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Summary Theories of international management

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A snapshot of the summary - Theories of international management

  • 1 week 1

  • What is a MNE?
    A multinational enterprise can be defined as ‘a firm that owns and/or controls value creating activities in two or more different countries. An MNE is a firm that uses FDI to establish or purchase income-generating assets abroad, but may also trade goods and services across international borders
  • What are four characteristics of FDI to the firm from the home country
    1) Nature of the firm changes --> becomes an MNE
    2) It has high commitment
    3) They do a long-term investment
    4) The management is interested in exercising a certain degree of control
  • What are two characteristics of FDI to the host country?
    1) FDI is a change for a direct injection in the economy
    2) FDI comes at a cost of local firms going out of the industry & any wider benefits to the local economy are uncertain 
  • At which four levels is analysis performed in IB?
    1) Country level
    2) MNE level
    3) Subsidiary level
    4) Individual level
  • Which different views/levels of analysis are performed in IB
    1) resource based view
    2) industry based view
    3) institutional based view
  • What are factors that explain country level analysis?
    - international economics
    - national economics
    - macro-level investments
    - trade flows
    - national statistics on trade and FDI
  • Why did analysis shifted from country level to MNE level?
    Hymer established a distinction between financial investments and foreign direct investments: gives the firm control over business activities in other countries.
  • What is the result of country specific advantage?
    That differences in factors across borders lead to international transactions, whether transfers of capital or goods.
  • What is the implication of the product life cycle to international business?
    industry change may force firms to relocate parts of their business to other countries
  • How can firms utilize a FSA?
    It allows them to overcome liability of foreignness (the cost of doing business abroad, derived from the lack of knowledge of the host market)
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