Case Study

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CHAPTER 1

Expanding Abroad:

Motivations, Means, and Mentalities

In this chapter, we look at a number of important questions that companies must resolve

before taking the leap to operate outside their home environment. What market

opportunities, sourcing advantages, or strategic imperatives drive their international

expansion? By what means will they expand their overseas presence—through exports,

licensing, joint ventures, wholly owned subsidiaries, or some other means? How will

the attitudes, assumptions, and beliefs that they bring to their international ventures

affect their chances of success? Before exploring these important questions, however,

we first need to develop a definition of this entity—the multinational enterprise

(MNE)—that we plan to study and develop some sense of its size and importance in the

global economy.

This book focuses on the management challenges associated with developing the strategies, building the organizations, and managing the operations of companies whose activities stretch across national boundaries. Clearly, operating in an international rather

than a domestic arena presents managers with many new opportunities. Having worldwide operations not only gives a company access to new markets and low-cost resources, but also opens up new sources of information and knowledge and broadens the

options for strategic moves the company might make in competing with its domestic and

international rivals. However, with all these new opportunities come the challenges of

managing strategy, organization, and operations that are innately more complex,

diverse, and uncertain.

Our starting point is to focus on the dominant vehicle of internationalization, the

multinational enterprise (MNE), and briefly review its role and influence in the global

economy.1 Only after understanding the origins, interests, and objectives of this key

actor will we be in a position to...