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Multinational Financial Management Alan Shapiro
8th Edition J.Wiley & Sons
Power Points by
Joseph F. Greco, Ph.D.
California State University, Fullerton
CHAPTER 1
Introduction: Multinational Enterprise
and Multinational Financial Management
3
PART I.THE RISE OF INTER-MODAL
INTERNATIONAL TRADE
A. THE REVOLUTION IN WORLD TRADE AND FINANCE (1985)1. Containerization
a. Containers (20’ (TEU) and 40’)
b. Make Inter-modal transport possible
4
This New Method of Shipping Has Revolutionized Global Trade and Finance
5
CARGO CRUSH
NO. 1
Long B
- IN MILLIONS OF TWENTY FOOT CONTAINERS (TEUs)
7.57.3
6.75.8
NY/NJ
LA
Source: L.A. Times, C-1, 2/4/2006
NO. 3 4.84.5
NO. 2
= 2005
= 2004
6
World’s Top 5 Container Ports
0
5
10
15
20
25
2005
Singapore
Hong Kong
Shanghai
Shenzhen
LA/ LongBeach
Pusan
Source: L.A. Times C-1, 2/22/2006
Millions of Twenty Foot Containers
7
Port of Long Beach/Los Angeles
8
A Containerized Port in China
9
10
11
12
Containerized Shipping isIntermodal
By rail mode
By air mode
By ground mode
13
A “Small” Container Ship
14
Intermodal Transport
4
The U.S. Land Bridge
15
FromDepartur
eArrival
Transit
Service
Vessel
Long Beach Tue Sep 25 Sat Oct 1318
daysAWEPD Priwall
New York Metro
Mon Sep 17
Tue Oct 1629
daysAWE Lt Genova
Oakland Tue Oct 2Wed Oct
1715
daysPSPD1 H.J. Athens
Le Havre Thu Sep 27Wed Oct
1720
daysCEX H.J. Savannah
Oakland Fri Oct 5 Fri Oct 1914
daysPSPD2
Portugal Senator
Le Havre Fri Sep 28 Fri Oct 1921
daysPDA H.J. Amsterdam
Long Beach Tue Oct 2 Sat Oct 2018
daysAWEPD
German Senator
Voyages to Hong Kong
on Hanjin
The Time Length Of Global Shipping
16
PART 1 THE RISE OF THE MULTINATIONAL CORPORATION
I. The MNC: A Definition
– a company with production and distribution facilities in more than one
country. – with a parent company located in the home
country– at least five or six foreign subsidiaries
17
THE RISE OF THE MULTINATIONAL CORPORATION
The MNC’s EvolutionReasons to Go Global:
1. More raw materials
2. New markets
3. Minimize costs of production
18
THE RISE OF THE MULTINATIONAL CORPORATION
RAW MATERIAL SEEKERSexploit markets in other countries
historically first to appear
modern-day counterparts
British Petroleum
Exxon
19
THE RISE OF THE MULTINATIONAL CORPORATION
MARKET SEEKERSProduce and sell in foreign markets
Have heavy foreign direct investors
Represented today by firms such as:
IBM
MacDonald’s
Nestle
Levi Strauss
20
THE RISE OF THE MULTINATIONAL CORPORATION
COST MINIMIZERSseek lower-cost production abroad
Their motive: to remain cost competitive
Represented today by firms such as:
Texas Instruments
Intel
Seagate Technology