IBSR Topic 11 Sol Picciotto Topic 1: International Business & Regulatory Networks International Business Structures & Regulation Law School

IBSR Topic 12 Background Theme 1: Globalization global unity? homogeneity international flows? diversity economic activities internationally interdependent: specialization, comparative advantage integrated (=under common control) political (state) structures interdependent: laws coordinated integrated: laws harmonized

IBSR Topic 13 Background Theme 2: Post-Industrial Capitalism Industrial primary industries: agriculture & mining secondary: manufacturing `smokestack industries commodity sold to consumer large-scale factory assembly mechanical technologies hierarchical organization Post-Industrial tertiary sector: services (e.g. professional, financial, retailing, travel/tourism) personal relationships networked individuals/groups electronic/biological/design flexible networks

IBSR Topic 14 International Economic Flows Cross-Border Flows exports (goods) investments (money) Firm A Firm B State X State Y

IBSR Topic 15 International Economic Integration Business Links:ownership contract Firm A agent B State X State Y branch/office subsidiary A-1 Licensee/ Franchisee B Supplier B

IBSR Topic 16 Nature of Links Legal Form ownership: of assets (branch) of shares (subsidiary) contractual (long-term: not one-off sale) agency supply licence/franchise Management Rights control direct power to command managers instruct scope of authority quality obligations quality obligations & targets

IBSR Topic 17 Transnational Corporations (TNCs) Trans-or Multinational? Bi-national? Control activities in more than 1 country Single Integrated Firm Joint Venture Public (with host government) Private (with other firm) ownership of assets (branch) ownership of subsidiary (shares) long-term contracts supply agency licence/franchise

IBSR Topic 18 TNCs and Economic Flows Foreign Direct Investment (FDI) portfolio investor lends to someone else for income direct investor controls activity International flows and Internal Transfers goods (Unctad WIR 1999, 233): 75% of world exports are by TNCs 35% of world exports are intra-firm transfers between affiliates investments: stock / flow include Equity investment – may capitalise inputs, e.g. know-how reinvested earnings (20% of FDI flows WIR 1999:4) Intra-firm loans – raised on international financial markets

IBSR Topic 19 Corporate Groups & Networks Integration vertical (e.g. oil majors) horizontal (e.g. Sony) conglomerate (e.g. Mitsubishi) Alliances & Strategic Groups Joint Ventures (R&D, production) equity/contractual minority equity participation e.g. Renault - Nissan (44%) - Dongfeng (50%) co-operation agreements (e.g. airlines)

IBSR Topic 110 Cartels & Concentrations anti-competitive cartels: Agreements illegal under competition/antitrust laws illegal per se: price-fixing, market sharing restraints unreasonable/not public interest: e.g. distribution strategic groups: keiretsu (Japan) chaebol (Korea) bank shareholdings (Germany) transnational expansion green-fields investment? Merger / Acquisition (M&A): anti-competitive?

IBSR Topic 111 Contractual Networks Supply Chains: long-term contracts Licences production technology marketing rights/brands Franchises 1st generation:product/process (petrol, beverages) 2nd generation: business format franchise Finance franchisee provides capital, pays royalty/rent/fee Control strategic/operational