Multinational Financial Management Alan Shapiro

8th Edition J.Wiley & Sons

Power Points by

Joseph F. Greco, Ph.D.

California State University, Fullerton

CHAPTER 1

Introduction: Multinational Enterprise

and Multinational Financial Management

3

PART I.THE RISE OF INTER-MODAL

INTERNATIONAL TRADE

A. THE REVOLUTION IN WORLD TRADE AND FINANCE (1985)1. Containerization

a. Containers (20’ (TEU) and 40’)

b. Make Inter-modal transport possible

4

This New Method of Shipping Has Revolutionized Global Trade and Finance

5

CARGO CRUSH

NO. 1

Long B

- IN MILLIONS OF TWENTY FOOT CONTAINERS (TEUs)

7.57.3

6.75.8

NY/NJ

LA

Source: L.A. Times, C-1, 2/4/2006

NO. 3 4.84.5

NO. 2

= 2005

= 2004

6

World’s Top 5 Container Ports

0

5

10

15

20

25

2005

Singapore

Hong Kong

Shanghai

Shenzhen

LA/ LongBeach

Pusan

Source: L.A. Times C-1, 2/22/2006

Millions of Twenty Foot Containers

7

Port of Long Beach/Los Angeles

                                                                                           

                             

8

A Containerized Port in China

9

                                                     

               

10

                                                     

               

11

                                                      

              

12

Containerized Shipping isIntermodal

By rail mode

By air mode

By ground mode

13

A “Small” Container Ship

14

Intermodal Transport

4

The U.S. Land Bridge

15

FromDepartur

eArrival

Transit

Service

Vessel

Long Beach Tue Sep 25 Sat Oct 1318

daysAWEPD Priwall

New York Metro

Mon Sep 17

Tue Oct 1629

daysAWE Lt Genova

Oakland Tue Oct 2Wed Oct

1715

daysPSPD1 H.J. Athens

Le Havre Thu Sep 27Wed Oct

1720

daysCEX H.J. Savannah

Oakland Fri Oct 5 Fri Oct 1914

daysPSPD2

Portugal Senator

Le Havre Fri Sep 28 Fri Oct 1921

daysPDA H.J. Amsterdam

Long Beach Tue Oct 2 Sat Oct 2018

daysAWEPD

German Senator

Voyages to Hong Kong

on Hanjin

The Time Length Of Global Shipping

16

PART 1 THE RISE OF THE MULTINATIONAL CORPORATION

I. The MNC: A Definition

– a company with production and distribution facilities in more than one

country. – with a parent company located in the home

country– at least five or six foreign subsidiaries

17

THE RISE OF THE MULTINATIONAL CORPORATION

The MNC’s EvolutionReasons to Go Global:

1. More raw materials

2. New markets

3. Minimize costs of production

18

THE RISE OF THE MULTINATIONAL CORPORATION

RAW MATERIAL SEEKERSexploit markets in other countries

historically first to appear

modern-day counterparts

British Petroleum

Exxon

19

THE RISE OF THE MULTINATIONAL CORPORATION

MARKET SEEKERSProduce and sell in foreign markets

Have heavy foreign direct investors

Represented today by firms such as:

IBM

MacDonald’s

Nestle

Levi Strauss

20

THE RISE OF THE MULTINATIONAL CORPORATION

COST MINIMIZERSseek lower-cost production abroad

Their motive: to remain cost competitive

Represented today by firms such as:

Texas Instruments

Intel

Seagate Technology