Topic 1 Final Presentation

8/2/2019 Topic 1 Final Presentation

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TOPIC 1 :INTERNATIONALISATION

OF BUSINESS

Justyna Wasowicz (Student n)

Steve Guicheron (12493281)

Guilhem Puddu (13562506)

Friday, 10thFebruary International Financial Management


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McDonalds


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Influence on the market

Game theory: Focuses upon interactions between competitors andexplain foreign investments in these terms rather that by comparingtransaction cost. FDI may give a one player the competitiveadvantage that would enable it to make a more menacing attack uponcompetitors (Buckley, 2004).


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Model of Business

McDonalds corporate strategy is to develop the fast food

restaurant through franchising around the world according tocertain criteria require to obtain the lease.

The franchise is defined by the usage of a successful businessconcept. In this case it will be large food service retailer


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FRANCHISE = FDI

The Franchisee need to pay a rent and royalties to the franchiser

Because the Franchiser increase its asset abroad

The franchiser development its supply network benefiting of the economy of

scope

The franchiser can increase significantly its brand awareness to drive its sale


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Theories and Motivation for Microsoft to workglobally? And why?

1. Theory of Comparative Advantage: Specialization bycountries can increase production efficiency

Microsoft chooses to take advantage on the comparative advantage thatthe world offers.

The Headquarters is in Redmond, Washington State, where the taxlegislation is accommodating and for greater infrastructures.


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Theory of Comparative Advantage

The research and development centres are located in :

Dallas,Texas

Dubai, UAE

Mubai, India

Singapore

For important

concentration of

high-informatics

skills employees.


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Theory of Comparative Advantage

Microsoft has settled different strategic administrative and financial head

offices.

To be closer to their

core market

Only in developed

countries

To reduce any risk.


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Product Cycle Theory

As a firm matures, it may recognise additional opportunitiesoutside its home country, in order to generate more incomecash flows ( BCG growth-share Matrix)

Source GlobalStats

Date January2012

AllMicrosoft

versions89.3%

Source: Wikipedia,

2012


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International business methods followedby Microsoft, Why?

Licensing - provision of technology inexchange for fees or some other benefits.

Constructors under Microsoft Licensing:

Greater Penetration: Worldwide exposition Establish an industry standard ( Best example is Microsoft) gain competitive advantage. promote a company's imageLess costly: Fewer costs of marketing and logisticalBetter Quality:

more reliable speeds up innovationLess risky: Whatever happens in the market Microsoft has already soldhis product. build developer loyalty OR dependence when competition is

not available.

Asus Fujitsu Acer Packard Bell

Samsung Toshiba Sony Dell Lenovo

Hewlett Packard Apple, if you buy the

software


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Establishing New Foreign Subsidiaries

Offices in 105 countries - on every continents.

The advantages of this mode of penetration :

permanent local presence knowledge of the market

Having the nationality of the country accommodating tax system

sustainability of the company on the market strengthenedcredibility

Make profitable logistic, administrative, commercial and financialoperations.


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Acquisitions of Existing Operations

Pros of a takeover :

Increase in sales/revenues Venture into new businesses and markets

Profitability of target company

Increase market share

Decrease competition (from the perspective of the acquiring company)

Reduction of overcapacity in the industry

Enlarge brand portfolio

Increase in economies of scale

Increased efficiency as a result of corporate synergies/redundancies (jobs

with overlapping responsibilities can be eliminated, decreasing operatingcosts)

589 acquisitions in 25 Years(1987-2011)

165 in Foreign Countries

580 in 10 years! (1994-2004) 424 in the US


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Acquisitions of Existing OperationsDate Company Business Country

July 30, 1987 Forethought

Computer software United States

July 10, 1995 Network Managers Systems design United Kingdom

March 6, 1996 VGA-Animation Software Software Germany

July 1, 1999 Sendit Application software Sweden

June 10, 2003 GeCAD Software Antivirus technology Romania

May 31, 2005 Tsinghua-Shenxun-Cert Asts Certain assets China

November 3, 2005 media-streams.com Software Switzerland

November 17,

20055th Finger Mobile Australia

October 29, 2007 Global Care Solutions-Assets Assets Thailand

November 1, 2007 HOB Business Solutions Information technology Denmark

November 15,

2007Musiwave Mobile music entertainment France

December 12, 2007 Multimap.com Mapping United Kingdom

March 31, 2008 90 Degree Software Business intelligence software Canada

April 25, 2008 Fast Search & Transfer Enterprise search Norway

June 4, 2008 Quadreon Software Belgium

June 26, 2008 Mobicomp Mobile applications Portugal

March 1, 2009 3DV Systems Developer ofZCam, a time-of-flight camera Israel

May 10, 2011 Skype Communications Telecommunications Luxembourg


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Globalisation versusInternationalisation

Internationalization processes involve the simple extensionof economic activities across national boundaries.

It is essentially a quantitative process which leads to a moreextensive geographical pattern of economic activities.

Globalization processes are qualitatively different frominternationalization processes.

They involve not merely the geographical extension of

economic activity across national boundaries, but also thefunctional integration of such internationally dispersedactivities.

(Dicken, 1988)


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The UK Economy in Brief

o One of the most open economies in thewestern world

o The worlds 6th largest economy

(International Monetary Found, 2010)o The worlds 2nd largest services exporter

o The most favoured destination in Europe for

foreign direct investment, and the 3rdworldwide


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The UKs Exports

UK exports account forover a quarter of UKGDP (Gross DomesticProduct)

ratio of UK exportvolumes to world importvolumes has fallen by23% since 1980 and by15% since 1990

UK GDP to world GDP,which has fallen by8.0% since 1980 and6.5% since 1990.


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The UKs Imports

Since 2000 goods imports in the UK had increased by 86 percent, and services imports had risen 107 per cent to US$

631,804 million and US$ 205,339 million respectively in 2008.


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Foreign Direct Investment

Direct investment in the UK(inward investment)

Foreign companies invested anet 45.7 billion in the UK in2009

Net earnings of foreign

companies from foreign directinvestments in the UK were 26.5billion.

Foreign direct investmentflows abroad (outward

investment) The net foreign direct investment

flows made by UK companiesabroad in 2009 were 21.2

billion.


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Multinational Corporationstheir position in the UK economy

Powerful influence in local andeconomies; budgets of someof them can exceed the GDPs

Significant role in globalisation

as well as internationalisation Existence of many

headquarters in the UK due toa favourable for MNCs tax

system corporate tax Attracting MNC facilities can

incur in increased tax revenue,employment, and economicactivity by the UK


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The Respond of the UKEconomy to the Globalisation

Creating the opportunities for businesses

Importance for Britain of continuing to develop acompetitive advantage in industries with majorgrowth-potential

Structural change in industries

Loss of the comparative advantage in producing

relatively low-value added manufacturing products The ability of governments to levy corporate taxes

from MNCs corporations


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References

Bibliography

Buckley, A. (2004). 5th Edition. Multinational finance.P388. Pearson Education Limited . Harlow

Website

www.mcdonalds.com Access 09/02/2012

www.microsoft.com Access 09/02/2012www.wikipedia.com/microsoftportal Access 09/02/2012
http://www.mcdonalds.com/http://www.microsoft.com/http://www.wikipedia.com/microsoftportalhttp://www.wikipedia.com/microsoftportalhttp://www.microsoft.com/http://www.mcdonalds.com/

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Topic 1 Final Presentation