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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/