Multinational Financial Management Alan Shapiro 9th Edition J.Wiley

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Multinational Financial Management Alan
Shapiro9th Edition J.Wiley Sons

• Power Points by
• Joseph F. Greco, Ph.D.
• California State University, Fullerton

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CHAPTER 16

• Corporate Strategy and Foreign Direct Investment

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THE THEORY OF THE MULTINATIONAL CORPORATION

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

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THE THEORY OF THE MULTINATIONAL CORPORATION

• B. Financial Market Imperfections
• 1. Hypothesis
• 2. Diversification Effect of the MNC

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THE STRATEGY OF THE MNC

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

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THE STRATEGY OF THE MNC

• Strategies (cont)
• 2. The Mature MNC
• a. the importance of economies of scale
  and
• b. economies of scope

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THE STRATEGY OF THE MNC

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

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THE STRATEGY OF THE MNC

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

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DESIGNING A GLOBAL EXPANSION STRATEGY

• III. HOW TO DESIGN A GLOBAL EXPANSION STRATEGY
• There are 5 Necessary Elements

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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

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DESIGNING A GLOBAL EXPANSION STRATEGY

• A. 5 Necessary Elements (cont)
• 4. Using appropriate evaluation criteria
• 5. Estimating the longevity of competitive
• advantage
• a. Develop competitive strength
• transferable overseas.
• b. Not easily duplicated