International Finance

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Chapter 1 – Globalization and the Multinational Enterprise
Eiteman, Stonehill & Moffett
Multinational Business Finance, 12th Ed

A Multinational Enterprise (MNE) is one that has operating subsidiaries, branches, or affiliates located in foreign countries. a. MNEs may be headquartered anywhere in the world. b. MNEs are often owned by a mixture of domestic and foreign stockholders. c. Ownership in a MNE may be so dispersed internationally that they may be known as transnational corporations. d. MNEs are often managed from a global perspective rather than from the perspective of any single country. e. The term enterprise is used rather than corporation because as business move into many emerging markets, they will enter into business arrangements with various types of enterprises that are not corporations such as joint ventures, strategic alliances, or simply operating agreements with enterprises that may not be publicly traded or even privately owned, but are actually extensions of the government.

Domestic firms may export their products or not. Domestic firms may license foreign firms to conduct the domestic firm’s foreign business. Domestic firms are not protected from international competition. Purely domestic firms must understand the multinational nature of business today.

Globalization and Creating Value in the Multinational Enterprise

To become a successful multinational enterprise requires (1) an open marketplace, (2) high quality strategic management (the ability to manage people and see profitably productive opportunities) and (3) access to capital. (See Exhibit 1.1). An Open Marketplace is another term for Free Trade or free movement of labor, capital, technology, innovation and entrepreneurship. Strategic Management is the ability to see business opportunities and attract the…...

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