Resolving Control Cost Conflict Within The St. Clair Hospital

Resolving Control Cost Conflict within The St. Clair Hospital Airlia Griffin MHA 601: Principles of Health Care Administration Dr. Prince Ordu June 16, 2015 Introduction Conflict is a natural part of any work environment. What considers it healthy conflict is how the individuals involved respond? Handling and resolving conflicts that arise in the workplace is one of the biggest challenges managers and employees face. â€Å"The consequences of health care workers’ conflict are many.† Patton goes on stating, â€Å"At best, conflicts result in beneficial changes in the workplace; at worst, it can impact patients’ lives.† (Patton, 2013) By learning to constructively resolve conflict, we can turn a potentially destructive situation into an opportunity for creativity and enhancement for performance. Janice Frates stated, â€Å"†¦,having work teams at all organizational levels openly and vigorously debate their ideas is a form of healthy conflict that produces both stronger team relationships and better work outcomes.† In regards to the St. Clair Hospital plan for cost control, a healthy conflict did not arise. Types of Conflict Identified Types of conflict identified throughout this particular case study would include intrapersonal conflict and inter-organizational conflict. Frates explained that intrapersonal conflict is when the interdependence of departments within an organization can lead to conflict which is often grounded in differing professional training and different measuresShow MoreRelatedWho Gets Power and How They Hold on to It10070 Words   |  41 Pageslegitimization, centralized control, regulations, and the more modem management information systems—tend to buffer the organization from reality and obscure the demands of its environment. Most great states and institutions declined, not because they played politics, but because they failed to accommodate to the polidcal realities they faced. Political processes, rather than being mechanisms for unfair and unjust allocations and appointments, tend toward the realistic resolution of conflicts among interestsRead MoreDeveloping Management Skills404131 Words   |  1617 PagesSoftware Services Printer/Binder: Edwards Brothers Cover Printer: Coral Graphics Text Font: 10/12 Weidemann-Book Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text. Copyright  © 2011, 2007, 2005, 2002, 1998 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protectedRead MoreStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 PagesPrinter/Binder: Courier/Kendallville Cover Printer: Courier/Kendalville Text Font: 10.5/12 ITC New Baskerville Std Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Copyright  © 2013, 2011, 2009, 2007, 2005 by Pearson Education, Inc., publishing as Prentice Hall. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtainedRead MoreLibrary Management204752 Words   |  820 Pages. . . 168 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Centralization and Decentralization . . . . . . . . . . . . . . . 170 Unity of Command . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Span of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Line and Staff Positions . . . . . . . . . . . . . . . . . . . . . . . . 174 Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Coordinating Mechanisms Read MoreFundamentals of Hrm263904 Words    |  1056 Pages134 Factors That Affect Recruiting Efforts 134 DID YOU KNOW?: Something for Everyone 135 Constraints on Recruiting Efforts 135 Organizational Image 135 Job Attractiveness 136 Internal Organizational Policies 136 Government Influence 136 Recruiting Costs 136 Chapter 7 Foundations of Selection 154 Learning Outcomes 154 Introduction 156 The Selection Process 156 Initial Screening 156 Completing the Application Form 157 DIVERSITY ISSUES IN HRM: Interview Questions 158 Key Issues 159 Weighted Application

The Bill Of Rights The Amendment Rights - 2558 Words

In 1791, the Bill of Rights was created to specify the individual rights of every human being. Madison James is the creator of the 10 Amendments, he believed it was necessary to create the document to further explain what the Constitution will provide for each person. The Bill of Rights gives every citizen the right to freedom of religion, freedom of speech, as well as the freedom of the press, and lastly the due process rights. This document was formed when the Constitution in 1789 was drafted. Federalist viewed the Bill of Rights as an unnecessary document that the Anti-federalist wanted in order to feel safe in knowing what the Constitution was really about and what was entitled to them. The 9th Amendment assures you cannot be denied certain rights, even if you re not told your rights you still have them. The 9th amendment stated the following, â€Å" the enumeration in the Constitution of certain rights, shall not be constructed to deny or disparage others retained by the pe ople.† This amendment grants you the rights that were not specified in the first 8 Amendments. For example, you have the right to have an abortion and you won t get in trouble because it s not illegal. This amendment was created to limit the power of the government over every individual. This is important for everyone so they aren t taken advantage. In 1965, â€Å"Griswold v. Connecticut,† a supreme court case about the use of birth control. Planned Parenthood League of Connecticut, was givenShow MoreRelatedThe Bill Of Rights : The Amendment Rights2558 Words   |  11 PagesIn 1791, the Bill of Rights was created to specify the individual rights of every human being. 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Many of the states and there representatives, had concerns about the wording of the current The Bill Of Rights The Amendment Rights - 2558 Words In 1791, the Bill of Rights was created to specify the individual rights of every human being. Madison James is the creator of the 10 Amendments, he believed it was necessary to create the document to further explain what the Constitution will provide for each person. The Bill of Rights gives every citizen the right to freedom of religion, freedom of speech, as well as the freedom of the press, and lastly the due process rights. This document was formed when the Constitution in 1789 was drafted. Federalist viewed the Bill of Rights as an unnecessary document that the Anti-federalist wanted in order to feel safe in knowing what the Constitution was really about and what was entitled to them. The 9th Amendment assures you cannot be denied certain rights, even if you re not told your rights you still have them. The 9th amendment stated the following, â€Å" the enumeration in the Constitution of certain rights, shall not be constructed to deny or disparage others retained by the pe ople.† This amendment grants you the rights that were not specified in the first 8 Amendments. For example, you have the right to have an abortion and you won t get in trouble because it s not illegal. This amendment was created to limit the power of the government over every individual. This is important for everyone so they aren t taken advantage. In 1965, â€Å"Griswold v. Connecticut,† a supreme court case about the use of birth control. Planned Parenthood League of Connecticut, was givenShow MoreRelatedThe Bill Of Rights : The Amendment Rights2558 Words   |  11 PagesIn 1791, the Bill of Rights was created to specify the individual rights of every human being. 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Modern science and materialism Essay Example For Students

Modern science and materialism Essay What is real? This question has puzzled many what is really real or what is reality. Reality as I shall explain is one that is according to materialism and proven by science. Materialism is defined, as the metaphysical view holding that matter alone is real. This is what Hugh Elliot proves in his argument Modern Science and Materialism. By use of his argument I will answer the questions of what is real, what humans need to know, if it is possible to know what is real and how, how to distinguish real for non-real, where humans fit in, and how we can benefit from materialism. First, what is real? Reality is only one thing, and it is all principles of matter and energy. When you reach out and touch something it is matter, when you look to the skies all around you sense this reality of matter and energy from the light in the sky to the ground beneath us. Elliot says that the universe consists of matter and energy in a state of permanent change.(Pg. 307 Modern Science and Materialism, Hugh Elliot) What Elliot is saying is matter is all objects being discerned, energy consisting of motion, heat, light, sound, electricity, and etc., and permanent change is real. This permanent change means that everything when you take a look around our universe it never stands still relative to the rest of the universe, and even science has proven this with the second law of thermodynamics it states that all systems will change spontaneously to less ordered. Now this is a scary thought that we wouldnt be able to grasp reality if it always changes on its own. This raises a serious question, how can we understand or live according to reality if it always is changing? Well, there is no need to worry about this fact of change, because we can understand how it works we our not helpless against nature. The universe will change according to Elliot and science, but the universe is not a chaotic place. It has procedures or fixed sequences that is follows it gives us humans knowledge about events so certain that we can predict the future. Elliot also states this he says that the universe it follows certain fixed sequences-usually called laws-which are so definite that even in the present state of knowledge many future events can be prophesied with certainty.(Pg. 308 Modern Science and Materialism, Hugh Elliot) Yes, now we have something to follow according to reality it is these, as Elliot states, laws. But unlike the laws of the government that are sometimes hard to follow these laws of the universe our fixed sequences that cant be broken, and wh at a relief. I have already mentioned one of these laws, but there is still others that govern us for our good. One is the law of gravity that states that large masses will exert a pull on other masses, and this is a law for the good of mankind. For if large masses didnt attract we would lose our atmosphere to space and so too we would be blown out into space. Yet, we have these laws that govern reality, but is it possible for us to gain the knowledge of all reality? Well, for us as humans to have knowledge we must have the facts, the ultimate facts of reality. When a mind has a small amount of real facts the reality that he constructs is less real. The more facts that we can accumulate the closer we get to true reality or what is really real. Hugh Elliot knew this he states before we can discern the deeper relationships of existence and the universe, we must know about these ultimate facts.(Pg. 308 Modern Science and Materialism, Hugh Elliot) This is how is we know reality we must construct it out of facts, and as Elliot stated we must know about these ultimate facts. This is what makes Elliots argument so easy to believe because he knew where to go to get these facts he gained knowledge before he gave his argument. To make this easy how many times have you thought that for sure you knew something and then as your education grows you see the world in a new light? Therefore it is possible to know what is real, but how?We already know that to have knowledge we need fact, but where and how do we get the facts that are consistent with reality? Hugh Elliot understood exactly where knowledge comes from he states all human knowledge is derived by observation and experiment.(Pg. 308 Modern Science and Materialism, Hugh Elliot) This is the source of facts, this is truth, and this is the ground on to which knowledge is built. By following this procedure many things have been learned and proven. Sir Isaac Newton tested his observations of falling matter by using experim ents to find out the facts on the laws of gravity. And because of the knowledge that became available it has changed our world for the better. We were able to use the fundamentals of this law to make and use machines. Our world went from an agricultural society to one of a booming industrial, space travel became possible, and countless lives have been saved. Although one law helped to change our understanding of the world there is much more that others have gathered. All knowledge that is based of the fore mentioned procedures have been gathered together into the various fields of science. This is where we can go to look for our answers to questions on reality. This is where Elliot argues we must go he says the first thing to be done in any search after philosophic principles is to travel over special sciences with a view to extracting from them such information relevant to our purpose.(Pg. 308 Modern Science and Materialism, Hugh Elliot) this is where we get the knowledge it is her e that others like us who want the truth have been going and they are also the ones increasing our knowledge through science. Macbeth Essay SummaryThus, when we know think of reality we can now say we understand it. It is purposeless, always changing according to laws, and it is all matter and energy. We have come to terms that it means that the only things that are real are those that go according to those things. There are no gods, or spirits, or any nonphysical entities like mind. We also know now that our place in reality is insignificant, but that it doesnt mean that we need have no happiness because of this. We can now enjoy life in total freedom always learning and growing in this knowledge. May you take to heart what has been given you so you can enjoy your life along with those like you who today are happier because of what they now know. Bibliography:

What is foreign Direct Investment Why firms favor FDI rather than exporting licensing or Franchising Essay Example

What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising Essay In their book ‘Foreign Direct Investment and Regional Economy’, Jonathan Jones and Wren Colin argue that foreign direct investment (FDI) is the process where firms or individuals provides capital to an already existing firm or to a newly created firm in another country. Jones J and Wren C (2006, 7). A multinational enterprise (MNE) is the name given to firms who have establishments in more than one country.   The Organization for Economic Cooperation and Development (OCED) defined FDI as ‘investment that adds to, deducts from or acquires a lasting interest in an enterprise operating in an economy’. Jones J and Wren C (2006, 8). The foreign investor has a considerable influence in the management. In the wake of globalization the role of FDI’s cannot be underscored in propelling economic growth across the globe.   It is estimated that the global inflows from private FDI’s rose from $159 billion in 1991 to a tune of $1.1 trillion in a decadeâ €™s time. The success of any MNE’s will be affected by the approach that the firm uses entering a market.   MNE’s must consequently be very keen before making the final decision of which entry method to apply. This paper will focus on elaborating what FDI is as well as highlighting why it is preferred to licensing, exporting or franchising. History has it that initially MNE’s were treated with much suspicion on the basis that probably they were only out to exploit the 3rd world nations but with time countries become most receptive probably due to the benefits accrued. Bora B (2002, 1). The success of any firm or MNE in FDI largely depends on various factors like the degree of competition in the host country. Competition is of much essence as it determines the rate at which the firms are to manipulate their productivity levels, introduce other new production possibilities and consequently create positive spill over effects or externalities on the host countries. Whether the overall effects of FDI are positive or negative remains a highly debatable issue that also depends on whose point of view is being considered.   FDI’s have a significant effect on the balance of trade.   It is mostly associated with the transfer or export of jobs and some countries may cite ‘brain drain’ as a problem cre ated by FDI.   The host country on the other hand might argue that the MNE in question is not to its advantage when it imports labor. FDI’s could be blamed for killing domestic industries especially in cases where MNE’s are able to produce at a lower cost of production and hence produce cheaper and quality products at a lower price than is being offered by the domestic industries. Bora B (2002, 1). However, cases where FDI produces products that are not produced by the host country, then this is to the host country’s advantage. We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you FOR ONLY $16.38 $13.9/page Hire Writer FDI is a very important source of capital as well as the technological know-how or knowledge in various productions.   Intellectual property rights (IPRs) are vital in influencing or rather determining if a firm is to invest in another country through FDI. Countries with weak protection discourage MNE’s from investing.   Bora B (2002, 197). IPR’s are a significant component of the regulatory system in any nation the same way taxes, regulations related to investment, trade policies as well as competition rules are.   IPR’s are very essential especially for firms that deal with ‘knowledge based assets’.   Countries with weal IPR’s would discourage foreign investors as there are high chances of imitation to counter the MNE’s goods.   Strong IPRS could be in the form of patents, copyrights, trade brands or even trademarks.   Imitation has a negative effect on the MNE’s as it reduces the market size. Strong IPR’s gi ves MNE’s a ‘monopoly’ advantage in the market which they can use to increase their profitability levels. Other factors that make foreign firms consider FDI includes the transportation costs incurred.   If a foreign firm estimates that the transportation cost would be too high when it exports her products, the FDI could be the better choice.   High trade costs also encourage firms or MNE’s to enter foreign countries through FDI.   A country where there is a relatively high productivity relative to the labor costs would also be more attractive for firms considering FDI.   Low fixed costs of establishing plants are also an incentive to FDI.   The major objective for the establishment of any firm is to make profits.   Profit which is the difference between the total revenues and total costs will be reduced if costs are high.   Firms with consequently try to opt for the options that minimize costs to increase their profits.   Low cost of establishments will therefore translate to increased profitability levels. Bora B (2002, 198). The role of IPRS in influencing FDI decisions is however dependent on the kind of business in question.   For the firms specializing in hard-to-imitate products the role of IPR’s is lower than for those whose products can be easily imitated.   Easy to imitate firms could be those dealing with pharmaceuticals and software. Access to foreign markets could also be influenced by investment regulations where inefficient ones will discourage FDI while efficient ones will attract FDI.   Limited rights of establishment will also hinder the market accessibility for MNE’s considering FDI.   Trade controls in a nation affect the flow of money in the economy.   If there’s limited flow of money in circulation then the demand for productions will be negatively affected.   Accessibility to credit has a positive effect on the demand thus triggering increased production. Strict controls on the production as well as on marketing can also influence FDI’s in a country.   Countries that control the amount of output or the raw materials to use may affect MNE’s decision of whether to enter a market through FDI.   Arbitrary taxes are a disincentive to FDI and so are licensing restrictions. Bora B (2002, 202) When foreign companies use the ‘export’ approach to attain market access in a certain country, it means that they will have to establish an importer in the foreign country as well as agents. It could also establish a sales subsidiary in having its goods or services in the market.   Licensing on the other hand entails the selection of whether one is to contract a foreign firm to produce for it its products and also carry out the marketing or a firm could also opt for franchising. Wertz B and Wensley R (2002, 458). The need to increase or rather widen their profit levels, seek growth opportunities as well as diversifying risks is what triggers MNE’s to invest in foreign markets.   Comparative advantage plays an important role in influencing if firms are to engage in business. Before firms can make concrete decisions about foreign investment they must carry out effective market research regarding the country in question. The quality of infrastructure in the host country also affects the decision of how to gain the market entry.   Other important questions a firm should try to answer include whether there are available raw materials as well as energy which would affect the costs of production. Mc Donald et al (2002, 244). The major forms of FDI are joint ventures and wholly owned subsidiaries.   Joint ventures entails the partnership of 2 or more independent firms form a partnership and share resources in the operation of FDI.   They could be contractual or equity joint ventures. Using the licensing approach in gaining access to a market involves or rather is characterized by some advantages. It has reduced risks regarding the loss of proprietary knowledge.   It allows the firms to have strategic flexibility as it is associated with minimal controls and above all it applies lower amounts of resources as compared to FDI McDonald et al (2002, 229). Environmental factors also have a role to play in influencing firm’s decision regarding which approach to use gaining access in the market. Such factors include the risks in that country, competitive conditions and familiarity with the location.   In countries with high risks MNE’s may consider licensing to FDI and the reverse is true.   Other factors that may favor licensing include high cultural difference between the host and the home or source country and a declining market demand.   In cases where competition is subject to rapid technological as well as regulatory changes, firms may also consider licensing to other approaches of accessing or entering markets.   Firms dealing with research and development (RD) intensive ventures will not opt for licensing.   Those in areas where there’s homogenous competition conditions as well as demand would least opt for licensing. Licensing would also not be considered in the face of rapid technological change, in countries with deregulation as well as those with political and cultural barriers.   Licensing would only be considered when the level of technological process if not complex, where there are harsh environmental conditions and hence it would not be profitable for the firms.   It can also be applied in cases of unstable demand. International franchising refers to a situation where a parent company offers or rather grants other companies the right of use to its products, services, trade marks or brand names but in a prescribed manner.   In return the mother or parent company gains profits which could be in a lump sum and continued or ongoing fees.   Independent firms could be given the mandate to control the franchise or the franchisor could take an equity share where they could have its own managers head some of the outlets.   The franchisor could offer knowledge about the business in question, offer marketing support and local exclusivity.   They could also offer the firms manuals on how to operate, and continued training.   The franchisee must however comply with the franchisor’s set standards and regulations so as not to tarnish its name through poor quality production. The ongoing fees are usually a certain percentage of the total sales made by the franchisee.   There are 2 types of franchising.   First generation franchising includes those between manufacturers and retailers as well as between wholesalers and retailers.   Franchising could be by a trade name or trade mark which is also referred to as second generation franchising or business franchising.   Franchising is applicable to both small as well as large firms and favored in cases where the cost of monitoring the managers as well as other employees is high overseas.   The major difference between licensing and franchising is that the former receives a ‘proportion’ of the business while the latter attains all there is necessary for the successful running of the business.   Licensing ensures limited control over the process of running a business unlike franchising.   Selection is also different for licensing and franchising where licensing are self-selective as fra nchisee are selected the parent company or firm.   Licensing is done on already well established firms contrast to franchising which could be on start-up firms (McDonald et al (2002, 233).   Parent companies have zero equity in licensing unlike in franchising. Whether a firm is to use exporting as a way of entering a market largely depends on the prevailing trade environment, costs of transportation, risks related foreign exchange as well as threats of non-payment. (McDonald et al (2002, 234). The use of licensing as a market entry strategy is criticized on the grounds that the parent company or firms could be creating its own competitor. However it reduces the political based risks as it is 100% owned by the locals.   It’s therefore a best solution or approach for new firms in the market.   Licensing earns the firms a minimal income compared to FDI entry. The role of the local government in influencing the kind of entry a foreign company takes is very significant. Countries could treat different entries differently thus encouraging some while discouraging others. Firms may opt for FDI in stable and well established economies as then their costs of operation are likely to be relatively low compared to unstable economies.   It is also easier to predict demand in such economies and they can easily make long term decisions unlike in cases of unstable economies.   MNE’s with the objective of pursuing a global strategy would favor FDI where they have full control over the running of their firms. The prevailing conditions of a host infrastructure also affect the entry mode.   This is because it has a significant influence on the costs incurred thus influencing the MNE’s profitability levels. Factors determining the mode of entry could be social, economical, political or industry specific factors. In their book, ‘International trade’ Luis and Oliva noted that there are two forms of FDI that is the vertical as well as the horizontal FDI.   Horizontal FDI is when companies manufacture similar products or services in varying countries while vertical FDI is when firms carry out different stages of production process in various or different countries. Rivera-Batiz L and Oliva M. (2003, 165). FDI is favored over exportation when there are location advantages that significantly lower the trade costs to the target market. Some countries attract FDI through the application of tax breeds.   MNE’s will therefore be influenced by such incentives before deciding the entry mode to adopt. Firms will prefer FDI to licensing where ‘arms’ length relationship are very complex or when the agency costs involved are too high.   Firms will tend to shy away from licensing when there are unclear or complex contracts that are not specified.   If the costs incurred for enforcing the licensing contracts are very high to an extent that is unprofitable for the MNE’s then, FDI is preferred Rivera-Batiz L and Oliva M. (2003, 178). When there are high chances of the host country accessing the technology and knowledge to produce similar products, then the use of licensing must be reconsidered.   High competitiveness in the local market can see the competitors offer cheaper but low quality goods to raise the demand. Strong IPR’s can favor FDI to exportation.   FDI is beneficial to the host country in the sense that it brings about superior technology that ensures cheaper production of quality goods and services.   However the benefits will depend on whether the technology has some positive externalities to the host country or not.   Since FDI create competition the positive effects of competition like lowered prices and quality production are ensured.   FDI is also associated with positive effects on a country’s investment and exports as well as reducing the foreign exchange gap. What is foreign Direct Investment Why firms favor FDI rather than exporting licensing or Franchising Essay Example What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising Paper In their book ‘Foreign Direct Investment and Regional Economy’, Jonathan Jones and Wren Colin argue that foreign direct investment (FDI) is the process where firms or individuals provides capital to an already existing firm or to a newly created firm in another country. Jones J and Wren C (2006, 7). A multinational enterprise (MNE) is the name given to firms who have establishments in more than one country. The Organization for Economic Cooperation and Development (OCED) defined FDI as ‘investment that adds to, deducts from or acquires a lasting interest in an enterprise operating in an economy’. Jones J and Wren C (2006, 8). The foreign investor has a considerable influence in the management. In the wake of globalization the role of FDI’s cannot be underscored in propelling economic growth across the globe. It is estimated that the global inflows from private FDI’s rose from $159 billion in 1991 to a tune of $1.1 trillion in a decade’ s time. The success of any MNE’s will be affected by the approach that the firm uses entering a market. MNE’s must consequently be very keen before making the final decision of which entry method to apply. This paper will focus on elaborating what FDI is as well as highlighting why it is preferred to licensing, exporting or franchising. History has it that initially MNE’s were treated with much suspicion on the basis that probably they were only out to exploit the 3rd world nations but with time countries become most receptive probably due to the benefits accrued. Bora B (2002, 1). The success of any firm or MNE in FDI largely depends on various factors like the degree of competition in the host country. Competition is of much essence as it determines the rate at which the firms are to manipulate their productivity levels, introduce other new production possibilities and consequently create positive spill over effects or externalities on the host countries. Whether the overall effects of FDI are positive or negative remains a highly debatable issue that also depends on whose point of view is being considered. FDI’s have a significant effect on the balance of trade. It is mostly associated with the transfer or export of jobs and some countries may cite ‘brain drain’ as a problem created b y FDI. The host country on the other hand might argue that the MNE in question is not to its advantage when it imports labor. FDI’s could be blamed for killing domestic industries especially in cases where MNE’s are able to produce at a lower cost of production and hence produce cheaper and quality products at a lower price than is being offered by the domestic industries. Bora B (2002, 1). However, cases where FDI produces products that are not produced by the host country, then this is to the host country’s advantage. We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on What is foreign Direct Investment? Why firms favor FDI rather than exporting licensing or Franchising specifically for you FOR ONLY $16.38 $13.9/page Hire Writer FDI is a very important source of capital as well as the technological know-how or knowledge in various productions. Intellectual property rights (IPRs) are vital in influencing or rather determining if a firm is to invest in another country through FDI. Countries with weak protection discourage MNE’s from investing. Bora B (2002, 197). IPR’s are a significant component of the regulatory system in any nation the same way taxes, regulations related to investment, trade policies as well as competition rules are. IPR’s are very essential especially for firms that deal with ‘knowledge based assets’. Countries with weal IPR’s would discourage foreign investors as there are high chances of imitation to counter the MNE’s goods. Strong IPRS could be in the form of patents, copyrights, trade brands or even trademarks. Imitation has a negative effect on the MNE’s as it reduces the market size. Strong IPR’s gives MNE’s a ‘monopoly’ advantage in the market which they can use to increase their profitability levels. Other factors that make foreign firms consider FDI includes the transportation costs incurred. If a foreign firm estimates that the transportation cost would be too high when it exports her products, the FDI could be the better choice. High trade costs also encourage firms or MNE’s to enter foreign countries through FDI. A country where there is a relatively high productivity relative to the labor costs would also be more attractive for firms considering FDI. Low fixed costs of establishing plants are also an incentive to FDI. The major objective for the establishment of any firm is to make profits. Profit which is the difference between the total revenues and total costs will be reduced if costs are high. Firms with consequently try to opt for the options that minimize costs to increase their profits. Low cost of establishments will therefore translate to increased profitability levels. Bora B (2002, 198). The role of IPRS in influencing FDI decisions is however dependent on the kind of business in question. For the firms specializing in hard-to-imitate products the role of IPR’s is lower than for those whose products can be easily imitated. Easy to imitate firms could be those dealing with pharmaceuticals and software. Access to foreign markets could also be influenced by investment regulations where inefficient ones will discourage FDI while efficient ones will attract FDI. Limited rights of establishment will also hinder the market accessibility for MNE’s considering FDI. Trade controls in a nation affect the flow of money in the economy. If there’s limited flow of money in circulation then the demand for productions will be negatively affected. Accessibility to credit has a positive effect on the demand thus triggering increased production. Strict controls on the production as well as on marketing can also influence FDI’s in a country. Countries that control the amount of output or the raw materials to use may affect MNE’s decision of whether to enter a market through FDI. Arbitrary taxes are a disincentive to FDI and so are licensing restrictions. Bora B (2002, 202) When foreign companies use the ‘export’ approach to attain market access in a certain country, it means that they will have to establish an importer in the foreign country as well as agents. It could also establish a sales subsidiary in having its goods or services in the market. Licensing on the other hand entails the selection of whether one is to contract a foreign firm to produce for it its products and also carry out the marketing or a firm could also opt for franchising. Wertz B and Wensley R (2002, 458). The need to increase or rather widen their profit levels, seek growth opportunities as well as diversifying risks is what triggers MNE’s to invest in foreign markets. Comparative advantage plays an important role in influencing if firms are to engage in business. Before firms can make concrete decisions about foreign investment they must carry out effective market research regarding the country in question. The quality of infrastructure in the host country also affects the decision of how to gain the market entry. Other important questions a firm should try to answer include whether there are available raw materials as well as energy which would affect the costs of production. Mc Donald et al (2002, 244). The major forms of FDI are joint ventures and wholly owned subsidiaries. Joint ventures entails the partnership of 2 or more independent firms form a partnership and share resources in the operation of FDI. They could be contractual or equity joint ventures. Using the licensing approach in gaining access to a market involves or rather is characterized by some advantages. It has reduced risks regarding the loss of proprietary knowledge. It allows the firms to have strategic flexibility as it is associated with minimal controls and above all it applies lower amounts of resources as compared to FDI McDonald et al (2002, 229). Environmental factors also have a role to play in influencing firm’s decision regarding which approach to use gaining access in the market. Such factors include the risks in that country, competitive conditions and familiarity with the location. In countries with high risks MNE’s may consider licensing to FDI and the reverse is true. Other factors that may favor licensing include high cultural difference between the host and the home or source country and a declining market demand. In cases where competition is subject to rapid technological as well as regulatory changes, firms may also consider licensing to other approaches of accessing or entering markets. Firms dealing with research and development (RD) intensive ventures will not opt for licensing. Those in areas where there’s homogenous competition conditions as well as demand would least opt for licensing. Licensing would also not be considered in the face of rapid technological change, in countries wi th deregulation as well as those with political and cultural barriers. Licensing would only be considered when the level of technological process if not complex, where there are harsh environmental conditions and hence it would not be profitable for the firms. It can also be applied in cases of unstable demand. International franchising refers to a situation where a parent company offers or rather grants other companies the right of use to its products, services, trade marks or brand names but in a prescribed manner. In return the mother or parent company gains profits which could be in a lump sum and continued or ongoing fees. Independent firms could be given the mandate to control the franchise or the franchisor could take an equity share where they could have its own managers head some of the outlets. The franchisor could offer knowledge about the business in question, offer marketing support and local exclusivity. They could also offer the firms manuals on how to operate, and continued training. The franchisee must however comply with the franchisor’s set standards and regulations so as not to tarnish its name through poor quality production. The ongoing fees are usually a certain percentage of the total sales made by the franchisee. There are 2 types of franchising. First generation franchising includes those between manufacturers and retailers as well as between wholesalers and retailers. Franchising could be by a trade name or trade mark which is also referred to as second generation franchising or business franchising. Franchising is applicable to both small as well as large firms and favored in cases where the cost of monitoring the managers as well as other employees is high overseas. The major difference between licensing and franchising is that the former receives a ‘proportion’ of the business while the latter attains all there is necessary for the successful running of the business. Licensing ensures limited control over the process of running a business unlike franchising. Selection is also different for licensing and franchising where licensing are self-selective as franchisee are selected the parent company or firm. Licensing is done on already well established firms contrast to franchising which could be on start-up firms (McDonald et al (2002, 233). Parent companies have zero equity in licensing unlike in franchising. Whether a firm is to use exporting as a way of entering a market largely depends on the prevailing trade environment, costs of transportation, risks related foreign exchange as well as threats of non-payment. (McDonald et al (2002, 234). The use of licensing as a market entry strategy is criticized on the grounds that the parent company or firms could be creating its own competitor. However it reduces the political based risks as it is 100% owned by the locals. It’s therefore a best solution or approach for new firms in the market. Licensing earns the firms a minimal income compared to FDI entry. The role of the local government in influencing the kind of entry a foreign company takes is very significant. Countries could treat different entries differently thus encouraging some while discouraging others. Firms may opt for FDI in stable and well established economies as then their costs of operation are likely to be relatively low compared to unstable economies. It is also easier to predict demand in such economies and they can easily make long term decisions unlike in cases of unstable economies. MNE’s with the objective of pursuing a global strategy would favor FDI where they have full control over the running of their firms. The prevailing conditions of a host infrastructure also affect the entry mode. This is because it has a significant influence on the costs incurred thus influencing the MNE’s profitability levels. Factors determining the mode of entry could be social, economical, political or industry specific factors. In their book, ‘International trade’ Luis and Oliva noted that there are two forms of FDI that is the vertical as well as the horizontal FDI. Horizontal FDI is when companies manufacture similar products or services in varying countries while vertical FDI is when firms carry out different stages of production process in various or different countries. Rivera-Batiz L and Oliva M. (2003, 165). FDI is favored over exportation when there are location advantages that significantly lower the trade costs to the target market. Some countries attract FDI through the application of tax breeds. MNE’s will therefore be influenced by such incentives before deciding the entry mode to adopt. Firms will prefer FDI to licensing where ‘arms’ length relationship are very complex or when the agency costs involved are too high. Firms will tend to shy away from licensing when there are unclear or complex contracts that are not specified. If the costs incurred for enforcing the licensing contracts are very high to an extent that is unprofitable for the MNE’s then, FDI is preferred Rivera-Batiz L and Oliva M. (2003, 178). When there are high chances of the host country accessing the technology and knowledge to produce similar products, then the use of licensing must be reconsidered. High competitiveness in the local market can see the competitors offer cheaper but low quality goods to raise the demand. Strong IPR’s can favor FDI to exportation. FDI is beneficial to the host country in the sense that it brings about superior technology that ensures cheaper production of quality goods and services. However the benefits will depend on whether the technology has some positive externalities to the host country or not. Since FDI create competition the positive effects of competition like lowered prices and quality production are ensured. FDI is also associated with positive effects on a country’s investment and exports as well as reducing the foreign exchange gap.