Unit11Text MultinationalCorporations 跨国公司 1 Keywords2 Evolutionofmultinationalcorporation3 Definitionofmultinationalcorporation4 Impactofmultinationalcorporation5 Majordeterminantsofforeigndirectinvestment6 Questions 1 Keywords multinationalentityextractiveindustrymultinationalcorporationethnocentricfirmpolycentricfirmregiocentricorgeocentricfirmforeignaffiliatecorporateheadquartercross borderdealcompetitivepositiongovernment erectedbarriercountry of originbuilt inpositivestereotypeacquiringorestablishingfirmsintermediarygoodsjust in timelogisticssysteminvestmentclimateenvironmentalconstraintpoliticalriskpoliticalupheavallocal contentrequirementexpatriateemployment 2 Evolutionofmultinationalcorporation Multinationalentitieshaveplayedaroleininternationaltradeformorethan300years ThebeginningsoftheseoperationscanbetracedtotheBritishandDutchtradingcompaniesand aftertheirdecline toEuropeanoverseasinvestments mainlyintheextractiveindustries ThephenomenonasitisknowntodayistheresultoftheleadtakenbyU S basedcompaniesinthepost WorldWar periodandlaterfollowedbyWesternEuropeanandJapaneseentities Differenttermsaboundforthemultinationalcorporation Theyincludeglobal world transnational international supernational andsupranationalcorporation Thetermmultinationalenterpriseisusedbysomewhenreferringtointernationallyinvolvedentitiesthatmaynotbeusingacorporateform 3 Definitionofmultinationalcorporation 3 1UNdefinitionofMNC3 2QuantitativecriteriaforMNC3 3QualitativecriteriaforMNC3 4KeycriteriaforMNC 3 1UNdefinitionofMNC TheUnitedNationsdefinesmultinationalcorporationsas enterpriseswhichownorcontrolproductionorservicefacilitiesoutsidethecountryinwhichtheyarebased 3 2QuantitativecriteriaforMNC Thenumberofcountriesofoperationistypicallytwo althoughtheHarvardmultinationalenterpriseprojectrequiredsubsidiariesinsixormorenations Anothermeasureistheproportionofoverallrevenuegeneratedfromforeignoperations Althoughnoagreementexistsregardingtheexactpercentagetobeused 25to30percentismostoftencited Thedegreeofinvolvementinforeignmarketshastobesubstantialenoughtomakeadifferenceindecisionmaking Severalnationsshouldbeownersofthecorporation 3 3QualitativecriteriaforMNC Thebehaviorofthefirmisthedeterminingfactor Ifthefirmistobecategorizedasamultinationalcorporation itsmanagementmustconsiderittobemultinationalandmustactaccordingly Intermsofmanagementphilosophies firmscanbecategorizedasethnocentric home marketoriented polycentric orientatedtowardindividualforeignmarkets orregiocentricorgeocentric orientedtowardlargerareas eventheglobalmarkets Evenethnocentricfirmswouldqualifyasmultinationalcorporationsifproductionwerethesolecriterion 3 4KeycriteriaforMNC Thefirmcontrolsitsproductionfacilitiesabroadandmanagesthem anditsdomesticoperations inanintegratedfashioninpursuitofglobalopportunities 4 Impactofmultinationalcorporation Theimpactofmultinationalsvariesbyindustrysectorandbycountry Inoil multinationalcorporationsstillcommand30percentofproduction despitestrongnationaleffortsbysomecountries Similarly thecontributionofmultinationalcorporations affiliatesmayaccountformorethanone thirdoftheoutputofthemarketingsectorincertaincountries Theimportanceoftheworldmarketplacetomultinationalcorporationsalsovaries Theforeignsalesshareoftotalsalesfortheworld slargestindustrialcorporationshasincreasedsteadily Thepercentagewillnaturallyvarybyindustry forexample oilcompanyratiosarewelloverhalf andbythecountryoforigin 5 Majordeterminantsofforeigndirectinvestment 5 1Marketingfactors5 2Barrierstotrade5 3Costfactors5 4Investmentclimate 5 1Marketingfactors Marketingconsiderationsandthecorporatedesireorgrowtharemajorcausesoftheincreaseinforeigndirectinvestment Evenasizabledomesticmarketmaypresentlimitationstogrowth Firmsthereforeneedtoseekwidermarketaccessinordertomaintainandincreasetheirsales 5 2Barrierstotrade Foreigndirectinvestmentpermitsfirmstocircumventbarrierstotradeandoperateabroadasdomesticfirms unaffectedbyduties tariffs orotherimportrestrictions Inadditiontogovernment erectedbarriers barriersmayalsobeimposedbycustomersthroughtheirinsistenceondomesticgoodsandservices eitherasaresultofnationalistictendenciesorasafunctionofculturaldifferences 5 3Costfactors Servicingmarketsatsizablegeographicdistancesandwithsizabletariffbarriershasmademanyexporters offeringsinforeignmarketsprohibitivelyexpensive Manymanufacturingmultinationalshaveestablishedplantsoverseastogaincostadvantagesintermsoflaborandrawmaterials Foreigndirectinvestmentoccursnotonlyhorizontally byfirmsacquiringorestablishingsimilarfirmsabroad butalsovertically Somefirmsengageinforeigndirectinvestmenttosecuretheirsourcesofsupplyforrawmaterialsandotherintermediarygoods Thisusuallysecuressupplyandmayprovideitatalowercostaswell 5 4Investmentclimate 5 4 1Definitionofpoliticalrisk5 4 2Formsofpoliticalrisk 5 4 1Definitionofpoliticalrisk Thegeneralattitudetowardforeigninvestmentanditsdevelopmentovertimemaybeindicativeofthelong termprospectsforinvestment Inmanycountries foreigndirectinvestmenttendstoarousenationalist