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Group B2
Sumeet Shahi Sudhanshu Sharma Vivek Kurup Rohini Gangapuram Niraj Nakhale
Geographical Expansion
Supplementary Paradigms
Environmental/Systems/Policy(ESP) Paradigm Porters Diamond of Competitive Advantages Asset Accumulation and Restructuring Paradigm Stages of Growth paradigm
Successful FDI
OWNERSHIP ADVANTAGES
Firm specific advantage transferred within regions (e.g., technology, brand name, benefits of economies of scale). Results in higher revenues and/or lower costs It offsets the costs of operating at a distance in an abroad location. E.g. Wal-Mart using supply chain Innovation innovation in stores out of USA.
Monopolistic Economies of Scale
Ownership Advantage s
The location advantages of different countries are key in determining which will become host countries for the Multinational enterprises. E.g. Vodafone tapped tax exemption in Mauritius.
Economic advantages quantities and qualities of the factors of production, transport and telecommunications costs, scope and size of the market.
LOCATION ADVANTAGE
Political Advantages common and specific government policies that influence inward FDI flows, intra-firm trade and international production. Social, cultural advantages general attitude towards foreigners and the overall position towards free enterprise, psychic distance between the home and host country, language an cultural diversities
INTERNALIZATION
Why doesnt a firm just sign a contract with a subcontractor (external agent) in a foreign country? Internalization advantages : Advantages by own production rather than producing through a partnership arrangement such as licensing or a joint venture. E.g. Infosys (Didnt had JV with US firm instead open offices all over the world.
HOW TO
SERVICE A MARKET
Oo
Lo
MNC Response MNC Activity Impacts: Porters Diamond of Host Country Impacts: Environment Systems & Policies +ve, -ve, Neutral New OLI
Support
ESP Impact Asset Restructure
On
Ln
In
O = Ownership L = Location
I = Internalization
TYPES
OF
oResource seeking FDI Seek and secure natural resources for the investing company oMarket seeking FDI Indentify and exploit new markets for the firms finished products oEfficiency seeking FDIs - Restructure existing investments to achieve efficient allocation of international economic activity of the firms oStrategic asset/capabilities seeking FDI - Strategic operations through the purchase of existing firms to sustain global competitive position
oUS had the initial location advantage which is now slowly shifting towards emerging economies
oInternalization Infosys has offices in over 30 countries