...Moving Headquarters Overseas MBAA 604 – International Business Administration Embry – Riddle Aeronautical University April 10th, 2015 Instructor Dr. Thomas O’Meara Table of Contents Introduction 3 Case Discussion Questions 4 Summary 7 References 9 Introduction The following case study examines the decision by a multinational enterprise (MNE) to relocate its businessunit and/or corporate headquarter(HQ) overseas.The next section will answer the case discussion questions related to the benefits and drawbacks associated to moving unit and corporate HQ to another country. Case Discussion Questions 1. What are the drawbacks and benefits associated with moving business unit and corporate HQ to another country? According to the closing case, the benefits associated with moving business unit and corporate HQ(headquarters) to another country must significantly outweigh their drawbacks. At the business unit level, it is likely to achieve efficiency gains by moving business unit HQ closer to the center of gravity of the business. The greater the percentage of business activities (sales units, manufacturing units) overseas, the greater the likelihood of business unit headquarters moving overseas. It makes more effective interaction between the different unit activities and encourages development of firm’s core competence. According to Peng, there are five strategic advantages at the corporate level. First, the firm becomes a global player. Second, stakeholders...
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...Management March 17, 2011 Foreign Direct Investment: Vernon’s product life-cycle theory Raymond Vernon’s theory was different than the modern day theories of the 1960’s. Before Vernon, economists thought the reason a country traded with another was because of some advantage it had over the other for producing a product. The advantage was thought to be mostly related to cost; a country could produce it cheaper. Vernon did not agree with this way of thinking. Raymond Vernon believed that products have a life cycle. His theory put emphasis on invention and new products. He believed that most trade came from manufactured products especially products saved consumers time and effort from work. Vernon believed that more advanced or stronger economic countries would focus on developing new products and inventions because those economies would have the economic structure to support research and development (Katsioloudes & Hadjidakis, 2007). Vernon believed that countries varied in economic development and they traded with each other not because they were superior but because it was a good opportunity for both. For example, during the 1950’s and 60’s the United States was a much more developed economic leader than Japan; however, trade between the two countries would not come from the U.S. having an advantage over Japan. It came about because it was to the advantage of both; for the U.S. it meant a chance to grow their market size and for Japan it meant the opportunity to buy...
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...THE HOME DEPOT OVERVIEW Bernie Marcus, Ken Langone and Pat Ferrah created the Home Depot in 1978. Their main vision was “One – Stop shopping for do it your self”. The Home Depot opens its door with two large stores located in Atlanta Georgia in 1979. With operations focus on customer services, The Home Depot provide their clients with highly trained personnel, leading those customers with quality services through different kinds of constructions projects. Their philosophy of customer services “whatever it takes” means purpose on develop customer relationship instead a simple sales transaction. Since its foundation in 1978, The Home Depot has been known as a story of growth; recognized as the fastest growing retailer in United State. In 1981 the company went public and by 1984 moves to the New York Exchange Commission. This kind of financial movement allows the opening of international operations. By 1984 Home Depot was opening operation in Canada by the acquisition of the company called Aiken Heads. After Canada, Home Depot expansion took place with Mexico in 2001 and China in 2006. Through the combination of national brands and products The Home Depot sets the standard for innovate merchandise for do it yourself customers and professional contractors. MARKET SYSTEMS AND LEGAL SYSTEMS With operations in different countries around the world, Home Depot needs to be aware about the different market and legal system that...
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...committed mass murder. Also, there has been a recent influx of immigrants settling in Uganda after fleeing from bloodshed in Rwanda, Zaire, and the Sudan. The government supports nepotism and is concerned to be one of the most corrupt countries in the world. There are few government regulations on the conduct of business which creates a favorable climate for doing business there. Also, electricity is not widely available. The religious terrain includes Christians, Muslims and various animistic religions. 2. With regard to a company, ethnocentrism describes the belief that the methods which work for a company at home will be equally effective abroad any cultural influences. With regard to a company, polycentrism describes the belief that an organization should behave like a local company. A geocentric attitude is one taken by a business wherein it bases its operations on informed knowledge of the needs of both home and host country. M and G: Martin’s attitude is polycentric because he believes in accommodating Ugandan ways of doing business regardless of the conflict with his company’s method of doing business. Green’s attitude is ethnocentric because he believes that the company’s methods should work equally well in Uganda as they do at home. The factors that influenced their respective attitudes are as follows: Green was influenced by the values of L. He knew he would be held accountable for the results of Martin’s decisions and the impact of the company. Green was influenced...
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...and ASSIGNMENTS International Business Strategy INTL 460 SECTIONS 61 and 81 Fall 2008 Professor Daniel F. Spulber Office 606 Leverone 491-8675 E-mail: jems@kellogg.northwestern.edu International Business Strategy Course Description The course defines the objectives and strategies of international business. The course emphasizes economic analysis of international business strategy formulation. Topics covered include gains from trade, costs of trade, and the competitive strategy of the international business. The course considers alternative modes of market entry, including import and export through intermediaries, contracting with suppliers and distributors, strategic alliances and foreign direct investment (FDI). Case studies are used to illustrate the basic principles of multinational business management and strategy. The course introduces the “Strategy Star” analysis. The first week of the course is dedicated to introducing international business strategy and providing a review of the micro-economics concepts that will be employed during the course. The course then introduces the concept of the ‘Global Value Connection.” This concept is used to develop global competitive strategies that depend on doing business between countries. Weeks 2 and 3 present strategies for providing global added value. The course highlights the economic aspects of gains and costs of trade that are relevant to the international business manager. Weeks 4, 5, and 6 develop...
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... Today’s business world continues to evolve to worldly new levels due to the global market. Before globalization began taking place, business was primarily localized or regionalized within villages, townships and kingdoms. The initial changes of transportation’s or shipping’s delivery methods from the beginning of time by just human delivery to the transportation or shipping of goods and people by methods using horses, donkeys, camels, elephants and other animals began to change access to goods and services from more distant areas, lands and cultures. The innovative minds of humanity began the progression of new transportation, travel, shipping and delivery methods with the inventions of wagons, boats, trains and airplanes. These inventions changed the access to goods and peoples from every point on the globe, resulting in numerous progressions and changes to travel, business and industry around the world. Other new technologies of the telegraph, phone, radio, televisions, satellites and the computer have all changed the communication techniques and access to people and information all over the globe. Where it once took possibly hours, days, weeks and even months for communications or information to flow from different locations, the world is able to communicate or access information in seconds today. Different cultures began the progression from receiving goods and communicating with other cultures to traveling and relocating to other cultures and countries around the...
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...flows between countries Most countries go internationally to get more opportunities and have new markets. The screening approach helps companies to select the countries that will be profitable to enter. However, there are many differences between the host and the home country which will cause the failure of the company in the host country if did not count. When entering a new market, the company must begin with exploring this market, knowing their culture, economic and political issues that will help in establishing a business or taking serious decision. Cultural distance: Values, beliefs, and attitude are the basics of each culture that influences the individual's perceptions, preferences, and behaviors which are the causes of the uniqueness of every society or country. The differences between the culture in the home country and the host country are called the cultural distance. The cultural cause has considered as a major element in the international business, also regarded as the main figure of entry choice, which is a key to the foreign market investment success....
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...many Multinational Corporations that seek to explore new markets, increase sales and profits. Expanding to overseas markets is every home-based business’ desire in the long run; most companies pounce on the opportunity as soon as it presents itself. Internationalization however poses business challenges in product selection, marketing and ethical issues. Companies e.g. Daewoo that expanded rapidly into international fora oblivious of these challenges lost not only their business in the host countries but also valuable capital investments. Ethical challenges are however the most common and contentious. This is occasioned by differences in the requirements of home and host countries (DeGeorge, R.T. (15). For instance, friendly payments are called gift-giving in China while as in USA it is considered bribery. In addition, the religious beliefs of the majority in a country also influence its perception of business ethics. In India, for instance, it is unethical to eat beef; in Pakistan, it is abominable to eat pork. As such, companies must adhere to both the legal ethical requirements as well as societal ethical requirements to succeed in international markets. One major ethical difficulty is questionable payments. In many countries, especially in the East and in Africa, bribes and gift-giving are a social norm, especially for large value business deals. The Lockheed Corporation was locked in a devastating international corruption scandal in 1975-1977. The company had given millions...
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...dilemmas that face multinational companies. Pay particular attention to the problem of different standards for business practice. Cite your sources using proper APA style. Respond to at least two of your classmates' postings. Multinational companies face ethical dilemmas magnified by the international context. Multinational companies operate across many countries; each country has its own culture and laws, and their own diverse social norms and ethical practices. In order to move into new markets and increase their profits they operate in multiple host countries. The laws, rules and regulations that govern how business is conducted set by the governments of these host countries are very different from those set by the home country of such multinational companies. Multinational companies find themselves confused by these laws, rules and customs of the host nation in which they conduct business. Should they do as the locals do or should they conform to the different and even conflicting cultural and ethical guidelines of their home countries? What could be viewed as ethically right in the home country may be absolutely considered wrong in the host country, and vice versa. In this sense, what constitutes an ethical act depends on where the multinational company is operating. A society’s culture is a good indication of what type of business behavior is considered right or wrong. Charles Mitchell and Jeffrey Edmund (2008) write, “Culture is a set of...
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... a. What are the bases for the claim that most multinationals are regional? The primary bases for the claim that most multinationals are regional are first the extraction of revenue by many “global” multinationals is confined to a region as opposed to the entire world, and second the similar market environment within certain region makes regionalization much more practical than globalization. First, Revenue generation in terms of geographic location is limited to specific regions or area, oftentimes geographically proximate regions. Rugman’s research uses the term home country to refer to the phenomenon that the home country diamond among countries in the same region is more similar to one another than the diamonds between a country in home country region and foreign country region. Therefore, adjacent markets are more likely to be similar to one another in in terms of business environment than home and foreign markets. More specifically, referring to the table 1 in the Rugman’s research, amongst fortune 500 firms, many have much higher intra-regional sales than foreign sales. This means that truly global, having penetrated the global market, multinationals are not common. Second, similar market environment within certain regions makes the exchange of products and services take place within a region than around the world. Based on the double diamond framework, the implication is that there are primary factors that affect a corporation’s market expansion: factor condition...
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...as more and more countries become open to the idea of relocation. In our case, we saw examples of big multi-national companies moving headquarters across continents, like Nokia moving from Finland to the United States, IBM from the United States to China and HSBC from London to Hong Kong. This report will examine the reason behind this phenomenon and what are the consequences as a result of that. There are some key reasons that lead to this trend. i) Moving closer to the Asian market As Asia continues to charge ahead in its development, many companies want to fight for a slice of the pie and are moving into Asia to take advantage of the growing demand there. For example, Procter & Gamble (P&G) has this year moved its global headquarters for their beauty and baby-care business, including its biggest brand, Pampers, from Cincinnati to Singapore. They have expressed that the move to Singapore was motivated by a need for P&G brands to be closer to the growing number of consumers in Asia. As we can see from this, multi-national companies see the importance of the Asian market and believe that in order to take advantage of the potential there, need to relocate their headquarters. It is no longer enough to just have operations in Asia, but it is also helpful to have headquarters within the region to facilitate development. ii) Moving away from heavy corporate taxes The next trend is that of companies moving their headquarters out of countries that have heavy corporate...
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...Part III Jamey Gifford MGT 350 University of Phoenix Decisions in Paradise After making the proposal of establishing The Home Depot in Kava, there still has to be ways on how to implement this correctly. Implementation of this kind of decision should not be taken lightly. Many factors need to be considered and taken care of before work can start. The company cannot only think about the factors that might affect the company but also the factors that might affect the citizens in Kava. Beside the factors that might affect the implementation of the decision, the company still has to think of the resources that will be used in the implementation of the decision. The company must think about the courses of actions that need to be taken to accomplish the proposal. Last, the company must consider ethical issues. The organization cannot just implement all the decisions that the organization wants to implement in a foreign country like Kava. The company has to think of the wellbeing of the people there and many other factors that make up the ethical aspects of establishing greater presence in Kava. Because Kava is known as a disaster-prone area, one factor that may affect the decision implementation is the environmental factor. Kava is known for their disasters like hurricanes and other natural disasters. Although disasters happen this must not stop The Home Depot from perusing their goals. But the organization cannot ignore the possibility that it can also affect the implementation...
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...it 4 Department of Electric, Managerial and Mechanical Engineering, Via Delle Scienze, 206, 33100 UDINE UD ITALY nassimbeni@uniud.it 5 Department of Management, University of Bologna Via U. Terracini 28, 40131 BOLOGNA BO ITALY andrea.zanoni@unibo.it ABSTRACT Interest in back-reshoring strategies – intended as companies’ decisions to reverse previous off-shoring by bringing manufacturing back home – has gained momentum recently. However, little is known so far about the magnitude of this phenomenon, about its geographical boundaries, and about the underlying motivations. In this paper a characterization of back-shoring as part of the dynamics of firms’ internationalization strategies is offered. Next, building on emerging empirical evidence, open questions are identified and an agenda for research is proposed. KEYWORDS Reshoring Back-reshoring Near-reshoring Off-shoring Internationalization 1. Introduction In the last few years numerous manufacturing companies have announced the return of part of their off-shored production (either in-sourced or out-sourced) to their home countries. Industrial giants such as Caterpillar, Bosch, and Philips are featured among them, but also a plethora of smalland medium-sized enterprises that are reconsidering their international...
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...2012 Intercultural Change Rio de Janeiro In Brazil, there are many cultural differences than in America where the corporate headquarters of the construction firm is. The Brazilians are fun loving people no matter what part of the country you visit. In Rio de Janeiro, were the Skyscraper is to be located, it is particularly true. To this culture, life is a party. In greeting it is common to receive a hand shake and a kiss on the cheek. An important part of this is that a woman shaking a man’s hand – she offers her hand first, in no way is the man to offer a hand shake to the woman. The primary language of the land is Portuguese, although some regions of the country also speak Spanish. Portuguese is one of the most difficult languages in the world, it is important to have a translator present when in that country. A translator form Brazil is preferred but not mandated. Greetings in Brazil are informal and meetings there are also. Personal meetings are a must when doing business with Brazil as the people do not like to do business only in an electronic nature. That is not to say once the meet and great is done, they will not maintain the future communications that way. Major decisions however, need to be done in a face to face meeting. That country gives a peaceful and pleasant experience with no racism as it is greatly integrated with centuries of culture. This may be why the corporation has chosen to build the world tallest skyscraper there. China The Chinese take great pride...
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...Host Country: Advantages 1. The investment level, employment level, and income level of the host country increases due to the operation of TNC's. 2. The industries of host country get latest technology from foreign countries through TNC's. 3. The host country's business also gets management expertise from TNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of TNC's. 5. TNC's break protectionism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of TNC's. 7. The host country can reduce imports and increase exports due to goods produced by TNC's in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of TNC's in the host country. Disadvantages 1. TNC's may transfer technology which has become outdated in the home country. 2. As TNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. TNC's may damage the domestic industry by monpolising the host country's market. 4. In order to make profit, TNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty. Home Country: Advantages ...
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