12. The degree of the technology transfer
After the discussion of what benefits the FDI might bring to the company and how to attract potential investors in the previous chapters, this chapter attempts to find the factors that may affect the absorption and the achievement that the FDI might bring to the company. It is commonly known that the FDI will bring the technology and the business skills to the company in the host country. However, the transferring will also highly depend on the company itself. This chapter will concentrate on two factors, the effect of the internalization advantages, and the absorptive capacity of the company.
12. 1 Internalization advantages
In the Dunning’s OLI Paradigm, internalization advantages refer to the control of the foreign parent. When the foreign firm is in possession of certain technology, the foreign firm would like
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If the company desired to shift from foreign to domestic technology, it is necessary to increase expenditures and investments in R&D (Chang, McAleer and Tang, 2013). The research indicated that the R&D investment and the inward FDI exhibit a commentary relationship. The investment in the R&D was around 11% of the gross profits in Accessen Group, and a continuing strengthening on the research and development of the company is highly recommended in order to shorten the technology gap between the company and the foreign partner.
Other supplementary factors include the financial support, communication, culture distance and the company’s acceptance. Each factor will serve as a motivator for the knowledge absorption, and enhance the competitiveness of the Accessen Group. To fully accomplish the objective of improving the competitiveness of the company through the attraction of inward foreign direct investment, it will need the cooperation and coordination in every department of the company and the constant communication with the foreign
One advantage from globalization is the idea of joint-stock companies. Joint-stock companies gave multiple people around the world the ability to own a company and make money off of it, even if the partial owners didn't live near the company (Document
Although United State tends to disadvantage from importing more manufactured items from other nations, United State is still having a great advantage when it comes to saving money. For instance, when manufactured products are made in the country, the factory owners have to pay the unskilled workers a sufficient hourly pay, and the business owners have to also worry about electric, water, and other necessary bills. However, when the products are made in other nations, the United State do not have to worry about bills and spending so much time and money on making the manufactured products since they are able to get their products cheaper when it made out of the country. On the other hand, even though the United State could still be getting
• To check the physical resources and scope of technical alliances with arrival of VC. • To detect more financial, technical, and industrial expertise prior to applying VC. • To develop and implement accelerated market presence. To define the strategic capabilities of Premier Inn, it is worth to mention its dependence on the macro-environment.
Coach Inc. Founded in 1941, Coach Inc identifies a leading American marketer of fine accessories and gifts for women and men headquartered in New York (Coach, 2016). Coach has continually sought to maintain the high level of quality experienced within its products through continuous development of new categories, which has maintained the company’s signature style and distinctive brand. SWOT Analysis Strengths The provision of high and superior quality leather The provision of unique and innovative styling pertaining to leather The provision of affordable prices pertaining to the company products
A transnational corporation is a very powerful actor with a significant foreign direct investment and physical operations in two or more countries. While these corporations have always existed in the world economy, they have become even larger over the past few decades, leaving many to wonder if they are gaining too much power. As with any powerful entity, people have begun to ponder whether these corporations are villains or heroes in the world economy. For some like consumers, companies, and host-country/world economies, the global corporations are heroes. While for others, like workers in poor countries, the environment, and local businesses, they are villains.
Analysis of Tesla in the Dutch business environment The following section will examine the rationale behind Tesla’s mode of business in the Netherlands using the OLI Framework proposed by John Dunning (1988). The framework covers company-specific (ownership) advantages, location-specific (locational) advantages and business mode (internalisation) advantages. According to Dunning, analysis of these 3 aspects can be used to determine whether or not a firm should engage in FDI in a specific country. 3.1 Ownership advantages Tesla has a number of ownership advantages that it can leverage when conducting business internationally, namely: intellectual property, existing partnerships, vertical supply chain integration and availability of
The company could also invest on human resource by recruiting high caliber workers, training, and have attractive compensating employees to lower turnover and talents, which could be taken by its
Around 2010, the company finally began to click. The worst of the cultural differences were getting resolved, and the Chinese had spent the period of upheaval learning about the capabilities needed within a multinational company. “They came to the United States ready to learn and absorb expertise’. Lenovo believe that with the advantage to the similarity between two companies, it should not be too difficult to integrate two corporate cultures. Even at, the pre-planning stage, the organization has designed a range of strategy such as cocktail party, a culture integration discussion board, set time up a cultural integration committee, to integrate two teams as well as to encourage communication between them.
1. 2. INTERNATIONAL TRADE THEORIES 2.1. Absolute Advantage According to Adam Smith 1776) in….., a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.
There are different ways to enter the foreign market (except the direct and indirect export of the goods): wholly owned subsidiaries, merger & acquisitions, joint ventures, franchising/licensing agreements and minority investments. After determining the entry mode the company will choose the market and evaluate it to find the best way to enter it. The different forms of market entry strategies have advantages and disadvantages. Standardization of market operations and processes are more different if a company chooses merger & acquisitions and joint ventures, because first the partnerships need to be harmonization. These partnerships are valuable because of the partner’s knowledge about the local market.
SOWT analysis : It’s the most famous tools for analysis and planning organizations, analyzes the work place , internal and external suppliers and competitor agents and others laws. The tool classifies those factors positive or negative factors. The negative and positive exploited were dealt with. The analysis of strengths, weaknesses, opportunities and threats and known as the SWOT acronym for Strengths, Weaknesses, Opportunities and Threats SWOT simply are internal factors and falling within the scope of control of the company.
In 1974, Delhaize took its first step of internationalization by entering the US market. He progressively acquired market shares in US and continued its internationalization process by entering Southeastern Europe in the early 1990s, and the Indonesian market in 1997. In this section we will try to understand the pressures that pushed Delhaize to internationalize. George Yip provides a framework to analyze the “globalization drivers” that are most likely to influence a company’s decisions to expend its business internationally. The four drivers of internationalization that he identified are: market drivers, cost drivers, government drivers and competitive drivers.
There are many different approaches to development in which countries over the years adopted to further develop and grow their economy. Some countries adopted the approach of import substitution in which they try to decrease their dependency on other nations and protect and foster domestic small companies. The disadvantage for an import substitution based industry, ISI, is although it achieves growth it does so through a greater period of time. On the other hand, growth and development from export oriented industries, EOI, has greater results and is so much faster than import substituting industries. Examples of countries that adopted import based industries are countries of Latin America while countries that adopted Export oriented Industries are countries of East Asia.
(Fan, Y. 2006) 2.0 Critical analysis of the internalization strategies engaged by the company 2.1 Identification of current internalization pattern 2.1.1 Foreign direct investment The current internalization pattern that Lenovo has been used is the foreign direct investment which take the form of merger and
INTRODUCTION McDonald’s is a American fast food organization that was started in 1940 by Richard and Maurice McDonald in San Bernardino, California. This corporation is one of the world’s biggest chain of Hamburger fast food eateries that is serving in excess of 58 million clients day by day. The very first McDonald’s eatery was open in Des Plaines on 15th of April, 1955.One day, Ray Kroc went there in 1954 and he was so inspired by their proficiency of their activity that he pitched his vision of making McDonald’s eateries all over the America as a franchise agent. 100 m of the hamburgers sold by McDonald by 1958.The first day deal of Mcdonald’s was $366.12. There would be more than 700 McD’s all through the United States by 1965.