Introduction to Multinational Corporations

1
Introduction to Multinational Corporations
2
Multinational Corporation
A firm that has direct investments in foreign
countries and actively manages their strategy,
operations, and organization processes.
3
Motivations to Internationalize
Traditional
Recent

• Secure key supplies
• Enter new markets
• Access low-cost factors or production

• Scale economies
• RD requirements
• Shorter product cycles
• Intl learning
• Competitive position

4
The Key Questions

• Does our firm have a competitive advantage?
• Are there opportunities to use that advantage in
  a foreign location?
• Does our firm have the organizational
  capabilities to manage cross-border operations?

5
Evolving Mentalities
Multinational (Multidomestic) International Global
Transnational
6
Perlmutters States of Mind
Ethnocentric Polycentric Geocentric
7
Managing in a Borderless World

• Differentiated products may be sold globally.
• Universal products focus on low prices, cost
  reduction, scale economies, leading customers.
• Lead-country products focus on key models
  permit local adaptation.
• Undifferentiated products require insiders
  knowledge of distribution.
• Appropriate management systems keep top managers
  from meddling ensure incentives match firm
  goals.

By Kenichi Ohmae