Prof. José Paulo Esperança - APDSI

Conferência: “Internacionalização das Empresas Portuguesas no

Domínio das TIC”20 de Outubro de 2009

Centro Europeu Jean Monnet

Prof. José Paulo Esperança ISCTE

Patrocínio: Patrocinadores Globais

InternacionalizarInternacionalizar ouou nãonãoInternacionalizarInternacionalizar: : eiseis a a QuestãoQuestão

JOSÉ P. ESPERANÇA

ISCTE/IUL

[email protected]

Conferência Internacionalização das Empresas Portuguesas noDomínio das TIC, 20 de Outubro

SMALLER BUT NOT FLAT WORLD

BRIEF BIBLIOGRAPHY

ROOT, Franklin S. (1998), Entry Strategies for

International Markets, Jossey Bass Wiley, San

Francisco.

Bartlett, C. and S. Ghoshal (2000) "Transnational

Management", Addison Wesley.

Articles: COVIELLO, N. (2006) “The Network Dynamics of

International Joint Ventures”, journal of International

Business studies”, 37, pp. 713-731.

HENNART J.F. (1991) "Control in MNEs: The Role and

Price of Hierarchy", Management International

Review, pp. 71-96.

MARTINEZ, J., J. ESPERANÇA and J. de la TORRE

(2005) Organizational Change Among Emerging Latin

American Firms: From “Multilatinas” to

Multinationals, Management Research, Fall, N. 3 (3).

Oviatt, B. e P. Mcdougall (1995) “Global Start-ups:

Entrepreneurs on a Worldwide Stage”, Academy of

Management Journal, Vol. 9, N. 2, pp. 30-43.

PERLMUTTER, H. (2000) “The Tortuous Evolution of

the Multinational Corporation”, in Transnational

Management, by Bartlett and Ghoshal.

PORTER, M. (1986) “Changing Patterns of International

Competition”, California Business Review, Vol. 28,

pp. 9-40.

Contents

1.1.The Evolving Context of International BusinessThe Evolving Context of International Business

2.Strategies for Foreign Markets

3. Born Globals and Emerging Multinationals

FOREIGN INVESTMENT

FORMS OF FOREIGN INVESTMENT

� Foreign Direct Investment (FDI)

� Portfolio investment

MAIN FDI GOALS

� Access to markets

� Access to production factors

� Production efficiency

� Knowledge

� Political safety

TYPES OF FDI

GREEN FIELD INVESTMENT

� Typical of MNE’s with larger experience in foreign markets

ACQUISITION

� Preferred by firms at an early internationalization stage

� Avoids fostering competition, while enhancing the

concentration benefits

� Limits strategic consistency within the MNE

FDI VS. TRADE AND GDP

AVERAGE ANNUAL GROWTH RATES (70-97) – WORLD LEVEL

� FDI 7,7 %

� Trade 5,2 %

� GDP 2,6 %

Source: World Investment Report (UNCTAD)

TRIAD – FDI FLOWS (1999)

Source: World Investment Report 2001 (UNCTC)

European Union

JapanUSA

554 512

48

177

17 76

The World Population and Income Pyramid

Emerging Markets are Climbing the Technology Ladder

Source: Federico Bonaglia, OECD development Center, 2007

Modular product architectures and global innovation

networks (computer versus ipod)

Source: Dedrick and Kraemer (2007), “Globalization of Innovation: The Personal Computing Industry”

FDI INWARD STOCK (2005)

Source: World Investment Report 2006 (UNCTAD)

Ranking Country/Region Stock ($) Stock (%)

World 10.130,0 100,0%

1 United States 1.626,0 16,1%

2 United Kingdom 817,0 8,1%

3 France 601,0 5,9%

4 Hong Kong 533,0 5,3%

5 Germany 503,0 5,0%

6 Belgium 492,0 4,9%

7 Netherlands 463,0 4,6%

8 Spain 368,0 3,6%

9 Canada 357,0 3,5%

10 China 318,0 3,1%

28 Portugal 65,0 0,6%

(billions of $US dollars)

FDI STOCK FROM MIDDLE-INCOME COUNTRIES

Country 1990 2000 2005Annual Growth

1990-2005

World 1.791.092 6.471.435 10.671.889 12,64%

Spain 15.625 167.719 381.319 23,74%

Brazil 41.044 51.946 71.556 3,78%

Argentina 6.057 21.141 22.633 9,19%

Chile 154 11.154 21.286 38,90%

Portugal 900 19.552 44.457 29,69%

Mexico 2.672 8.273 28.040 16,97%

Hungary 197 1.280 6.604 26,38%

(millions of $US dollars)

Source: World Investment Report 2006 (UNCTAD)

BRIC and OECD average scores across the 12 pillars of the GCI (2009)

Fonte: Djankov, La Porta, e outros, WP 2001, “The Regulation of Entry

Complex Bureaucracy: France


Minimum Bureaucracy: New Zealand


Corruption and Bureaucracy

Contents




THE MULTINATIONAL ENTERPRISE

DEFINITION:

� The MNE is a firm carrying out value adding activities in more

than one country

TYPES OF MULTINATIONAL ENTERPRISES

� Polycentric or Multidomestic

� Geocentric or Global

� Ethnocentric

� Regiocentric

Source: Casson, Perlmutter, Porter

FDI AND PRODUCT LIFE CYCLE - VERNON

Sales

Time

Phase I

New products are launched in the home market

Phase II

Expansion takes place in similar markets

Phase III

Low cost production are actively searched

Phase IV

Decline fosters concentration on low cost locations

TYPES OF MNEs

Source: Bartlett and Ghoshal

Global Integration(Global Enterprise, Japanese)

Worldwide Learning(International Firm, American)

Local Adaptation(MNE, European)

TRANSNATIONAL CORPORATION

Source: Bartlett and Ghoshal

Local Adaptation

Global Integration

Worldwide Learning

DECENTRALIZED FEDERATION

Source: Bartlett and Ghoshal (2004, Ch. 4)

Mainly financial

flows (capital out,

dividends back)

Loose, simple controls

(strategic decisions

decentralized)

COORDINATED FEDERATION


Mainly knowledge

flows (technology

products,

processes,

systems)

Formal system controls (planning,

budgeting, replicating parent

company administrative system)

CENTRALIZED HUB


Mainly flows of

goods

Tight, simple controls (key

strategic decisions made centrally)

ORGANIZATIONAL CHARACTERISTICS OF MNEs

DECENTRALIZED FEDERATION

COORDINATED FEDERATION

CENTRALIZED HUB

STRATEGIC APPROACH

KEY STRATEGIC CAPABILITY

CONFIGURATION OF ASSETS AND CAPABILITIES

ROLE OF OVERSEAS

OPERATIONS

Sensing and exploiting local opportunities

Knowledge developed and retained within each unit

Multinational

National responsiveness

DEVELOPMENT AND DIFFUSION OF KNOWLEDGE

Decentralized and nationally self-sufficient

Adapting and leveraging parent-company competencies

Knowledge developed at the center and transferred

to overseas units

International

Worldwide transfer of home country innovations

Implementing parent-company strategies

Knowledge developed and retained at the center

Sources of core competencies centralized,

others decentralized

Centralized and globally scaled

Global-scale efficiency

Global


INTEGRATED NETWORK


Distributed,

specialized

resources and

capabilities

Complex process of coordination and

cooperation in an environment of

shared decision making

Large flows of

components,

products, resources,

people and

information among

interdependent units

INTERNATIONAL JOINT VENTURES

Multinational Parent Company

Local Parent Company

International Joint Venture

Technology, Capital

Local Knowledge

Typical International Joint Venture

MOST VALUABLE BRANDS (2007)

Source: Business Week/Interbrand

1 Coca-Cola $65,32 Billion

2 Microsoft $58,71 Billion

3 IBM $57,09 Billion

4 General Electric $51,57 Billion

5 Nokia $33,70 Billion

6 Toyota $32,07 Billion

7 Intel $30,95 Billion

8 McDonald's $29,40 Billion

9 Disney $29,21 Billion

10 Mercedes-Benz $23,57 Billion



11 Citi $23,44 Billion

12 Hewlett-Packard $22,20 Billion

13 BMW $21,61 Billion

14 Marlboro $21,35 Billion

15 American Express $19,64 Billion

16 Gillette $20,42 Billion

17 Louis Vuitton $20,32 Billion

18 Cisco $19,10 Billion

19 Honda $18,00 Billion

20 Google $17,84 Billion



21 Samsung $16,85 Billion

22 Merrill Lynche $14,34 Billion

23 HSBC $13,56 Billion

24 Nescafé $12,95 Billion

25 Sony $12,91 Billion

26 Pepsi $12,89 Billion

27 Oracle $12,45 Billion

28 UPS $12,01 Billion

29 Nike $12,00 Billion

30 Budweiser $11,65 Billion

Contents




New MNEs versus Traditional MNEs

Source: AMP, 2009,

Expansion Paths

Motivations for FDI

Intangible Assets

THE MULTINATIONAL ENTERPRISE

Source: Martinez et al (2005)

Local

Environment

Domestic

Company

“Professionalization”

Process

International

Environment

Emerging

MNC

Internationalization

Process

Global

Environment

Experienced

MNC

Consolidation /

Rationalization

Process

THE EMERGING MULTINATIONAL


Inte

grat

ion o

f A

ctiv

itie

s

Localization of Activities

Low High

Low

HighExperienced

MNCs

Greater use of Coordination and Control Mechanisms

Emerging MNCs

Minor use of Coordinating Mechanisms



MLs MNCs

Number of Employees Worldwide n 11,290 55,114 ***

Total Global Sales Millions of $US dollars 1,238 13,956 ***

Sales in Home Region % 76 58 ***

R&D Intensity Low(1) - High (7) 2,10 3,63 ***

Rate of Introduction of New Products Low(1) - High (7) 3,20 3,81 *

Homogeneity of Demand Dissimilar(1) - Homogeneous(7) 4,55 5,07 *

Domestic Competition Local Firms(1) - Subsidiaries MNCs(7) 3,57 4,52 **

*p<0,1; **p<0,05; ***p<0,01

MeanT-Test

SignificanceVariables Scale



MLs MNCs

Locus of Decision Making (a) Autonomy(1) - Centralization(7) 3,72 3,99 -

Formalization of Corporate Relations Very Low(1) - Very High (7) 4,18 4,79 *

Strategic Planning and Budgeting Annual Budget(1) - Complex(7) 4,13 4,68 *

Corporate Control and Reporting (b) Inexistent/Annual(1) - Frequent(7) 2,31 3,41 ***

Coordination Mechanisms (c) Rare(1) - Frequent(5) 3,12 3,18 -

Socialization or Acculturation Diverse Culture(1) - Common Culture(7) 5,18 4,96 -

Regional Coordination (d) Increased(1) - Decreased(7) 2,27 2,04 **

*p<0,1; **p<0,05; ***p<0,01

MeanT-Test

SignificanceVariables Scale

PORTUGUESE TRANSNATIONAL CORPORATIONS

Amorim Sonae

Cimpor Logoplaste

Caixa Geral de Depósitos Grupo Pestana

Millennium BCP Portugal Telecom

BES YDreams

GRUPO AMORIM

Amorim Capital, SGPS, S.A. 67,791%

Luxor, SGPS, S.A. 2,308%

Millennium BCP - Investimentos, S.A. 2,960%

Portus Securities, Sociedade Corretora, S.A. 5,564%

Others 21,377%

Shareholder Structure - 2007

Portugal Denmark Hungary Brazil Morocco

Spain Germany Italy Argentina Algeria

France Poland Bulgaria Chile Tunisia

UK Switzerland Moldavia Russia South Africa

Netherlands Austria USA China Australia

Countries

Source: www.amorim.com

CIMPOR

Production % Production %

Portugal 7,0 36,8% Egypt 3,8 20,0%

Spain 2,6 13,7% South Africa 1,0 5,3%

Mozambique 0,8 4,2% Cape Verde - -

Morocco 1,2 6,3% Turkey 2,5 13,2%

Brazil 5,8 30,5% China 1,8 9,5%

Tunisia 1,6 8,4%

(millions of tons/year) (millions of tons/year)

Source: www.cimpor.pt

CAIXA GERAL DE DEPÓSITOS

Portugal USA

Germany Mexico

Andorra Venezuela

Belgium South Africa

Spain Cape Verde

France Mozambique

Luxembourg S. Tomé e Principe

Monaco China

Norway India

UK Timor

Sweden

Switzerland

Brazil

Countries

Source: www.cgd.pt

MILLENNIUM BCP

Poland Bank Millennium

Greece Millennium Bank

Turkey Millennium Bank

Mozambique Millennium Bim

Angola Banco Millennium Angola

USA Millennium BCP

Countries

Workers 1,060%

Others (Individuals) 17,320%

Others (Companies) 8,410%

SGPS 16,940%

Portuguese Organizations 19,610%

Foreign Organizations 36,66%


Source: www.millenniumbcp.pt

BES

Bespar 40,000%

Crédit Agricole 10,800%

Portugal Telecom 4,000%

Bradesco 3,100%

Others 42,100%


Source: www.bes.pt

SONAE

Source: www.sonae.pt

- Portugal - Portugal

- Spain

- Greece

- Germany

- Italy

- Brazil

- Portugal - Portugal

- France

- Brazil

LOGOPLASTE

Portugal 17 Factories

Spain 5 Factories

United Kingdom 6 Factories

France 4 Factories

Czech Republic 1 Factory

Countries

Source: www.logoplaste.com

GRUPO PESTANA

Portugal 22 Hotels

Brasil 8 Hotels

Mozambique 3 Hotels

South Africa 1 Hotel

Cape Verde 1 Hotel

Argentina 1 Hotel

S. Tomé e Principe 1 Hotel

Countries

Source: www.pestana.com

PORTUGAL TELECOM

Angola (Unitel) 517 millions of Euros

Morocco (Meditel) 425 millions of Euros

Namibia (MTC) 116 millions of Euros

Cape Verde (CVT) 63 millions of Euros

S. Tomé e Principe (CST) 9 millions of Euros

Macau (CTM) 209 millions of Euros

Timor (Timor Telecom) 18,5 millions of Euros

Brazil (UOL) 176 millions of Euros

Countries - Revenues (2006)

Telefónica 9,96%

Espirito Santo Group 7,77%

Brandes Investments Partners 7,41%

Onging Strategy Investments 5,35%

CGD Group 5,11%

Telmex 3,41%

Paulson & Co. Inc. 2,34%

Fidelity 2,09%

Barclays Group 2,06%

Capital Group Companies 2,04%

Visabeira Group 2,01%

Others 50,45%

Shareholder Structure

Source: www.portugaltelecom.pt

YDREAMS

CLIENTS

�Adidas

�BBC

�Chelsea FC

�Compal

�European Union

�Portugal Telecom

�Rock in Rio

�SICSource: www.ydreams.com

In 1987, two frinds, Robert and Fernando, launched the first Nando’s restaurant ina poor quarter of Johannesburg.

Nando´s – The Origin

Nando´s – Tradition

Nando´s operates in 33 countries from 5 Continents

Nando´s – Expansion

InternacionalizarInternacionalizar ouou nãonãoInternacionalizarInternacionalizar: : eiseis a a QuestãoQuestão

OBRIGADO!

Conferência Internacionalização das Empresas Portuguesas noDomínio das TIC, 20 de Outubro

Prof. José Paulo Esperança - APDSI

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