A complete summary of the Multinationals course with Prof. Sels and Slangen, including any additional information given by the professors during class time. Used to successfully pass the course for the exam in June, 2021.
,Table of contents
Chapter one : Globalising business ................................................................................................................................. 5
1.1 What is global business ......................................................................................................................................... 5
1.2 Important economic terms ................................................................................................................................... 5
1.3 European and Global business .............................................................................................................................. 5
1.4 A unified framework ............................................................................................................................................. 8
Institutional perspective ............................................................................................................................................. 8
Resource-based view .............................................................................................................................................. 8
1.5 What is globalisation? ........................................................................................................................................... 8
Trends in globalisation ............................................................................................................................................ 9
Three views on globalisation .................................................................................................................................. 9
The global economic pyramid ................................................................................................................................. 9
1.6 Summary ............................................................................................................................................................. 10
Chapter two : Formal institutions : economic, political and legal systems ................................................................... 11
2.1 Institution-based view ........................................................................................................................................ 12
2.2 Dimensions of institutions .................................................................................................................................. 12
2.3 Understanding institutions ................................................................................................................................. 12
2.4 What do institutions do? .................................................................................................................................... 12
2.5 Core propositions................................................................................................................................................ 13
Political systems.................................................................................................................................................... 13
Economic systems ................................................................................................................................................. 13
Legal systems ........................................................................................................................................................ 14
2.6 Debates ............................................................................................................................................................... 15
Intellectual property right debate......................................................................................................................... 15
Debate: the relationship between good corporate governance and institutions ................................................. 15
• These rules specify the distribution of rights and responsibilities among different participants in the
corporation e.g. the board, managers, shareholders and the rules and procedures for making decisions on
corporate affairs. .................................................................................................................................................. 15
• Variations in corporate governance around the world are closely associated with variations in economic
and legal systems. ................................................................................................................................................. 15
Debate: institutions and political risk ................................................................................................................... 15
2.7 Implications for practice ..................................................................................................................................... 16
2.8 Summary ............................................................................................................................................................. 16
Chapter three : Informal institutions ............................................................................................................................ 17
3.1 Culture ................................................................................................................................................................ 17
Approaches to national culture ............................................................................................................................ 17
Cultural clusters .................................................................................................................................................... 18
Cultural dimensions .............................................................................................................................................. 18
Culture dimension scores ..................................................................................................................................... 19
, 3.2 Language ............................................................................................................................................................. 20
Handling language differences.............................................................................................................................. 20
3.3 Religion ............................................................................................................................................................... 20
Chapter four : firm resources ....................................................................................................................................... 20
4.1 Resource-based view .......................................................................................................................................... 20
4.2 Primary resources ............................................................................................................................................... 21
Intangible resources ............................................................................................................................................. 21
4.3 Capabilities.......................................................................................................................................................... 22
Value chain ........................................................................................................................................................... 22
To outsource or not? ............................................................................................................................................ 22
Capabilities relating to the value chain ................................................................................................................. 22
4.4 Appraising resources: VRIO ................................................................................................................................. 23
Benchmarking ....................................................................................................................................................... 23
4.5 Application: Outsourcing & offshoring................................................................................................................ 24
Outsourcing .......................................................................................................................................................... 24
Offshoring ............................................................................................................................................................. 24
Debates and extensions ........................................................................................................................................ 24
4.6 Global value chains ............................................................................................................................................. 24
4.7 Harvard business case: Shanzai! MediaTek and the ‘white box’ handset market .............................................. 25
Chapter five : FDI and theories of internationalisation ................................................................................................. 26
5.1 Foreign direct investment (FDI) .......................................................................................................................... 26
Types of FDI .......................................................................................................................................................... 26
The impact of FDI .................................................................................................................................................. 27
5.2 Contractual expansion modes............................................................................................................................. 27
Exports .................................................................................................................................................................. 27
Licensing and franchising ...................................................................................................................................... 27
5.3 MNE’s.................................................................................................................................................................. 28
Why do MNE’s exist? ............................................................................................................................................ 28
5.4 Theories of internationalisation .......................................................................................................................... 29
OLI paradigm vs. internationalisation process models ......................................................................................... 29
Uppsala model ...................................................................................................................................................... 30
Stages models ....................................................................................................................................................... 30
Network internationalisation model ..................................................................................................................... 30
IP models cannot explain ‘born globals’ ............................................................................................................... 30
Chapter six : FDI decisions and multinational strategies ............................................................................................... 31
6.1 Why expand abroad? .......................................................................................................................................... 31
6.2 Where to expand to? .......................................................................................................................................... 31
Relevant location advantage depends on the strategic objective......................................................................... 31
Location disadvantages (LDA’s) ............................................................................................................................ 31
, 6.3 When to expand? ................................................................................................................................................ 32
6.4 How to expand? .................................................................................................................................................. 32
FDI-based modes .................................................................................................................................................. 32
6.5 Integration-responsiveness framework .............................................................................................................. 34
Home replications strategy ................................................................................................................................... 34
Localisation strategy ............................................................................................................................................. 35
Global standards strategy ..................................................................................................................................... 35
Transnational strategy .......................................................................................................................................... 35
6.6 Conclusion .......................................................................................................................................................... 37
Chapter seven : Competitive dynamics......................................................................................................................... 37
7.1 Dynamics of competition .................................................................................................................................... 37
7.2 To collude or not to collude? ........................................................................................................................ 38
Competition and collusion .................................................................................................................................... 38
7.3 Market structures ......................................................................................................................................... 38
Modified Herfindahl-Hirshman index ................................................................................................................... 38
7.4 Cooperation and signalling ................................................................................................................................. 38
7.5 The concentrated European market ................................................................................................................... 39
Merger control ...................................................................................................................................................... 39
7.6 Institutions and prices ................................................................................................................................... 40
Formal institutions: anti-dumping ........................................................................................................................ 41
7.7 How can local firms react towards big MNE’s? ............................................................................................. 41
7.8 Implications for action ........................................................................................................................................ 42
7.9 Closing case: Brussels vs Microsoft and Google .................................................................................................. 42
7.10 Summary ........................................................................................................................................................... 42
Chapter eight: global strategies and M&A’s ................................................................................................................. 42
8.1 Building global strategies .................................................................................................................................... 42
8.2 Mergers or acquisitions: what is the difference? ................................................................................................ 43
Managing acquisitions .......................................................................................................................................... 44
Causes of acquisition failures ................................................................................................................................ 45
Acquisition versus alliances .................................................................................................................................. 45
Institutions governing acquisitions ....................................................................................................................... 45
Debates and extensions ........................................................................................................................................ 46
8.3 Closing cases ....................................................................................................................................................... 46
8.4 Summary ............................................................................................................................................................. 47
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