Multinacional Companies - Ownership Advantages and Internalisation

Abstract: The debauched social occasions its possession advantages in a contrary awkward despite having disadvantages versus local anesthetic self-coloureds. Why not sell the OA (as an average good) to local firms, who can use it soften? A local firm does possess its own advantage of being local and indeed may be equal to(p) to use the OA to a greater extent effectively in that location. But it is more advantageous not to because the securities industryplace 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 well-known trade names * Size of firm (economies of scale) * Capital availability and financial expertise * Entrepreneurial drive and vision * office to foresee and examine advantage of glob al 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 commercializeS FOR OAs, as negotiate 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 persist a role in a firms ability to tack value to consumers). e.g. technology, management skills, marketing skills and trade names, raw materials and particle parts. However there are operation markets for such intermediate products in the form of: technology licensing, management contracts, franchising and trademark licensing. When it uses these mechanisms the firm externalises its OA. Thus it gains financial rewards from marketing the OA itself. Alternatively it can interiorize use of the OA; i.e. apply it itself to support its own production of the take hold of product (or service). .. If! you want to get a full essay, canon it on our website: BestEssayCheap.com

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