Multinational Enterprise

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LEEDS BECKETT UNIVERSITY, Level 6, Multinational Enterprises, CRN: 21119, NURULLAH FURKANPEHLIVAN ID: 77155459

Student Name: NURULLAH FURKAN PEHLİVAN ID: 77155459

Assesment Brief: MULTINATIONAL ENTERPRISES

Module Tutor: STEVE GREGORY

Statement of Authenticity: “I confirm that this submission is my own work. Any quotations are properly cited using theHarvard referencing method. All errors and omissions are myresponsibility alone.”

Date 05.05.2015 Sign:

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TOTAL WORDS COUNT = 3781 (I+II+III= 3542)PART I = 727PART II = 1488PART III = 1327PART IV = 239

CONTENTSCONTENTS PagPagee

PART 1 : GLOBAL FDI AND PRODUCTION I. FDI 2 I . 1 - INTRODUCTION 2 I . 2 - FDI INFLOWS 2 I . 3 - FDI OUTFLOWS 3 I . 4 - FDI BY MODE OF ENTRY 3 I . 5 - FDI PROJECTS – SECTOR andINDUSTRY

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A - SECTORS 4 B - INDUSTRY 4 B . 1 - OIL and GAS 4 B . 2 - PHARMACEUTICALS 4 B . 3 - RETAIL INDUSTRY 4 II. INTERNATIONAL PRODUCTION 5III. CONCLUSION 5IV. ENDNOTES and DEFINITIONS 5 V. BIBLIOGRAPHY 6

PART 2 : THE GROWTH OF MNEs AND THEORIESI. INTRODUCTION 7

II. INTERNALISATION THEORY 7III. TRANSNATIONAL MONOPOLY CAPITALISM 9

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IV. CONCLUSION 10V. BIBLIOGRAPHY 11

PART 3 : TRADE AND NISSANI. INTRODUCTION 14

II. NISSAN 14III. NISSAN IN THE UK 14IV. CONCLUSION 16V. ENDNOTES and DEFINITIONS 17

VI. BIBLIOGRAPHY 19

PART 4 : REFLECTION ON THE ASSESSMENT 21

PART 1 : GLOBAL FOREIGN DIRECT INVESTMENT AND INTERNATIONAL PRODUCTION IN 2014

I . FOREIGN DIRECT INVESTMENT (FDI)

I .1 - INTRODUCTION

This part related with key changes in global FDI and international production in 2014 over last year.

I .2 - FDI INFLOWS

After a decrease in 2012, global FDI inflows in 2013 increased by 9% in main economic groupings (developed, developing, transition) and reached $1,452 trillion from $1.33 trillion and this growth predicted to continue in following years. (Figure:1)

Figure 1 : FDI inflows, 2003-2013 and projections, 2014-2016

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(Billions of dollars)

Source: UNCTAD FDI-TNC-GVC Information System, FDI/TNC database UNCTAD, World Investment Report 2014 (WIR14).

International Investors Association of Turkey

The biggiest FDI inflows proportion is belong to developingeconomies with more than 50% and 40% belong to developed countries and less than 10% occurred in transition economies.

US remains first destination by having largest FDI inflow while China maintained its second place and Russian Federation saw noticeable expansion inflow and become thirdlargest FDI recipent in first time.1

FDI flows in North America grew by 23% acquisitions from Asian investors contributed this inflow to this region. Developing Asian economies continues to have highest inflow(over 400 billion$) through China with the exception of West Asia which seen 8.6% decrease.

FDI inflows to transition economies reached highest levels by 28.3% and biggest proportion belongs to Russian Federation. FDI inflows to LDCs up, while trends for LLDCs and SIDS was downward.

Consumer-oriented industries increased in Africa, includingfood, IT, tourism, finance and retail. The poorest developing economies are less dependent on extractive industry investment and natural resources.

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I .3 - FDI OUTFLOW

Global FDI outflow increased by 5%.Trends for developed economies are decreased and remained in low level like in 2012 while investments from developing and transition economies continued to expand. Investments like the largestinvestor the United states 8% decreased result of cross-border merger and acquisition (M&A) purchases.

In transition economies FDI flows increased by 84% especially in Russian Federation due to Russian TNCs involved in the most of the FDI projects.

East Asia, with investment from Chinese TNCs increased by 15% reached 100 billion $ because of cross-border M&As. In Latin America and the Caribbean see 8% decline that excludeoffshore financial centres which declined by 31% due to decreasing cross-border M&As.

I .4 - FDI BY MODE OF ENTRY

Greenfield projects raised by 9%, while worth of cross-border M&As increased by 5% (Figure:2).

Greenfield investments in developing economies have been comparatively important than developed-country projects.

Figure 2 : Historic trend of FDI projects, 2004-2013

Source: UNCTAD FDI-TNC-GVC Information System, cross-border M&A database for M&As and information from the Financial Times Ltd, fDi Markets (www.fDimarkets.com) for greenfield projects.

UNCTAD, World Investment Report 2014 (WIR14).

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In developed economies both Greenfield investment projects and cross border M&As declined. While in developing economies M&As in food, beverages and tobacco industry, increased significantly $12 billion to around $40 billion in 2013.

In developing and transition economies Greenfield projects increased by 17% and cross-border M&As rose by 36% which isaccounted for 53% of global cross-border M&As, in this success Chinese firms roles remarkablehaving investments $50 billion. In sectors like textile, services and electricity, gas and water had upward trend.

I .5 - FDI BY SECTOR AND INDUSTRY

A - SECTOR

The types of investment (Greenfield, Cross-Border M&As) in sector stage (primary sector, manufacturing, services) varied. Greenfield projects in primary sector are higher inAfrica and LDCs than for the average developed and developing economies.

B - INDUSTRY

B.1- OIL and GAS

In US cheap natural gas production boomed2 that take attention of, foreign investments, in to United States manufacturing industries3 and caused falling the price of natural gas4. TNCs and SOEs build partnerships with the United States and agreed to technology exchange to implement shale gas success in their home country like US 5.That caused outward FDI flows to the United States and foreign capital growth in shale projects outside the US.6

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In 2013 United States share of chemical Greenfield projects(except pharmaceutical products) reached a record level with 25%, its above for all other industries.

B.2 - PHARMACEUTICALS

FDI in pharmaceuticals focused on developed economies.

B.3 - RETAIL INDUSTRY

Global retailers invested internationally via both Greenfield, cross border M&A's and also using franchising. Value of cross-border M&As in the industry has increased bycontrast, greenfield investment dropped. Some big retail companies change their operation strategy to growth in emerging markets or Saharan Africa while become smaller in domestically market.7

II - INTERNATIONAL PRODUCTION

International production continued growing in all indicators8. TNCs in the gas and oil, telecommunications and utilities industries all notably improved their expenditures and acquisitions while consumer good, and industrials9 remained low. Internationalisation level of largest TNCs in developed, developing and transition economies remained stable.10

III - CONCLUSION

Developing Asia continues to be the world’s leader FDI recipient; it remained the world's number one recipient in region and the top investment destination. Private equity firms are becoming more popular in emerging markets.

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The shale gas revolution in United states clearly noticeable in FDI figures and it can change the global energy sector over the upcoming decades.

Retail industry is attracted significant levels of FDI, there are more Cross-border M&As in retail industry, that including in e-commerce. Rise of e-commerce affected the retail industry especially in China online retail sales reached high number.

IV - ENDNOTES and DEFINITIONS 1) FDI inflow; The United states : 188 billion $, China : 124 billion $, Russian Federation : 79 billion $. 2) Growth rate of 50 per cent annually.

3) Gas, petrochemicals and plastics industries.

4) In United States natural gas prices declined from almost$13 per MMBtu (million British thermal units) in 2008 to $4 per MMBtuin 2013 (Almost three times lower than European gas prices and four times less than Japanese cost for liquefied natural gas).

5) PetroChina and CNOOC, arranged a number of agreements with main western TNCs, including Shell invested $1 billion in Sichuan basin/China.

6) Argentina and Australia, has made joint ventures betweendomestic companies and international players.

7) In 2009,Wal-Mart from United States acquired a 58% share in DYS, Chile’s biggest food retailer, making an investment of$1.5 billion; and in 2012, it acquired South Africa’s Massmart for $2.4 billion

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8) Sales 9.4%, foreign assets 7.9%, FDI outward stock 5 per%, Foreign employment 5%, exports of foreign affiliates 2.5% increased.

9) Defined as transport, aerospace and defence, and electronic and electrical equipment

10) Reason for remained stable for developing and transition economies because of larger larger domestic investments which is 19 per cent grew.

Definitions :

FDI : Foreign Direct InvestmentTNC : Transnational Company/CorporationLDCs : Least Developed CountriesLLDCs : Landlocked Developing CountriesSIDS : Small Island Developing StatesSWFs : Sovereign Wealth FundsSOEs : State-Owned Transnational

Enterprises / SO-TNCs

V - BIBLIOGRAPHY

UNCTAD World Investment Report 2014 (WIR14): Investing In the SDGs-An Action Plan.Pap/Cdr Edition.New York and Geneva,United Nations Publication.

UNCTAD Statistics 2015 [Online] Available from: [http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=88 [Accessed 23 April, 2015]

Office for National Statistics [Online] Available from: http://www.ons.gov.uk/ons/publications/re-reference-tables.html [Accessed 23 April, 2015]

http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=88

http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=88

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Grahame Allen, Aliyah Dar Foreign Direct Investment [Online] Available from: [http://www.parliament.uk/business/publications/research/briefing-papers/SN01828/foreign-direct-investment-fdi] [Accessed 23 April, 2015]

International Investors Association of Turkey (YASED), [Online] Available at: [http://www.yased.org.tr/webportal/Turkish/Documents/UNCTAD_2014_Dunya_Yatirim_Raporu_30062014.pdf] [Accessed 23 April, 2015]

PART 2 : THE GROWTH of MULTINATIONAL ENTERPRISES AND THEORIES

I - INTRODUCTION

MNE is an enterprise that owns and controls value-adding activities in more than one country (Kusluvan, 1998 cited Dunning, 1989). Kusluvan (1998) broad the definition and adds MNE is a company has 10% of equity or contractual involvement such as management contracts, leasing agreements, franchising, in more than one country.

Multinational firms are larger, earn high profits, and spend more on advertising and R&D (Dunning, 1973).

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II - INTERNALISATION THEORY

Internalisation interests extension of direct operations under the firm and brings in common ownership and control the actions conducted via intermediate markets, that connects the firm to customers. Firms will benefit with creating their own internal market like transactions process will be low cost within the firm. (Morgan, Katsikeas1997 cited in p . 70 Buckley, 1982, 1988), (Buckley and Casson 1976, 1985)

Internalizing markets beyond national boundaries resulted to born MNEs.

Internalisation theory explains while MNE’s trade in the market they will use either subcontracting, licensing method or MNE will produce himself by FDI method. Theory answer the question of Why firms rather FDI than producing in his country and export (Dulupcu, Demirel 2005).

Reason MNE’s internalisation is they want to trade in markets and industries where there are strong incentives tointernalise (Grazia, 2005).

The core of the internalisation theory is given specific distribution of endowments, the content of MNE action willpositively link to cost of establishing cross-border markets in intermediate products (Dunning, 2008).

Internalisation theory occurs at the company level in order to analyse FDI, licensing and subcontracting (Porter,Casson, Wadeson 2014 ).

Internalisation theory of the MNE is based on the hypothesis which transaction expenses are higher in trans-border activities. This cause raises the incentive to internalize like activities by direct production in abroad instead of by market transactions or licencing (Grazia, 2005).

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First Buckley and Casson, (1976) create four different typeof aspect critical to the internalisation decision, these following;

1.Industry specific aspects about the nature of the product and organization of the external market

2.Region specific factors concerning geographical and social features of the region related with market

3.Nation specific factors in relation to among nations concerns, and political and fiscal relations

4.Company specific factors that reflect the capability ofthe management to establish an internal market

Internalisation theory, developed for western MNE’s appearsto be standing up well to emerging markets. It will be interesting to witness the relevance over time within the relatively newly emerging geographical areas like India andChina, both tipped to become greater economic powerhouses. To its credit, the internalisation theory already examines various unique cultural and political anomalies which existhere, and will be an aid to predictions (Buckley, 2014).

Internationalization theory highly depends on the analysis of transaction costs that involves. When in market transactional imperfections occurs if there is an incentiveto internalise. Internalisation’s interests are all those benefits that came from producing internally to the firm that will allow to bypassing external markets (Grazia, 2013).

Internalisation theory attaches significance to the analysis of initial condition, and varying market conditions and does this over time. This is done within a wider business context, examining the role of communicationflows, resource

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costs, product life cycles, R&D facilities, and the role ofmanagers is strategic decision making.(Buckley, 2014)

MNE can gain competitive advantage is in its strategic decision making processes, which are generally highly internalised , but also the effectiveness of the communication of this information across geographical space. The ability to control the costs of these flows is critical.(Buckley, 2014)

The integration with elements of history is another aspect which gives benefit to theory, in that it considers the development and the evolution of the MNE across time. The historical analysis can create a great amount of information detailing the diversity at both business failures and successes.(Buckley, 2014)

Buckley and Strange argues (2011) because of profit maximization and development strategies of companies, Buckley and Casson (1976) defend result of market imperfections in intermediate products companies will buid internal market (internalize external market) for rise benefit and prevent some expenses.

Internalisation theory explains the growth of MNE. The theory moves away from the traditional, economic centred theories by incorporating wider elements of social sciencesgeography and history, within the international business context. Internalisation considers how the boundaries of any MNE will change over time. (Buckley et.al, 2014)

For MNE’s geographical element are significant, in that as well as considering locational advantages, its patterns andinteractions across space and networks (Buckley, 2014).

Considering opportunities to internalise markets is knowledge intensive services, and the counterbalancing of outsourcing, a good degree of strategic decision making canbe explained (Buckley et. al, 2014).

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MNEs allow to shareholders international diversification opportunity through investments on abroad. In some foreign countries MNE take advantage of lower tax rates. (Merck andYeung, 1992)

Direct access to raw materials or cheap labour can be a motivation for international expansion. (Merck and Yeung, cited 1992, Hood and Young 1979)

The most vital parts of internalisation are markets for knowledge and markets for intermediate products. (Grazia, 2005)

Benefit of internalisation, is advantages of ruling, organizing ownership and location specific advantages within MNEs instead of selling right to use those advantages to internal companies in the host country. The gains of firm are improved planning, coordination, and possibilities to raise profits have to be balanced against communication and control problems. (Kusluvan 1998 cited (Buckley, 1987).

III - TRANSNATIONAL MONOPOLY CAPITALISM

Transnational company is co-ordinating manufacture from onecentre of strategic decision-making while this coordinationtakes the firm beyond national borders. This co-ordination could include market and nonmarket exchanges (Cowling and Sugden,1987).

Almost two thirds of the world’s exports belong to transnational economies. Usually TNCs are capitalist enterprises, so they have to behave according to ‘rules’ ofcapitalism, the most essential one is drive for profit .(Dicken, 2011)

Between 1880/90 and the late 1940’s was a time of rising giant firms, trusts, cartels, mergers. Oligopoly and monopoly becomes usual during this time. (Dicken 2011 citedFreeman and Perez, 1988). Developments during this time was

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effected by economic perspective telecommunications was a ‘natural monopoly’ (Dicken, 2011).

TNC’s have detection power owing to their ability to collect and use this information for their advantage so this will help them to secure high price–cost margins and high power in market. Aim for control market resulted more monopolization. Transnationalism has linkage with seeking for cheaper labour so for a labour force with less bargaining power.(Grazia, 2005). Grazia (2005) mention about Cowling and Sugden’s (1987) thoughts about using the innovation, they argue when innovation is in the product TNCs will take advantage to achieve further monopolization which will lead them furtherstagnation tendencies when it's in processes, it will push to decrase the wages.

The reason why companies become transnational is the risks which force them to defend against competitors also becausethe advantages of transnational cause them to attack. (Grazia, 2005)

Cowling and Tomlinson (2005) describes strategic failures in the context of decision making which conflicts with local interests, and the under protection of the labour force, as well as the control, by the MNE’s of the trade unions.

The shareholders of the MNE would view things differently, where strategic success or failure would be measured in terms of shareholder value / returns.

The MNEs will exploit scale economies, in an attempt to deliver shareholder value, and to do so will create highly efficient transnational production systems, allied with effective strategic decision making, in order to maintain market position (Cowling and Tomlinson, 2005).

IV - CONCLUSION

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Beacuse of desire to monopolise product markets, number of transnational economies raise. Transnational monopoly capitalism can boost the power of large companies via lowering costs and reaching larger markets Transnational capitalism bring lower levels of competition and efficiency(Cowling and Sugden, 1987).

Among companies operating in global markets from least costlocations became popular. Location of investment, and wage rates at particular location has important issue, domestic investment will be linked with local expenses instead of local demand (Cowling, 2005).

Import is not effective competitive pressure for monopoly capitalists due to large companies themselves control the international trade. Internal and foreign TNCs in specific country raises monopolisation. Since monopolisation growth capitalists seek new markets and for more profits (Grazia, 2005).

Monopoly capitalism is provide political advantage to capital over labour in struggle, increase rate of exploitation and control over price decisions by giant companies generates a hierarchy of profits rates these resulted creating rise in the potential rate of capital accumulation (Despain 2014, cited Foster 2014)

Benefits of multinationality: labour fragmentation, bargaining position on governments reduce the risks and variances in tax and currency regimes (Grazie, 2005). Internalization will generate more multinationality betweencompanies. Because knowladge easily communicable beyond national boundaries (Buckley and Casson 1976).

Companies go internalisation strategy and make FDI for following reasons;

High transportation costs and existence of trade barrier

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Risks of having not enough knowledge about external market

Asymmetric information between buyer and seller The conditions in market increasing the costs

(Dulupcu, Demirel 2005, cited Buckley and Casson 1976)

Internalisation theory has macro perspective, thinks industry-level issues and investigative the strategic questions of where factory located, who holds the product and who employs the productive labour. These are linked with FDI. (Ellram 2013 cited Casson, 2013).

The benefit of using internalisation to firms is they can apply price differentiation between markets, avoiding any delay, bargain or customer ambiguities and be able to minimize the effects of transfer pricing by government regulations. (Dulupcu, Demirel 2005)

Whether oligopolistic, monopolistic, transaction cost advantages to internalize markets, internalisation theory characterized by growth and profit maximization of companies accommodates all. (Kusluvan, 1998)

V - BIBLIOGRAPHY

Buckley, P.J. (1982), Multinational Enterprises and Economic Analysis, Cambridge University Press, London.

Buckley, P.J. (1988), “The limits of explanation: testing the internalisation theory of the multinational”, Journal of International BusinessStudies, Vol. 19, pp. 181-93.

Buckley, P.J. and Casson, M. (1976), The Future of the Multinational Enterprise, Macmillan, London.

Buckley Peter J. (2014) "Forty years of internalisation theory and the multinational enterprise", Multinational Business Review, Vol. 22 Iss: 3, pp.227 – 245

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Buckley, Peter J. and Strange, Roger (2011) The Governance of the Multinational Enterprise: Insights from Internalization Theory Journal of Management Studies 48:2j

Casson, M. (2013). Economic analysis of international supply chains: An internalization perspective. Journal of Supply Chain Management, 49 (2), 8-13

Casson Mark, Porter Lynda , Wadeson Nigel (2014) Internalization Theory: An Unfinished Agenda

Cowling, Keith and. Tomlınson, Philip R (2005) Globalısatıon And Corporate Power Contributions to Political Economy 24, 33–54

Cowling Keith and Sugden, Roger 1987. Transnational Monopoly Capitalism. Edition. Prentice Hall / Harvester Wheatsheaf

Dicken Peter, 2011. Global Shift: Mapping the Changing Contours of the World Economy Sixth Edition. The Guilford Press)cited Freeman, C. and Perez, C. (1988) Structural crises of adjustment, business cycles and investmentbehaviour.

Dulupcu Murat Ali, Demirel Onur (2005) Globalization and Internationalization European Commission Socrates Comenius 2.1.

Dunning, John H. (1973) The determinants of international product, Oxford Economic Papers., 289336.

Dunning, J. H. (1989), “Multinational Enterprises and the growth of services: some conceptual and theoritical issues”, The Service Industries Journal, 9(1):5.

Dunning, John H (2008). Multinational Enterprises and the Global Economy. 2nd Edition. Edward Elgar Pub.

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Grazia,Ietto-Gillies (2013) The Theory of the TransnationalCorporation at 50+. Kingston University, London.

Grazia, Ietto-Gillies (2005). Transnational Corporations And International Production: Concepts, Theories And Effects. illustrated edition Edition. Edward Elgar Pub. Kusluvan Salih (1998 ) A Revıew Of Theorıes Of Multınatıonal Enterprıses D.E.Ü.İ.İ.B.F. Dergisi Cilt:13, Sayı:I, , ss.163-180 cited

Merck, Randall and Yeung Bernard (1992) Internalization North-Holland cited in Hood, Neil and Stephan Young, 1979, An event study test Journal of International Economics 33 41 56..Cited The economics of multinational enterprise (Longman, London and New York).

Morgan, Robert E,and Katsikeas Constantine S. [1997] Theories of international trade, foreign direct investment and firm internationalization: a critique Management Decision 35/1 68–78

Despain , Hans G, 2014 Review The Theory of Monopoly Capitalism. cited John Bellamy Foster, 2014.The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy Monthly Review Press, New York, new edition [Online] Available from: http://marxandphilosophy.org.uk/reviewofbooks/reviews/2014/1076[Accessed 20 April, 2015]

ELLRAM, LISA M. 2013 Offshoring, reshoring and the manufacturing location decision [Online] Available from: http://www.thefreelibrary.com/Offshoring%2c+reshoring+and+the+manufacturing+location+decision-a0330680487 [Accessed 23 April, 2015]

http://www.thefreelibrary.com/Offshoring%2C+reshoring+and+the+manufacturing+location+decision-a0330680487



http://marxandphilosophy.org.uk/reviewofbooks/reviews/2014/1076

http://marxandphilosophy.org.uk/reviewofbooks/reviews/2014/1076

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PART 3 : TRADE AND NISSAN

I - INTRODUCTION

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In this section activities of Japanese TNC Nissan’s influence is evaluated based on trade.TNC’s international production and trade are closely connected. (Grazia, 2005)

II - NISSAN

Nissan established in 1933 and their headquarter is in Yokohoma/Japan. Nissan Group, Japan's second-largest automotive company.They expanded their businesses globally during timebuilding branch plants1 overseas, and via mergers and acquisitions. In 2013 Nissan had 6.2 % glabal market share in the industry and aiming for %8 by the end of 2016.

Nissan has a global partnership with Renault since 1999 forcar manufacturing and sales also for automotive financing, both two companies work as a partner but keeping the diffirent brand and corporote identity2.

In last two decade Nissan become more transnationalised3 andhave direct operations in many countries ın order to accelerate own growth in the global precense and expand thebusiness. Nissan produces diffirent range of cars considering customer requirements with more than 60 diffirent model like zero emission cars, light cars or minivans, pickups, trucks under the name of Nissan, Infiniti and Datsun global brands.

Nissan manufactures and sells automotive products in automotive business while also take part in marine industryproducing and selling of boats and equipment in marine business.

III - NISSAN IN THE UNITED KINGDOM

UK is one of the largest recipients of FDI in the world andJapan is second largest outward FDI in the world. In the UK, Japan is ranked second place for FDI source.

Early 1980s was a movement of Japanese car producers aimed to develop in foreign markets, following a trend of global

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development. In the European region Nissan had problems4

while searching to increase their share of European marketsby exports (Morschett, 2010).

Nissan is a Japanese owned TNC and it was the first Japanese car firm established a plant in the UK. Nissan took decision to locate its first production plant in Europe at a location near by Sunderland in 1984; it was after long duration of seeking and negotiating for the ideal location.

Reasons attracted Nissan to Sunderland is Nissan wanted a greenfield site to set up its production plant with suitable field for further enlargement in the future. Localcouncil and development corporation offered Nissan a 930-acre site 5 and council offered site as a single-union plant.High unemployment rate 6, ethnically homogenous population, logistical criteria 7 and the availability of government subsidies8 was other attractions for Nissan (Morschett, 2010).

Most of its suppliers are located close distance in this region and they have great relations with suppliers9 (KPMG,2014) (Rehder, Thompson 1994).

Nissan also built the Nissan European Technology Center in London to design and resarch; develop new products for Europe in the United Kingdom. (Rehder, Thompson 1994) .

Nissan, established European operations in the UK,rather than in the countries with strong domestic manufacturers (e.g., Peugeot, Volkswagen, Renault and Fiat) (Dicken, 2011).

Nissan using Intra-industry trade (IIT) importing its main equipment’s, diesel engines from France and automatic transmissions from Japan.

The Nissan model called Qashqai was designed and engineeredfully in the UK, with in the under NMUK basis for many

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testing and development. Around 80% of the cubic volumes ofparts for Qashqai are produced in the Nissan UK Sunderland plant.(Nissan UK, Make it Sunderland). Their models which produced in UK are Qashqai and LEAF recieved international recognition awards with their exellent quality (KPMG, 2014)10. Nissan aiming to be the first position in the electric car market with Leaf model. (KPMG, 2014)11. Even though Nissan has localised electric battery production plant in Sunderland, they still imports the battery’s electrode from Japan. (SMMT, 2014) Nissan sold 138.338 cars in 2014 and that makes Nissan sixth most popular brand in the UK with 5.6% total market share in 2014.There is 17.3% increase in terms of sales comperison to 2013 in 2014. In UK New Qashqai was most popular one among all Nissan model reached over 47 thousandof sales. (Mintel, 2015 - Nissan 2014 Sales report )

In 2013 one out of three cars produced in UK was belong theNissan.That makes them the top automotive manufacturer in UK.(SMMT, 2014)NMUK’s number of vehicle production in 2011 was 492 thousand and in 2012 505 thousand and in 2013, 516 thousand car produced and by this production rate, NMUK 5thbiggest Nissan production plant among others12 (Nissan Global). Because of pressures from environmental supporters, organizations become conscious environmental effect of their products. Concern about the environmental perspectiveprompted and Nissan make some action for their factory in Sunderland13 (Samson, 2012).

Trade has a vital role affecting the relationship between growth and environment. Trade increases the availability, and lowers the costs of environmental friendly technologies. Demand in public for a cleaner environment

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gives an incentive to adopt clean technology in Nissan. When Nissan produced LEAF14 model it was the most sold Battery Electric Vehicles (BEV) on the market. This succes brings them good cooperation with West Midlands Police. When West Midlands Police seek for visible gap for their electric car vehicle fleet they tried Nissan Leaf in 2012. After positive results, they ordered more 30 LEAFs in June 2013 and it was the largest order of plug-in vehicles by a fleet in the UK and that supported with the installation of charge points at 11 different sites with funding from the Plugged in Midlands scheme (OLEV, 2013).

The UK has liberal-market economy with market-oriented. Nissan had market-oriented investments in UK. Nissan stimulated without trade barriers within EU and made directproduction to enter to market having FDI, rather than exporting strategy .

When there is trade barrier companies use direct productionin source market where there is no trade barrier. This source is comes from home production or via export. EU benefits from trade with between members without barrier. EU attracted more FDI inwards from TNC’s belong to non-member countries who wanted to take advantage of free trade. Nissan’s FDI into the UK was a strategy of penetrateto EU market and overcome trade barrier. Eventually motor products from the UK to EU increased. This is an example ofgeographical structure trade (Grazia, 2005).

Nissan is the Britain’s largest car exporter.EU countries also affected from Nissan even they are not hosted direct production of Nissan. EU is the UK’s largest trading partner. More than 50% UK vehicle exports to EU consumers and 40% of components bought by UK vehicle producers are from EU (KPMG, 2014).

On KPMG interview programme Chief Planning Officer of Nissan told “We build cars for Europe in the UK.” When Nissan manufactured above 500.000 unit vehicles at Sunderland plant in 2013. Only 19% of production was sold inside in the UK borders, 71% was exported to the Europe

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that includes Russia and 10% exported to the rest of the world. (KPMG, 2014)

IV - CONCLUSION

Manufacture investment and productivity in UK below from US, Japan and fourth largest car manufacturer in the EU15. Manufacturing companies from abroad are especially Japanesefirms, with a huge capital investment and new management knowledge, like NMUK, set world standards in UK. (Rehder, Thompson 1994)

NMUK positively effected British job market,16 producing 4 diffirent models which is Leaf, Nute, Juke, Qashqai. They has been biggest car producer in the UK since 1998 producing over 500.000 vehicles annually with high productivity.

EU’s bargaining power in trade negotiations over world is massive; it supports UK to export more than 50% of locally-produced cars to growth markets around rest of the world (KPMG, 2014).

Government’s encouragement to Nissan for investment into UKhas increased the productivity and international competitiveness of the automobile industry.17

TNCs/MNE’s like Nissan contribute huge amounts of world trade. Another important point about Nissan is, it's estmated inward investment that since the opening of factory is 3.5 billion £ invested in UK . FDI funded by theNissan Japan , resulted in a transaction between the Japan and UK while Japan as a home country will record a negative value on the capital account of the balance of payments as investment funds leave from Japan, the UK will register a corresponding positive value (Grazia, 2005). Nissan FDI contributed positively economic growth of UK.

Nissan decided to build a branch plant in UK in 1980s because ımporting cars into the European market was not

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cost effective strategy, because of import restrictions like quotas or tariffs. Nissan were compelled to build production plant within the European Union by FDI, via mergers, acquisitions or joint ventures, to raise their market share and to secure their long-term position in EU market. (Hudson, 2002). Nissan supports UK membership of EU.18

V - ENDNOTES AND DEFINITONS

1) By TNC a factory establish in a foreign country headquartered elsewhere. One of the well-known example is Japan’s Nissan plant in Sunderland.

2) Renault holds a 44.3 %stake in Nissan, while Nissan owns 15% of Renault shares. The alliance jointly operates Renault Nissan, in which both Nissan and Renault have a 50 % interest (Datamonitor 2007b,p.18)

3) Today Nissan produces 61 per cent of its cars outside ofJapan, comparing with 14 per cent in 1989. (Dicken, 2011)

4) Japanese Yen makes exports difficult and political resistance to growing imports.

5) During that time in Sunderland agricultural land prices, £1,800 ($2,700) per acre (Rehder, Thompson1994)

6) When Nissan chose its Northeast region, unemployment rate was 20%. (Rehder, Thompson 1994)

7) Good road and rail links to other UK cities and near to water port which is

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Port of Tyne give them easy access to export markets and for the import of cars to the UK.

8) Nissan got 112 million GBP in subsidies from the Britishgovernment as an incentive for locating the production plant in Britain (Crowther/Garrahan 1988).

9) Recently 132 different companies from Britain supplyingparts and Components to Nissan motor UK. (Rehder, Thompson 1994)

10) Nissan LEAF: European and World Car of the Year in 2011alongside 2012 Car of the Year Japan., Nissan Qashqai: Winner of over 13 global awards

11) January 2014, 100.000 Nissan LEAFs had been cunsumed around world, that makes it the best selling electric plug-in car globally (KPMG, 2014) About 50.000 LEAF and 60.000 lithium-ion batteries produced by NMUK each year it created more than 550 new jobs (Financial Times, 2011).

12) Other countries such as Japan, Mexico, UK, Spain China,Taiwan, Thailand, Philippines, South Africa, Indonesia, Brazil and India

13 ) Nissan Sunderland UK factory will use 8 wind turbines in order to operate 6% of plant energy needs aiming decreasing carbon dioxide emission 4000 tons annually. (Samson, 2012) 14 ) LEAF position is the world’s first mass-produced and best-selling 100%

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electric vehicle. LEAF is the world's most popular EVs having 97% performance satisfaction and 95% clients recommend this car to their friends. (SMMT, 2014)

15 ) UK has 1.5 million car produced while USA 11 Millon, Japan 10 million and Germany 5.7 Million automotive manufactured. In EU biggest is Germany second Spain third place is France and UK is fourth place. (OICA, 2013) 16) Nissan UK employee around 8000 people its predicted that Nissan’s support more 26.000 people in their supply chain network. (Nissan Europa, 2015 ) 17) UK automotive sector takes 4% of total GDP (£60.5 billion) 3% of GDP and gives employment for around 700.000 people in the UK in manufacturing, retail and service sectors. Automotive export sectorsin the UK, takes 10% of total UK export in goods (KPMG, 2014 cited Departmentfor Business, Innovation and Skills (BIS)

18 ) Nissan's chief operating member Toshiyuki Shiga told for referendum possibly will be held in 2017 about Britain's membership in EU "From the foreign investor point of view I hope that the UK will remain as an EU member." That indicate Nissan’s view on EU is important and they want to see as a single market. (Telegraph, 2013)

Definitions ;

NMUK : Nissan Motor United Kingdom EU : European Union

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VI - BIBLIOGRAPHY

CROWTHER, S.; GARRAHAN, P. (1988): Corporate Power and the Local Economy, in: Industrial Relations Journal, Vol. 19, No. 1, pp. 51-59.

Danny Samson, 2012. Management. Asia Pacific Edition. Cengage Learning Australia.

DATAMONITOR (Ed.) (2007b): New Cars in Japan - Industry Profile, New York,NY.

Dicken, Peter, (2011). Global Shift, Sixth Edition: Mappingthe Changing Contours of the World Economy (Global Shift: Mapping the Changing Contours). Sixth Edition . The Guilford Press.

Grazia Ietto-Gillies, 2005. Transnational Corporations And International Production: Concepts, Theories And Effects. illustrated edition Edition. Edward Elgar Pub.

HUDSON, R (2002): Changing Industrial Produetion Systems and Regional Development in New Europe

Mintel The UK Car Review: (2015) An Insight into Brand Preferences and Market Trends - UK - Companies and Products

Morschett, Dirk 2010. Strategic International Management: Text and Cases. 2nd ed. 2010 Edition. Gabler Verlag

(OLEV) The Office for Low Emission Vehicles (2013 ) Drivingthe Future Today A strategy for ultra low emission vehiclesin the UK

Peter J. Buckleya, Sierk A. Horn , Adam R. Crossa and John Stillwell (2013) The spatial redistribution of Japanese direct investment in the United Kingdom between 1991 and 2010 Business History, Vol. 55, No. 3, 405–430,

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Robert R. Rehder, Judith Kenner Thompson, (1994) The Japanese Transplant Beachhead in Europe The Columbia Journal of World Business

Royal Geography Society Geography in the news(n.d), Cars: Britain’s global business is back on track

Stuart Dawley, Andy Pike, John Tomaney (2013) How does manufacturing contribute to UK resilience? Future of Manufacturing Project: Evidence Paper 28 Foresight, Government Office for Science

Automotive Council UK (2015) [Online] Available from: [http://www.automotivecouncil.co.uk/mapping-uk-automotive/north-east-2/[Accessed 23 April, 2015]

Knapman, Chris (2012) The history of Nissan's Sunderland factory [Online] Available from: [http://www.telegraph.co.uk/motoring/car-manufacturers/nissan/9753733/The-history-of-Nissans-Sunderland-factory.html[Accessed 23 April, 2015]

KPMG (2014) The UK Automotive Industry and the EU [Online] Available from: [www.kpmg.co.uk ] [Accessed 23 April, 2015]

Department for Business, Innovation and Skills (BIS), (2014) ,Automotive Industry Report

Financial Times Nissan to build updated Qashqai in UK (2011) [Online] Available from: [http://www.ft.com/cms/s/d735ef08-91d2-11e0-b4a3-00144feab49a, [Accessed 23 April, 2015]

Kamal Ahmed 08 Oct 2013 Britain must stay in the EU, says Nissan boss [Online] Available from: [http://www.telegraph.co.uk/finance/newsbysector/industry/10364535/Britain-must-stay-in-the-EU-says-Nissan-boss.html [Accessed 23 April, 2015]

http://www.telegraph.co.uk/finance/newsbysector/industry/10364535/Britain-must-stay-in-the-EU-says-Nissan-boss.html

http://www.telegraph.co.uk/finance/newsbysector/industry/10364535/Britain-must-stay-in-the-EU-says-Nissan-boss.html

http://www.telegraph.co.uk/finance/comment/kamal-ahmed/

http://www.ft.com/cms/s/d735ef08-91d2-11e0-b4a3-00144feab49a

http://www.ft.com/cms/s/d735ef08-91d2-11e0-b4a3-00144feab49a

http://www.kpmg.co.uk/

http://www.telegraph.co.uk/motoring/car-manufacturers/nissan/9753733/The-history-of-Nissans-Sunderland-factory.html



http://www.automotivecouncil.co.uk/mapping-uk-automotive/north-east-2/

http://www.automotivecouncil.co.uk/mapping-uk-automotive/north-east-2/

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Nissan Global (2015) [Online] Available from: [http://www.nissanglobal.com/EN/GCS/] [Accessed 23 April, 2015]

Nissan Newsroom Europa (2015) [Online] Available from: [http://www.newsroom.nissan-europe.com/[Accessed 23 April, 2015]

Nissan UK (2015) [Online] Available from: [http://www.nissan.co.uk/] [Accessed 23 April, 2015]

OICA (Organisation Internationale des Constructeurs d’Automobiles) 2013 [Online] Available from: [ http://www.oica.net/category/production-statistics/2013-statistics/ [Accessed 23 April, 2015]

The Society of Motor Manufacturers and Traders (SMMT) MotorIndustry facts [Online] Available from: [ http://www.smmt.co.uk/2014/02/motor-industry-facts-2014/[Accessed 23 April, 2015]

Tim Pollard (2015) UK 2014 car sales analysis: winners and losers [Online] Available from: [ http://www.carmagazine.co.uk/car-news/industry-news/ford/uk-2014-car-sales-analysis-winners-and-losers/ [Accessed 23 April, 2015]

Make it Sunderland 2012 [Online] Available from:[ http://www.makeitsunderland.com/index.aspx?articleid=8046 [Accessed 23 April, 2015]

PART 4 : REFLECTION ON THE ASSESSMENT

A - What did you learnt from assessment?

http://www.makeitsunderland.com/index.aspx?articleid=8046

http://www.carmagazine.co.uk/car-news/industry-news/ford/uk-2014-car-sales-analysis-winners-and-losers/

http://www.carmagazine.co.uk/car-news/industry-news/ford/uk-2014-car-sales-analysis-winners-and-losers/

http://www.smmt.co.uk/2014/02/motor-industry-facts-2014/

http://www.oica.net/category/production-statistics/2013-statistics/

http://www.oica.net/category/production-statistics/2013-statistics/

http://www.nissan.co.uk/

http://www.newsroom.nissan-europe.com/

http://www.nissanglobal.com/EN/GCS/

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Companies in order to grow and to have global presence theyare doing investments not only in local home country aimingfor international market. I learn how think in analytic way, read UNCTAD data and make a paragraph and summarizing the report. I didn't know existence of UNCTAD data and reports I will use them again for relevant modules.

I learn theories in deeply like internalisation and monopolisation a relation between them how it does effect the companies these theories in real life. I have learn newword terminology related with economics

B - What did you found most interesting?

The most interesting part is knowing how the world become globalized and improvements on technology during the time and these changes how affects company's growth strategy andcompany policy?

There are limited number of TNC in world and they hold the big proportion of worlds capital and they have beneficial relations with governments.

C - What did you found most challenging?

While I summarize UNCTAD report on section one I have to bevery picky in order to understand salient trends, key changes and write down the report in limited words.In section two the sources about internalisation and monoplisation was high academic language, I had to read couple times for paraphrasing in my own words.In section tree I had difficulties with combining, blendingfacts and theories.

D - How effectively did it assess the learning outcomes of the module?

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Module has a good method of teaching. After assessment I have sufficent information about Multinational Enterprises.Information on module and assesment handbook's is guidelineshows student use his own way to study and learn.

Multinational Enterprise

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