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Chapter 1: Expanding Abroad: Motivations, Means, and Mentalities by Mind Map: Chapter 1: Expanding Abroad:
Motivations, Means, and
Mentalities
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Chapter 1: Expanding Abroad: Motivations, Means, and Mentalities

Multinational Enterprise

Definition

Multinational Enterprise (MNE), Has substantial direct investment into a foreign country, Actively manages these offshore assets

"International" Enterprise, Considers itself international but is not an MNE, Sources from overseas, exports products or even has minor equity shares in overseas companies - does not actively manage though!

Scope

Both strategic and organizational integration

Active, coordinated management of operations in different countries

Motivations

Traditional

Secure Key Supplies

Market-seeking behavior

Access low-cost factors of production, Cheap labor, Lower-cost capital

Captured in the product cycle theory, 1. Company has innovation in its home country, 2. Production becomes more stabilized, production is set up in foreign markets, 3. Product is highly standardized, cost competition -> resource seeking motive, Not applicable anymore!

Emerging

Scale economics, ballooning R&D, shortening product life cycles

Scanning and learning capability

Competitive positioning

Means

Prerequisites

Domestic companies have a home advantage over foreigners because of greater familiarity with the market, MNE needs some distinctive competency to overcome the disadvantage of being foreign

MNE must be able to use its assets more effectively through its own subsidiaries than through contractual relations with others

Process of Internationalization

Incremental, Uppsala Model, Market Commitment, Market Knowledge, Evaluate Commitment Decisions and Current Activities

Radical, Invest in or acquire local partners directly

Born Global

Mentality

Depending on the industry, the company's strategic position, host country's specific needs... a company might reasonably well operate with any of those four mentalities

International

foreign subsidiary just supplements home office products are developed for home market and only later also sold abroad

Multinational

Companies modify their products, strategies and even management practices to different foreign markets

Global

Multinational is too unproductive -> create products for a global market and make them in a few highly productive plants views the whole world, not different countries as its basic unit of analysis

Transnational

be responsive to local needs while capturing the benefits of global efficiency PARADOX links and coordinates operations across countries to maintain competitive effectiveness and efficiency "Trans-"need to be responsive to special country needs "-national"