Lecture II. MNEs and the Evolving Global Business Environment (ch. 1). Definition of MNE. Substantial DFI (Direct Foreign Investment) Active management of offshore assets Can be in manufacturing or service Can be wholly owned or joint venture operations
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MNEs and the Evolving Global Business Environment
* Differences between joint venture and strategic alliances
Foreign Affairs, May/June 2006
Summary: A new corporate entity based on collaborative innovation, integrated production, and outsourcing to specialists is emerging in response to globalization and new technology. Such "globally integrated enterprises" will end up reshaping geopolitics, trade, and education.
1. Free trade? (Managed trade?), removal of trade barriers, (GATT), WTO –Globalization (also see Ch2 –BG)
2. Changing attitudes of the developing countries, more favorable DFI policies
3. Regional economic integration –EU, NAFTA, ASEAN, APEC….
4. Technological advancement – impacts on strategy and structure
5. Competition for capital, borderless global operations – immense investments and new technologies force MNCs to look for global markets
6. Globally integrated supply chain, greater interdependence
- “Managing the World Safe for Markets” HBR, 8/2003,
- World on Fire, A. Chua, 2003
- “Emerging Threat:Human Rights Claims” E. Schrage, HBR,
(Chapter 8 – see slide # 25)
1. Traditional Motivations (1950-1980)
2. Emerging Motivations (1980 - )
3. Beyond Motivations
a. Location-specific Advantages
b. Strategic competencies
c. Organizational capabilities
R. Vernon 
V = ( Q + F + S ) / C
Ch. 8 basically deals with MNE’s social responsibilities, which are further complicated by:
- operating in culturally different markets and subject to different legal constraints.
- growing pressure of sustaining competitiveness ( much of it comes from greater efficiency – the exploitive MNE)
- growing discontents with globalization
- rising nationalism (pressure to localize)
Green, Hassan,Immelt, Marks and Meiland, “In Search of Global Leaders” HBR, 8/2003pp. 38-45
Overseas assignment – prerequisite?