Multinational business (EC3033N)

Week 1 LectureGlobalisation

Agenda • Module introduction– Lecture/workshop programme– Module assessment– Course work– How to reference

• Globalisation of Markets and the Internationalisation of the firm

Module aim• To apply economic analysis to the study of key aspects of the

rationale for the operations of multinational businesses;• To analyse the major economic implications of and issues arising

from foreign direct investment (FDI);• Facilitate and support students in utilising personal resources

and materials so that they can carry out independent research into an aspect of the international economy, using research methods appropriate to the task;

• Develop researching, analysing data, presenting data, communication, problem solving, interpersonal and creative skills of students.

Learning outcomes• At the end of this module students will:• Be aware of the extent of and the reasons for FDI in

the world economy;• Be able to critically analyse the major operations of

the multinational business;• Be in a position to analyse the implications of the

increase in FDI, including its impact on the globalisation process and national economies ;

• Be aware of some of the major contemporary issues affecting on multinational businesses’ activities.

Lecture programme• 1st 8 weeks of teaching main are will be FDI and HRM because

they play very important role in multinational business– Week 1: Globalisation of Markets and the internationalisation

of the firm– Week 2: Theories of the Multinational Enterprise.– Week 3: Financing the Operations of the Multinational Enterprise.– Week 4: The Economic Impact of foreign direct investment

(FDI).– Week 5: The Economic Impact of foreign direct investment

(FDI).– Week 6: Culture and the Multinational Enterprise.– Week 7: Human Resource Management in the Multinational

Enterprise.– Week 8: Human Resource Management in the Multinational

Enterprise

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Lecture programmes

Week 9: Multinational Business in the European Union and North America.Week 10: Multinational Businesses in Asia – Japan, China and India.Week 11: Multinational Businesses in Latin America.Week 12: Global Financial Crises and the Multinational Business and/or Revision.Weeks 13 – 15 Examinations

Tutorial and workshop• You will gain more from the tutorial and

workshop if you prepare prior to each tutorial and workshop

• Please study lecture notes from the previous week prior to the seminar

Assessment • The overall mark is calculated from two

elements of assessment which are weighted equally

• 50% - 2500 word essay• 50% - unseen exam

Assessment • To achieve a good grade, – you need to show understanding of the topic and– that you are able to critically analyse the theoretical

concepts of multinational business

General marking scheme

•70% and above•Very good understanding of the question, comprehensive cover of course material,

sophisticated evaluation of theoretical/policy issuesDistinction •60%- 69%•Good understanding of the question, good coverage of relevant course material, detailed and

accurate analysis, usage of graphs, evaluation of theoretical issuesMerit •40% and above•At least basic understanding of the question and sufficient coverage of relevant course

material and basic economic analysisPass •0%• If you steal and pass off the ideas of someone else as if it would be yours (i.e. without crediting

the source). If you quote the words of another person without indicating that you are using a quoteplagiarism

Assessment 1• Submission date: week 7 day 3• Possible topics that you have to choose to write

an essay1. Discuss the main forces driving the globalisation

process and explain the challenges/opportunities that globalisation presents to multinational business

2. Discuss and evaluate Dunning’s (1988) eclectic paradigm of international production

3. Discuss and evaluate the impacts of foreign direct investment on host country economies (using examples and case studies)

Assessment 2• Unseen exam• Week 13-15

Plagiarism • “The taking and using as one’s own….the thoughts, writings or

inventions of another” Oxford English Dictionary• Types of plagiarism

– Copying work from a book or the internet without referencing it– Using quotes without reference and/or indication (“……”)– Copying a friends essay (and maybe changing some bits and pieces)– Buying an essay and submitting it as your own work– Submitting an essay that was previously submitted for another module– Collaborating with a friend and writing up the report/essay together– ‘googling’ for information and copy/pasting it together– Taking notes without putting down where the information is from, and later

writing the essay/report from those notes– Paraphrasing sentences from books or journal articles without referencing

them– Not referencing within the text, only providing a bibliography at the end

Strategies to avoid plagiarism• Allocate sufficient time for each of your writing

stages• Record source details and take appropriate

notes• Reference correctly- use Harvard referencing

system– In-text referencing including the author, year and if

applicable, the page numbers– Provide a bibliography/reference including all the

sources you used, sorted alphabetically by the author’s surname.

Core texts• Cavusgil, S. T., et al (2008) International Business: Strategy,

Management, and the New Realities, Prentice Hall.• Dicken, P., (2007) Global Shift: Mapping the Changing

Contours of the World Economy, 6th Edition, Sage.• Ietto-Giles, G. (2002) Transnational Corporations:

Fragmentation Amidst Integration, Routledge, London• Morrison, J. (2002) The International Business Environment,

Palgrave.• Pitelis, C., and R. Sugden (eds) (2002) The Nature of the

Transnational Firm, 2nd Edition, Routledge, London.• Rugman, A. M., and S. Collinson (2006) International

Business, 4th Edition, Prentice Hall.

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Additional sources• Journals/Magazines/Newspapers – Journal of International Business Studies– Harvard Business Review– European Journal of Management– The Economist– The Financial Times– The Wall Street Journal

• Websites– If you are searching for published materials written on a topic or

written by an author then good websites are:– www.econlit.org– http://zetoc.mimas.ac.uk– www.bids.ac.uk

Globalisation of Markets and the Internationalisation of the firm

A day in the global economy.

Globalisation • Integration of world economies through the reduction

of barriers to the movement of trade, capital, technology, and people.

• Broadening set of interdependent relationships among people from different parts of a world that happens to be divided into nations

• International Business: consists of all commercial transactions that take place between two or more countries – e. g. Trades, investments, transportation, etc.

How does International business differ from Domestic business?

Who participates in International business?

Get to know the globalisation!

• People who make the products are paid very little• A pair of jeans may have parts from many countries• Nike has factories in many different countries• Globalisation effects what we eat and what clothes we wear• Some MNC’s revenue is greater than the GDP of certain

countries• Most of the world’s largest MNC’s are based in America• The largest MNC’s include Exxon, Ford, Coca-Cola and

Microsoft.• The main aim of MNC’s is to make a profit.

Globalisation and international business• Globalisation and international business enable society to

access goods and services of more variety, better quality or lower prices.

• What do you say about Nepal with respect to globalisation?

• For more information: Read the article 28 AUG, 2013by

Nepal and globalisation: An Insight!

Role of MNCs in Globalisation

• Balance of Payments• Employment• Technology transfer• Social responsibility• Government control• Competition among local and foreign brand

Some facts about a multi national company!• It has more full-time employees --2.1 million --than seven

times the population of Iceland• It’s $405 billion in revenue last year makes it the 23rd-largest

economy in the world, bigger than Sweden• It is the largest overall employer in the USA, and the biggest

employer in 25 states• In 2000, it was sued 4,851 times --about once every 2 hours• It is battling 1.6 million employees in the largest class action

sex discrimination law suit ever --the potential cost is $11 billion

• It is the most frequent destination typed into GPS device Telenav

Example of international business

Example of international business

Example of international business

Advantages and disadvantages of globalisation

Advantages Disadvantages

• Employment• Education• Product quality• Cheaper prices• Free movement of capital• Communication• Transportation• International trade• GDP increases

• Health issues• Loss of culture• Uneven wealth distribution• Environment degradation• Inequality in the development of economies• Cut throat competition• Monopoly

The forces driving globalisation• Increase in and expansion of technology• Market Liberalisation and adoption of free

market trade• Industrialization and economic development• Growing consumer pressures• Increased global competition• Changing political situations• Integration of world financial markets

Why companies engage in international business?• Seek opportunities for growth through market diversification• Earn higher margins and profits• Gain new ideas about products, services and business methods• Better serve key customers that have relocated abroad• Be closer to supply sources• Gain access to lower cost or better-value factors of production• Develop economies of scale in sourcing, production, marketing

and R&D• Challenge international competitors more effectively or stop the

growth of competition in the home market• Invest in a potentially rewarding relationship with a foreign

partner

Modes of operation in international business• Importing and exporting• Tourism and transportation• Licensing and franchising• Turnkey operations• Management contracts• Direct and portfolio investment (including joint

ventures)

Functions of operations in international business• Decision on most appropriate strategy to be

used in international markets. The main areas of focus are:– Marketing– Global manufacturing and supply-chain

management– Accounting– Finance– Human resources

Corporate governance• Ethics• Corporate social responsibility (CSR)• Bribery and Corruption