EXPANDING EXPANDING ABROADABROAD

Motives, Means, Mentalities Motives, Means, Mentalities

MNEMNE Operates globally and adjusts Operates globally and adjusts

products to countryproducts to country QualificationsQualifications

Direct investment in foreign countriesDirect investment in foreign countries Not just import-export businessNot just import-export business

Manage operations as essential parts of Manage operations as essential parts of companycompany

Why Internationalize?Why Internationalize? Traditional motives:Traditional motives:

Secure key suppliesSecure key supplies Market-seekingMarket-seeking Access low-cost factorsAccess low-cost factors

Current motives:Current motives: Scale economies, R&D investment Scale economies, R&D investment

inflating, shortened product life cyclesinflating, shortened product life cycles Global scanning/learningGlobal scanning/learning Competitive positioningCompetitive positioning

PhasesPhases InnovationInnovation Demand overseas Demand overseas

growsgrows Company moves to Company moves to

low-wage countrylow-wage country Develop at lower Develop at lower

costcost

Prerequisites to become Prerequisites to become MNEMNE

Must have:Must have: Location specific advantageLocation specific advantage

Foreign motivation to investForeign motivation to invest Strategic competenciesStrategic competencies

Owner/MGT skills to overcome foreignnessOwner/MGT skills to overcome foreignness Organizational capabilitiesOrganizational capabilities

How?How? Uppsala ModelUppsala Model

Gain experience in foreign marketGain experience in foreign market Start close Start close move further move further Traditional exports Traditional exports demanding demanding

operationsoperations Invest in local partners as shortcutInvest in local partners as shortcut High commitment-high controlHigh commitment-high control

MentalitiesMentalities InternationalInternational MultinationalMultinational GlobalGlobal TransactionalTransactional

Acer, IncAcer, Inc

FoundationsFoundations Did not expand too quicklyDid not expand too quickly Employee ownershipEmployee ownership Avoid debtAvoid debt Acer 1-2-3Acer 1-2-3 Employee “think and learn”Employee “think and learn”

Leonard LiuLeonard Liu Acer stock crashed Acer stock crashed

in late 1980’s below in late 1980’s below market indexmarket index

Liu introduced Liu introduced accountability for accountability for profit and loss to profit and loss to managersmanagers Challenged Challenged

traditional idealstraditional ideals Evaluations Evaluations

LayoffsLayoffs

Should Acer, Inc Should Acer, Inc continue…?continue…?

EPGEPG EthnocentricEthnocentric

Home managers more capable than non-nativeHome managers more capable than non-native PolycentricPolycentric

Host country knows what’s best for its peopleHost country knows what’s best for its people GeocentricGeocentric

Hire best men for the job no matter the Hire best men for the job no matter the nationalitynationality

RegiocentricRegiocentric More than one country (NAFTA)More than one country (NAFTA)

Distance is aDistance is a“Multidimensional “Multidimensional

Construct?”Construct?”