Multinacional Companies - Ownership Advantages and Internalisation

Abstract: The debauched handlings its ownership benefits in a exotic awkward despite having disadvantages versus local anesthetic theatres. Why non sell the OA (as an modal(a) good) to local firms, who can use it purify? A local firm does possess its own advantage of being local and indeed may be able to use the OA much effectively in that location. But it is more advantageous not to because the grocery storeplace is inefficient, it is better to INTERNALISE than externalise. Ownership advantages Ownership advantages (OA) confer on the firm queen in the market, or a cost advantage that outweighs the senseless be of doing business abroad. * Technology (ability to create, acquire and upgrade) * Management skills * trade skills and known trade names * Size of firm (economies of scale) * Capital approachability and financial expertise * Entrepreneurial drive and vision * exponent to foresee and examine advantage of global production and market opportunities Internalisation: The basic condition WHY FIRMS INTERNALISE use of the OA (rather than externalise it by sell it to another firm) is because the groceryS FOR OAs, as median(a) goods, ARE VERY feeble ( i.e. costly and risky to use). The reasons for this MARKET FAILURE differ harmonise to the type of intermediate goods (i.e. inputs that good turn a role in a firms ability to allow value to consumers). e.g.

technology, management skills, marketing skills and trade names, raw materials and fortune parts. However there are operation markets for such intermediate products in the form of: technology licensing, ma nagement contracts, franchising and tradema! rk licensing. When it uses these mechanisms the firm externalises its OA. Thus it gains financial rewards from marketing the OA itself. Alternatively it can interiorise use of the OA; i.e. apply it itself to support its own production of the net product (or service)... If you want to get a full essay, legislation it on our website: BestEssayCheap.com

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