Chapter 1: Globalization and the Multinational Corporations

Power Points created by: Joseph F. Greco Ph. D. California State University, Fullerton Mihaylo College of Business and Economics
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Chapter 1: Globalization and the Multinational Corporations

1.1 Introduction

1.2
1.3

Globalization and the Growth of International Trade and Capital Flows

Multinational Corporations

1.4
1.5

Other Important International Players

Globalization and the Multinational Firm: Benefactor or menace?

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1.1 Introduction
Globalization:
World economy increasingly globalized Increasing connectivity and integration of countries and corporations Multinational corporations (MNCs) dominating the landscape

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1.2 Globalization and the Growth of International Trade and Capital Flows
Globalization: Overview
The Growth of International Trade Trade Liberalization
International Efforts to Promote Free Trade

The Growth in Trade MNCs Are Affecting Free Trade The Globalization of Financial Markets
Trends in Financial Openness The New Financial Landscape

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1.2 Globalization and the Growth of International Trade and Capital Flows
The Growth of International Trade Trade Liberalization Comparative Advantage European Economic Community

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Exhibit 1.1 Trade and Financial Openness

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Exhibit 1.2 Trade Liberalization Dates by Country

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1.2 Globalization and the Growth of International Trade and Capital Flows
The Growth of International Trade International Efforts to Promote Free Trade GATT WTO EU NAFTA ASEAN Recent Developments outsourcing

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1.2 Globalization and the Growth of International Trade and Capital Flows
The Growth of International Trade The Growth in Trade MNCs Are Affecting Free Trade

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Exhibit 1.3 Panel A The Growth in International Trade

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Exhibit 1.3 Panel B The Growth in International Trade

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Exhibit 1.3 Panel C The Growth in International Trade

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1.2 Globalization and the Growth of International Trade and Capital Flows
The Globalization of Financial Market Trends in Financial Openness The New Financial Landscape Derivative security Securitization

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1.3 Multinational Corporations

Multinational Corporations: Overview
Definition of an MNC How MNCs Enter Foreign Markets The Goals of an MNC Corporate Governance Around the World

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Exhibit 1.4 Worlds Top Nonfinancial Transnational Corporations by Foreign Assets

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1.3 Multinational Corporations

Definition of an MNC: A firm that does business in two or more foreign countries

How MNCs Enter Foreign Markets Royalties Licensing Franchising Joint ventures Foreign Direct Investment (FDI)
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1.3 Multinational Corporations

The Goals of an MNC Investment Time Horizon Stakeholder Alternative Agency Theory and Corporate Governance

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1.3 Multinational Corporations

Corporate Governance Around the World Corporate governance differences across countries affects a firms valuation May lead to cross-listing of stocks

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Exhibit 1.5
Methods of Overcoming Agency Problems Due to the Separation of Ownership and Control

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Exhibit 1.6 Panel A Foreign Direct Investment

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Exhibit 1.6 Panel B Foreign Direct Investment

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Exhibit 1.7
Cross-Border Mergers and Acquisitions by Buyer and Seller, 1990-2004 (in the millions of dollars)

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1.4 Other Important International Players International Players

International banks Multilateral Development Banks WTO OECD International institutions
IMF World Bank

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1.5 Globalization and the Multinational Firm: Benefactor or Menace? Two Sides to the Globalization Argument:
Pro: Benefactors

Con: Anti-globalists

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