Summary: Theories Of International Management

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• What is a MNE?

  A multinational enterprise can be defined as ‘a firm that owns and/or controls value creating activities in two or more different countries. An MNE is a firm that uses FDI to establish or purchase income-generating assets abroad, but may also trade goods and services across international borders

• What are four characteristics of FDI to the firm from the home country

  1) Nature of the firm changes --> becomes an MNE
  2) It has high commitment
  3) They do a long-term investment
  4) The management is interested in exercising a certain degree of control

• What are two characteristics of FDI to the host country?

  1) FDI is a change for a direct injection in the economy
  2) FDI comes at a cost of local firms going out of the industry & any wider benefits to the local economy are uncertain 

• At which four levels is analysis performed in IB?

  1) Country level
  2) MNE level
  3) Subsidiary level
  4) Individual level

• Which different views/levels of analysis are performed in IB

  1) resource based view
  2) industry based view
  3) institutional based view

• What are factors that explain country level analysis?

  - international economics
  - national economics
  - macro-level investments
  - trade flows
  - national statistics on trade and FDI

• Why did analysis shifted from country level to MNE level?

  Hymer established a distinction between financial investments and foreign direct investments: gives the firm control over business activities in other countries.

• What is the result of country specific advantage?

  That differences in factors across borders lead to international transactions, whether transfers of capital or goods.

• What is the implication of the product life cycle to international business?

  industry change may force firms to relocate parts of their business to other countries

• How can firms utilize a FSA?

  It allows them to overcome liability of foreignness (the cost of doing business abroad, derived from the lack of knowledge of the host market)