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CHAPTER 20

CHAPTER 20. CORPORATE STRATEGY AND FOREIGN DIRECT INVESTMENT. CHAPTER OVERVIEW:. I. THEORY OF THE MULITNATIONAL CORPORATION II. THE STRATEGY OF MULTINATIONAL ENTERPRISE III. DESIGNING A GLOBAL EXPANSION STRATEGY. I. THE THEORY OF THE MULTINATIONAL CORPORATION.

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CHAPTER 20

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  1. CHAPTER 20 CORPORATE STRATEGY AND FOREIGN DIRECT INVESTMENT

  2. CHAPTER OVERVIEW: • I. THEORY OF THE MULITNATIONAL CORPORATION • II. THE STRATEGY OF MULTINATIONAL ENTERPRISE • III. DESIGNING A GLOBAL EXPANSION STRATEGY

  3. I. 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

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

  5. II. THE STRATEGY OF THE MNC • II. THE STRATEGY OF THE MNC • A. Three strategies: • 1. No. 1 That of the Innovation- based MNC

  6. THE STRATEGY OF THE MNC • Three Strategies (con’t) • 2. No. 2 That of the mature MNC • a. the importance of economies of • scale and • b. economies of scope

  7. THE STRATEGY OF THE MNC • 3. No. 3 The senescent MNC • a. global scanning capability • b. the role of rationalization and • integration.

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

  9. III. DESIGNING A GLOBAL EXPANSION STRATEGY • III. DESIGNING A GLOBAL EXPANSION STRATEGY • A. Five Necessary Elements: • 1. Awareness of profitable investments • -building competitive advantage • 2. Selecting a mode of entry • -evaluate systematically

  10. DESIGNING A GLOBAL EXPANSION STRATEGY • A. Five Necessary Elements (con’t) • 3. Adjusting the Effectiveness of the Entry Mode • - continual auditing • 4. Using appropriate evaluation criteria

  11. DESIGNING A GLOBAL EXPANSION STRATEGY • 5. Estimating the longevity of competitive advantage: • a. Develop competitive strength • transferable overseas. • b. Not easily duplicated

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