Multinational Manufacturing Strategies

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Questions and Answers

What type of firms were pioneers of the capital-intensive technologies of the Second Industrial Revolution?

The firms that pioneered the capital-intensive technologies of the Second Industrial Revolution were multinational.

Which industries were the post-World War II successors of the industries that pioneered the technologies of the Second Industrial Revolution?

  • Automobile producers (correct)
  • Pharmaceuticals (correct)
  • Chemicals
  • Electricals
  • Computers (correct)
  • Machinery
  • Telecoms (correct)

Multinational manufacturing existed before the 19th century.

False (B)

What is the name of the German firm that pioneered the development of telegraph and cable equipment in the 1850s?

<p>Siemens and Halske</p> Signup and view all the answers

What company is considered the first successful US multinational manufacturer?

<p>Singer</p> Signup and view all the answers

Which of these products were the primary focus of multinational manufacturing in the late 19th century?

<p>Cotton thread (B), Artificial silk (E), Branded consumer products (G), Tyres (H)</p> Signup and view all the answers

The late 19th century saw a decline in the chemical industry.

<p>False (B)</p> Signup and view all the answers

What is the name of the largest German firm that had a minority interest in a US manufacturing company in 1871?

<p>Bayer (C)</p> Signup and view all the answers

German chemical companies were primarily focused on domestic markets in the late 19th century.

<p>False (B)</p> Signup and view all the answers

What is the name of the pharmaceutical product that Bayer famously developed?

<p>Aspirin</p> Signup and view all the answers

Which of these countries were among the first to host foreign subsidiaries of the leading German dyestuffs firms?

<p>Russia (C), France (D)</p> Signup and view all the answers

US manufacturers of industrial chemicals and pharmaceuticals ventured beyond their home market before World War II.

<p>False (B)</p> Signup and view all the answers

What is the name of the US company that became the first worldwide producer of lifts?

<p>Otis Elevator</p> Signup and view all the answers

What is the name of the US company that became the world's first-mover in cash registers by the early 20th century?

<p>National Cash Register</p> Signup and view all the answers

Multinational manufacturing was absent from branded consumer goods by 1914.

<p>False (B)</p> Signup and view all the answers

What is the name of the Swiss firm that originated as a producer of condensed milk, baby food, and chocolates—and later became a major multinational corporation?

<p>Nestlé</p> Signup and view all the answers

What is the name of the British company that was the predecessor to Unilever and was known for its multiplant operations in the soap industry?

<p>Lever Brothers</p> Signup and view all the answers

What factors significantly contributed to the growth of international cartels in the interwar period?

<p>Exchange controls (A), Depressed market conditions (B), Growing political risk (C)</p> Signup and view all the answers

Interwar European governments typically opposed the spread of cartel agreements.

<p>False (B)</p> Signup and view all the answers

International cartels primarily emerged in industries with a large number of producers.

<p>False (B)</p> Signup and view all the answers

Which of these factors contributed to the success of the 'classic' interwar cartel model?

<p>Fixing of export prices (A), Price and output agreements (B), Division of sales territories (C)</p> Signup and view all the answers

Cartels were always effective in preventing cheating and opportunistic behavior by members.

<p>False (B)</p> Signup and view all the answers

Cartel administrators were always centrally located in large European cities.

<p>False (B)</p> Signup and view all the answers

World War II had a negligible impact on international cartels.

<p>False (B)</p> Signup and view all the answers

After World War II, the growth of manufacturing FDI resumed.

<p>True (A)</p> Signup and view all the answers

Which of these sectors were prominent areas of investment for US multinational firms in the postwar period?

<p>Chemicals (A), Machinery (B), Transportation equipment (C), Food products (D), Primary and fabricated metals (E)</p> Signup and view all the answers

US companies were not significant innovators in technology during the postwar period.

<p>False (B)</p> Signup and view all the answers

Which of these countries were among the most active in manufacturing FDI in the postwar period?

<p>Dutch (A), Britain (B)</p> Signup and view all the answers

British firms had a strong bias towards investing in the developed Commonwealth markets in the postwar period.

<p>True (A)</p> Signup and view all the answers

Which of these firms are prominent examples of Dutch multinational corporations?

<p>Philips (A), Unilever (B), Shell (C), Akzo (D)</p> Signup and view all the answers

French and German manufacturers engaged in FDI on a substantial scale in the early postwar years.

<p>False (B)</p> Signup and view all the answers

US firms were the primary focus of multinational investment in Europe in the postwar period.

<p>True (A)</p> Signup and view all the answers

What is the name of the US company that invested significantly in the soap and detergents market in Europe, expanding beyond its previous focus on Canada and Britain?

<p>Procter &amp; Gamble</p> Signup and view all the answers

Japanese manufacturers rebuilt their businesses after World War II with a primary focus on domestic markets.

<p>False (B)</p> Signup and view all the answers

The fixing of the exchange rate at Yen 360/US $1 between 1949 and 1972 hindered the growth of Japanese export competitiveness.

<p>False (B)</p> Signup and view all the answers

Which of these factors fueled 'new protectionism' against Japanese exports in the 1970s?

<p>Disputes with Japan over trade restrictions (A), US pursuing 'orderly marketing agreements' (B), Growing US trade deficit (C)</p> Signup and view all the answers

Japanese FDI in the 1970s was primarily driven by the desire to gain access to the European market.

<p>False (B)</p> Signup and view all the answers

The growth of demand for chemical products in the developed world consistently exceeded overall rates of growth.

<p>True (A)</p> Signup and view all the answers

The petrochemical industry initially emerged as a primarily European enterprise.

<p>False (B)</p> Signup and view all the answers

What are the names of the two US oil companies that were active in the early development of the petrochemical industry?

<p>Shell (A), Exxon (B)</p> Signup and view all the answers

US chemical companies initially focused on exporting chemical products abroad rather than establishing FDI.

<p>False (B)</p> Signup and view all the answers

Which of these US chemical companies were particularly prominent in petrochemicals in the postwar period?

<p>Dow (A), Union Carbide (C)</p> Signup and view all the answers

German chemical companies were completely absent from foreign production after World War II.

<p>False (B)</p> Signup and view all the answers

The leading German chemical companies abandoned their cartel in 1950 primarily due to a decline in investment opportunities.

<p>False (B)</p> Signup and view all the answers

Which of these factors contributed to the widespread adoption of FDI in the automobile industry?

<p>Import barriers and local content requirements (A), Competitive struggles between major US firms (B), Expanding global markets for automobiles (C), Rising world incomes (D)</p> Signup and view all the answers

Which firms are prominent examples of the consolidation of fragmented low-volume manufacturers in the German automobile industry?

<p>Daimler-Benz (A), Volkswagen (VW) (B), BMW (C)</p> Signup and view all the answers

Japanese automobile manufacturers relied heavily on exports before the 1970s.

<p>True (A)</p> Signup and view all the answers

Toyota's lean production system originated in the 1980s.

<p>False (B)</p> Signup and view all the answers

Japanese automobile manufacturers primarily focused on the production of luxury vehicles in the 1970s

<p>False (B)</p> Signup and view all the answers

The US government imposed a Voluntary Export Restraint (VER) on Japanese automobile imports before 1982.

<p>False (B)</p> Signup and view all the answers

Japanese companies controlled about one-third of the US car market by the late 1980s.

<p>True (A)</p> Signup and view all the answers

South Korea's automobile industry was primarily developed by small and medium-sized enterprises.

<p>False (B)</p> Signup and view all the answers

Which of these firms were among the first to recognize the commercial applications of computers?

<p>National Cash Register (NCR) (A), Remington Rand (B), IBM (C)</p> Signup and view all the answers

The US government played a minimal role in the development of the computer industry.

<p>False (B)</p> Signup and view all the answers

What is the name of the first computer designed for business use that was developed by Remington Rand?

<p>Univac</p> Signup and view all the answers

IBM's strategy for computer sales in the 1950s was based on a single family of incompatible computers.

<p>False (B)</p> Signup and view all the answers

Which firms were the primary beneficiaries of IBM's decision to outsource the disk operating system and microprocessor for the PC?

<p>Intel (A), Microsoft (B)</p> Signup and view all the answers

IBM had exclusive rights to Microsoft and Intel's technologies.

<p>False (B)</p> Signup and view all the answers

Microsoft and Intel's capabilities were not protected by copyright and other measures.

<p>False (B)</p> Signup and view all the answers

Microsoft acquired a near monopoly in personal computer operating systems in the 1980s.

<p>False (B)</p> Signup and view all the answers

The Microsoft Explorer 2.0 browser was only available after the commercial launch of the Internet.

<p>False (B)</p> Signup and view all the answers

Flashcards

Second Industrial Revolution

The period when new inventions and technologies like the telegraph, sewing machine, and chemicals began to dominate manufacturing, driving multinational expansion.

Foreign Direct Investment (FDI)

Investments made by companies in manufacturing facilities and operations outside their home country.

Multinational Corporation (MNC)

A company that operates in multiple countries, often with manufacturing facilities, marketing, and distribution networks.

Ownership Advantages

Companies that have unique skills, knowledge, or resources that other firms lack, giving them a competitive advantage.

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Location Advantages

Factors related to the location of a company's operations, including costs, markets, and access to resources.

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Internalization

The practice of acquiring or creating capabilities to operate directly in a foreign market, rather than relying on other firms.

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International Cartel

A legal agreement that restricts international competition by setting prices, quotas, or sales territories. Common during the interwar period.

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Lean Production

A production system focused on efficiency and eliminating waste, utilizing just-in-time inventory and quality control.

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Economies of Scale

The ability to produce more output with fewer resources, often due to efficiency and scale.

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Economies of Scope

The ability to produce a variety of products or services at a lower cost than producing them separately.

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Suppliers (in manufacturing)

Companies that specialize in manufacturing and distributing components or parts used in a final product, often working closely with larger manufacturers.

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Offshoring

The act of a company making a product or service in another country, often to take advantage of lower costs or access a new market.

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First-mover advantage

Firms that are pioneers in a particular industry, often using innovative technologies or business models.

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Acquisition

The process of a company buying out or merging with another company, often to gain access to new markets, technologies, or resources.

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Joint Venture

A type of agreement where two or more companies combine their resources and expertise to achieve a shared goal, often involving joint ownership or investment.

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Direct Distribution

The practice of a company using its own sales force and distribution channels to sell its products directly to customers.

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Homogeneous Products

Companies that manufacture products that are identical or very similar, making it difficult to differentiate based on features or quality.

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Product Differentiation

The process of creating a unique identity and positioning for a product in the market, often through brand names and marketing.

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Brand

A name, logo, or symbol used to identify a particular product or company, creating brand recognition and customer loyalty.

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Marketing

The use of advertising, public relations, and marketing to promote a product or company to potential customers.

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Developed Markets

Countries with high levels of economic development, technological advancements, and high per capita incomes.

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Developing Markets

Countries that are in the early stages of economic development, with lower per capita incomes and often rapid growth.

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Intellectual Property Protection

The ability to protect intellectual property rights through legal means, such as patents, copyrights, and trademarks.

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Protectionism

A type of government action to restrict imports from foreign countries, often to protect domestic industries.

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Voluntary Export Restraint (VER)

A form of indirect protectionism where governments negotiate voluntary limits on exports from a particular country.

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Multidivisional Structure

A form of business organization where control is distributed among multiple divisions, each focusing on a specific product, market, or function.

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Conglomerates

Large, diversified, and powerful business groups that are often dominant in their respective industries.

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Post-Fordist Production

The process of businesses shifting their focus from mass production to more flexible and responsive production methods, often using technology and worker empowerment.

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Petrochemicals

An industry that emerged in the interwar period, combining petroleum-based raw materials with chemical processes to create new products.

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Internalization

The process of a company utilizing resources and capabilities internally to expand globally, rather than relying on partnerships or licensing.

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Technological Innovation

A company's ability to innovate and develop new products, processes, or services, often leading to a competitive advantage.

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Digitalization

The growing use of computers, digital communication, and information technology in various industries, transforming business operations.

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Outsourcing

The practice of companies outsourcing specific tasks or processes to external providers, often in other countries, to save costs or gain expertise.

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Study Notes

Multinational Strategies and Manufacturing

  • Multinational strategies have been prominent in manufacturing industries since the late 19th century
  • Firms from the Second Industrial Revolution rapidly expanded into international markets
  • Post-World War II saw a continuation of these trends in various industries

Origins and Growth of Multinationals

  • Multinational manufacturing did not exist before the 19th century
  • Early examples emerged in the 1830s, with Swiss cotton firms investing in southern Germany
  • Mid-19th century saw more sustained direct investments
  • Siemens and Halske, a German firm, pioneered telegraph and cable equipment, establishing workshops in St. Petersburg and London.
  • 1863 saw Siemens and Halske establish its own cable factory near London, ensuring independence from existing suppliers
  • Singer, the sewing machine company, was an early example of a successful US multinational by 1914, having established a large international business.

Chemicals and Machinery

  • Late 19th century saw significant developments in the chemical industry, driven by applied scientific research to industrial processes leading to new products.
  • German chemical companies, like BASF, Bayer, and Hoechst, invested heavily in research and production, becoming major exporters of their products and establishing subsidiaries abroad
  • By 1914, major German dyestuff firms held a significant portion of the global production

Pharmaceutical Industry

  • German pharmaceutical firms also expanded internationally before 1914, with companies like Merck entering the US market in 1899 and France in 1912
  • International operations included manufacturing and research based in other countries

Swiss and Belgian Firms

  • Swiss firms like Geigy, Sandoz, and Hoffmann La Roche also had small manufacturing operations in various countries by the 1910s.
  • Belgium's Solvay played a large role by developing and industrializing caustic soda production processes, used in multiple industries
  • The US saw limited expansion in chemicals before World War II.

Machinery Industry

  • US-based companies like Otis Elevator and National Cash Register became prominent international investors in machinery industries, surpassing their role in the chemical sector
  • This was in contrast with US chemical investment during that time.

Branded Consumer Goods

  • By 1914, internationally-branded consumer goods were prevalent.
  • British companies produced various food products
  • British, German, and US companies produced gramophone machines and record players.
  • Other consumer goods businesses, such as Nestlé (which produced condensed milk, baby food, and chocolates) and Unilever, were also expanding internationally by 1914

Interwar Cartels

  • By the 1930s, worldwide manufacturing was often controlled by international cartels
  • Market conditions such as depressed markets, political instability, and exchange restrictions fueled the spread of such agreements
  • International cooperation was often prevalent during this era especially in the chemical industry.

Automobiles and Food

  • Automobile manufacturing began in Europe in the late 1890s
  • European firms like Renault, Daimler-Benz, and Fiat started building plants internationally
  • US automobile makers had initially focused locally, becoming more prominent after World War I. Leading US companies like Ford and General Motors expanded their activities by the 1920s via vertical integration and efficient production methods like the assembly line.

Henry Ford

  • Henry Ford transformed the automobile industry with the introduction of the standardized production process and the assembly line
  • These processes led to significant cost reductions that were unmatched in Europe at the time.

Electronics

  • US firms, especially IBM in partnership with companies like Microsoft and Intel led the way in the personal computer industry.
  • IBM's recognition of the significance of electronics for data processing led to heavy investment in research and production.

The Interwar Period

  • World War I altered the existing industrial landscape as several countries sought to acquire greater control of industrial activities within their own borders
  • Increased tariffs and nationalistic fervor hampered international relations and investments.

1950s and 1960s

  • The Post-war period witnessed renewed multinational investment activity
  • This was particularly true for industries such as machinery, chemicals, and automobiles.

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