Intro to IB additional content from lectures and videos

Power perspective

dominate the market not to get eaten

Value chain perspective

engage in value chain, decentralize production, reduce risk

Agglomeration perspective

be where the action is

FDI substitutes

market seeking, trying to get around tariff walls, horizontal

FDI complements

efficiency or strategic asset seeking, vertical

Patterns of FDI – firms in the same industry:

- Similar strategic behavior - The same location o Strategic rivalry -> multipoint competition

The arm’s length

The companies are independent of one another and trade based on contractual arrangements. There is no ownership from one company of the other.

Internalization

Companies perform activities within the boundaries of the firm, rather than acquiring them in the market.

Risks associated with exporting are:

• increasing transportation costs • introduction of tariffs (or other trade barriers) • increasing bureaucracy

Risks associated with licensing are:

loss of reputation/misuse of the brand name • intellectual property risks

Psychologically proximate

being similar to the home country in terms of institutional environment and/or culture.

Uppsala model, main reason for a gradual internalization process

Internalization comes with uncertainty, limited knowledge – limit risk, limited commitment – means learning, means reducing uncertainty, means more learning

Born global

the inception is to create advantages from the use of resources and outputs in multiple countries – internalize quickly

Difference between equity modes

equity has an ownership, non-equity are contracts

3 Is of CSR

Issues, Ideology, Institutions

MNE provoke unease in society

due to too much power and control and exploiting labor and environment

Tragedy of commons

overuse of the resources – have to reduce

Wicked problem

impossible to identify a single cause or a solution

Sustainability

meets the goals of the present without compromising the needs of future generations around the world

Friedmanite position

the business of business is business

Carroll’s 4 responsibilities

Economic, legal, ethical, discretionary (must, has, should, might DO)

Stakeholder theory

broad range of actors influencing the firm, considering not only stakeholders but others impacted by a strategy of the firm

Stakeholder theory, why is it complex for MNE to address CSR

Different stakeholders, different issues, cannot prioritize. Cannot do the same in all countries in the same degree. More countries, more complexity – variety of strategic dilemmas

MNE Strategy

how the MNE leverages its R&Cs to create value across the MNE’s activities.

MNE Structure

how the units of the MNE relate to / interact with one another in support of the strategy?

Need’s of integration relation with resource based view

synergies between operations in multiple countries/efficient use of resources – RBW – resources and capabilities

Examples of adaptation

cars are relatively standardized in every country, but food not because there are different preferences

Upstream activities

inputs and production of goods

downstream

distribution and sales of those goods

distinction between upstream and downstream not that clear for MNEs

some subsidiaries do single activity like sales and other do multiple

Examples of upstream and downstream process optimization

Upstream – integration with suppliers and amount of inventory Downstream – managing retail relationships

Subsidiary roles

- Receptive - Active - Autonomous