Seminar 1 - International Firm in a global society
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The seminar covered theories of multinational firms and their evolution over time. It discussed the dominating and coordinating perspectives on multinationals and provided practical examples of IKEA and GM. The group then took a break and had a discussion covering questions about market imperfections driving multinationals, describing IKEA and GM through different theories, how perceptions of multinationals can vary by theory, any dangers of uncontrolled growth, and whether multinationals can withstand changes over time.
Seminar 1 - International Firm in a global society
- 1. 16 sep Seminar 1 Group 6:1 The Dominating Multinational and the Coordinating Multinational ERIK ABELSSON DANIEL BARKMAN VERA BATYALOVA ANNELI BUCHT
- 2. 16 sep Agenda The timeline Two different theories Practical examples Summary Break Discussion
- 3. 1900 1950 1970 1960 1900 - 1950 First MNCs World War II Portfolio theory 1980 1990 2000 2010 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion 988 47
- 4. 1900 1950 1970 1960 1980 1990 2000 2010 1960 1891 988 47 16 sep History How is it that firms can establish and run a business operation in a host country in competition with local firms in a situation where the foreign investors suffer from a lack of knowledge of how to do business in that country? -Stephen Hymer Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 5. 1900 1950 1970 1960 1980 1960 Industrial Organisation Theory A theory of Foreign Direct Investment The Dominating Multinational 1990 2000 2010 16 sep History Dominating perspective Coordinating perspective Examples Summary 1891 Break Discussion 988 47
- 6. 1900 1950 1960 1970 1980 1990 The Dominating Multinational Market Imperfection Monopolistic Advantages Removal of conflicts 2000 2010 16 sep History Dominating perspective Coordinating perspective Examples Summary 1891 Break Discussion 988 47
- 7. 1900 1950 1960 1970 1980 1990 2000 2010 16 sep History 1970 Dominating perspective ca 4000 Coordinating perspective Examples 1891 988 47 Hymers theory started to develop into new theories Summary Break Discussion
- 8. 1900 1950 1960 1970 1980 1990 2000 The new route ca 4000 2010 16 sep History Dominating perspective Coordinating perspective Examples 1891 988 47 Why is this operation carried out by the firm itself, and not sold to a local firm through the issue of, for instance, a license? Summary Break Discussion
- 9. 1900 1950 1960 1970 1980 1970-1980 The Internalization Theory ca 4000 1. Coordinating interdependet economic activites 2. Firm-specific assets is a key to the MNCs existens 1990 2000 2010 16 sep History Dominating perspective Coordinating perspective Examples Summary 1891 Break Discussion 988 47
- 10. 1900 1950 1970 1960 1980 1990 2000 Transaction Cost Economics Four components: -Uncertainty 2010 16 sep History Dominating perspective Coordinating perspective -Small-numbers bargaining Examples -Bounded rationality Summary -Opportunism Break Discussion
- 11. 1900 1950 1960 1970 1980 1990 The Dominating Multinational vs. 2000 2010 16 sep History Dominating perspective Coordinating perspective Examples Summary The Coordinating Multinational Break Discussion
- 12. 1950 1900 1970 1960 1980 1990 2000 2010 16 sep Market Imperfection History Dominating Firms special advantage (patent, barriers to entry ,etc) Coordinating Transactional cost Dominating perspective Coordinating perspective (uncertainty, opportunism ,etc) Examples Monopolistic advantage Cost minimizing behavior Summary Structural imperfection Natural imperfection Break Discussion
- 13. 1900 1950 1970 1960 1980 1990 2000 2010 16 sep Control History Coordinating Dominating Raising Revenues Minmizing transaction costs Monopolistic Advantage Coordinate transactions Hierarchy Hierarchy Removal of conflict Internalize transactions Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 14. 1900 1950 1970 1960 1980 1990 2000 2010 16 sep The role in society History Coordinating Dominating Market Power and Monopolistic Advantages Best at organizing certain economic activities Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 15. 16 sep Practical Examples History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 16. 16 sep History Retail industry Founded 1943 298 warehouses in 26 countries Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 17. 13 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 18. 16 sep Competitive advantages The timing in history Design, flat packs and selfassembly Marketing and branding Location specific advantage History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 19. 16 sep History Economic Affairs Secretary Arvind Mayaram said the Foreign Investment Promotion Board has cleared Ikeas proposal to invest 1.5 billion ($1.9 billion) to set up 25 stores in India. -Forbes Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 20. 13 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 21. 16 sep Short discussion History Dominating perspective Coordinating perspective Examples Summary Break Considering the good and bad consequences of MNCs to society, does one outweigh the other? Discussion
- 22. 16 sep History Dominating perspective Motor vehicle industry Founded 1908 Coordinating perspective Brands: Chevrolet, Cadillac, Opel, Baojun Examples +212 000 employees Acts on all six continents Summary Break Discussion
- 23. 16 sep History Dominating perspective Coordinating perspective Cost minimizing behavior Difference in location Summary Transactional costs Break Internalize market Discussion Examples
- 24. 16 sep History Dominating perspective Coordinating perspective Tried the market through outsourcing Rising transactional costs Summary Problem with knowledge transfer Break More and more internalized Discussion Examples
- 26. 16 sep History 15 m break After the break, you will work together in your seminar groups during the discussion part. Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 28. Discussion Question 1: Both the dominating and the coordinating theory are based on market imperfection. Do you consider market imperfection to be the main stimulus for the establishment of multinational firms? 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 29. Discussion Question 2: How would you describe IKEA from the coordinating theory? How would you describe GM from the dominating theory? 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 30. Discussion Question 3: When Forsgren talked about the beauty and the beast, is it the choice of theory which decides our perception of the MNCs? 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 31. Discussion Question 4: Internalization theory argues that MNC卒s have positive impacts on the welfare and society. Do you see any danger with multinationals growing uncontrolled? 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion
- 32. Discussion Question 5: Are MNCs strong enough to stand the test of time? Will they live on forever? (Consider the waves of globalization and GMs bankruptcy) 16 sep History Dominating perspective Coordinating perspective Examples Summary Break Discussion