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CHAPTER 16

CHAPTER 16. Corporate Strategy and Foreign Direct Investment. THE THEORY OF THE MULTINATIONAL CORPORATION. I. THE THEORY OF THE MULTINATIONAL CORPORATION A. The MNC as an Oligopolist: Why FDI? 1. When is FDI justified? 2. Internalization 3. Market Integration a. Vertical

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CHAPTER 16

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  1. CHAPTER 16 Corporate Strategy and Foreign Direct Investment

  2. THE THEORY OF THE MULTINATIONAL CORPORATION • I. THE THEORY OF THE MULTINATIONAL CORPORATION • A. The MNC as an Oligopolist: Why FDI? • 1. When is FDI justified? • 2. Internalization • 3. Market Integration • a. Vertical • b. Horizontal

  3. THE THEORY OF THE MULTINATIONAL CORPORATION • B. Financial Market Imperfections • 1. Hypothesis • 2. Diversification Effect of the MNC

  4. THE STRATEGY OF THE MNC • II. THE STRATEGY OF THE MNC • A. Three strategies: • 1. The Innovation-based MNC

  5. THE STRATEGY OF THE MNC • Strategies (con’t) • 2. The Mature MNC • a. the importance of economies of scale and • b. economies of scope

  6. THE STRATEGY OF THE MNC • 3. The Senescent MNC • a. global scanning capability • b. the role of rationalization and integration.

  7. THE STRATEGY OF THE MNC • 4. FDI and Survival • a. Cost reduction • b. Economies of scale • c. Multiple sourcing • d. Keeping domestic customers

  8. DESIGNING A GLOBAL EXPANSION STRATEGY • III. DESIGNING A GLOBAL EXPANSION STRATEGY • 5 Necessary Elements

  9. DESIGNING A GLOBAL EXPANSION STRATEGY • A. 5 Necessary Elements • 1. Awareness of profitable investments • -building competitive advantage • 2. Selecting a mode of entry • -evaluate systematically • 3. Adjusting the Effectiveness of the Entry Mode • - continual auditing • 4. Using appropriate evaluation criteria • 5. Estimating the longevity of competitive • advantage: • a. Develop competitive strength • transferable overseas. • b. Not easily duplicated

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