EXPANDING ABROADMotivations, Means,

and Mentalities

Multinational Enterprise (MNE)

What is it?

An enterprise that has a substantial direct investment and active management of entities in a foreign country.

Scope In 1984, the UN’s definition of MNE changed.

An MNE is an enterprise:

Comprising entities in two or more countries

Operates under a system of decision making permitting coherent policies and a common strategy through one or more decision-making centers

The entities are linked in a way that allows one or more to exercise significant influence over the activities of the others

Influence

70%

30%

World Trade

Top 500 MNEs

Other

MNEs produce __% of the world’s automobiles, __% of computers, __% of toothpaste, and __% of soft drinks.

Top 500 MNE’s account for:

85

70 35

65

The Motivations: Pushes and Pulls to

Internationalize

Traditional Vs. Emerging

TRADITIONAL EMERGING

Need to secure key supplies

Market-seeking behavior

Access to low-cost factors of production

Increasing scale economies, ballooning R&D investments, and shortening product life cycles

Global scanning and learning capability

Competitive positioning

Going International Prerequisites

Motivation

Strategic Competencies

Organizational Capabilities

Uppsala Learning Model of Internationaliztion

Approaches to Foreign Market Entry

Evolving Mentalities

International Mentality

Multinational Mentality

Global Mentality

Transnational Mentality

International Mentality

Overseas portions are distant outposts whose role is to support the parent company

Products are developed for the domestic market and are only subsequently sold abroad

Multinational Mentality

Growing sales convince managers that the foreign branches have more than marginal significance

The parent company will modify its main products to fit the needs of foreign markets

Global Mentality

Provide standardized products at low costs

Provides the company with more central coordination and control

Transnational Mentality

Companies are more responsive to local needs and pressures to develop global scale competitive efficiency

Resources and activities are dispersed but specialized to for efficiency and flexibility

QUESTIONS?