expanding abroad
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expanding abroad

Expanding Abroad

Motivations, Means, and Mentalities

multinational enterprise mne
Multinational Enterprise (MNE)

What is it?

An enterprise that has a substantial direct investment and active management of entities in a foreign country.

scope
Scope
  • In 1984, the UN’s definition of MNE changed.
  • An MNE is an enterprise:
    • Comprising entities in two or more countries
    • Operates under a system of decision making permitting coherent policies and a common strategy through one or more decision-making centers
    • The entities are linked in a way that allows one or more to exercise significant influence over the activities of the others
influence
Influence

Top 500 MNE’s account for:

MNEs produce __% of the world’s automobiles, __% of computers, __% of toothpaste, and __% of soft drinks.

85

70

35

65

traditional vs emerging
Traditional Vs. Emerging

Traditional

Emerging

  • Need to secure key supplies
  • Market-seeking behavior
  • Access to low-cost factors of production
  • Increasing scale economies, ballooning R&D investments, and shortening product life cycles
  • Global scanning and learning capability
  • Competitive positioning
going international prerequisites
Going International Prerequisites
  • Motivation
  • Strategic Competencies
  • Organizational Capabilities
evolving mentalities
Evolving Mentalities
  • International Mentality
  • Multinational Mentality
  • Global Mentality
  • Transnational Mentality
international mentality
International Mentality
  • Overseas portions are distant outposts whose role is to support the parent company
  • Products are developed for the domestic market and are only subsequently sold abroad
multinational mentality
Multinational Mentality
  • Growing sales convince managers that the foreign branches have more than marginal significance
  • The parent company will modify its main products to fit the needs of foreign markets
global mentality
Global Mentality
  • Provide standardized products at low costs
  • Provides the company with more central coordination and control
transnational mentality
Transnational Mentality
  • Companies are more responsive to local needs and pressures to develop global scale competitive efficiency
  • Resources and activities are dispersed but specialized to for efficiency and flexibility
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