multinationals and corporate governance
TRANSCRIPT
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MNEs and Risk Management:
history
723g33
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List of content
Multinational Enterprises (MNEs) and its
power
The case of News Corp
The importance of corporate governance
Competitive advantage vs. disadvantage of
MNEs
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Political power of multinationals
The Dutch East India Company (VOC) was the
second multinational corporation in the world,
was a chartered company established in 1602
(the first, the British East India Company, 1600). Voc is the first company to issue stock and the
largest of the early multinational companies,
possessing quasi-governmental powers, includingthe ability to wage war, negotiate treaties, coin
money, and establish colonies.
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The Shipyard of Dutch East India
Company at ca. 1750
http://en.wikipedia.org/wiki/File:VOC_duit.jpghttp://en.wikipedia.org/wiki/File:VOC.svghttp://en.wikipedia.org/wiki/File:Voc.jpg -
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A bond issued by the Dutch East India Company, dating
from 7 November 1623, for the amount of 2,400 florins
http://en.wikipedia.org/wiki/File:Vereinigte_Ostindische_Compagnie_bond.jpg -
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Replica of the VOC
vessel "Batavia" 1620
1629
A modern reconstruction of the 18th
century VOC Amsterdam: Nationalmaritime museum in Amsterdam
http://en.wikipedia.org/wiki/File:VOC_Amsterdam.jpghttp://en.wikipedia.org/wiki/File:Ship_Batavia_1.jpg -
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Dutch East India Company
went bankrupt 1799 leaving a debt of 219
million Dutch guilders.
Changing patterns of trade and poor
governance were major contributing factors in
the demise of the VOC
The VOC failure to issue shares to raise further
capital was one of its fundamental failings.
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Legacy of the VOC: what was left? VOC offered a bureaucratic model for 19th century trading
companies in terms of integrating commercial and colonialinterests
VOC offered a paradigm for integrating a consensus and
alliance model in the home country with the utilization of the
natural and human resources of the host country Learned from VOC, Dutch legislation requires the adoption of
a 'balanced' approach to corporate management, the birth of
the stakeholder model!
Having an army in the company is not an efficient way to run acompany. Better leave it with the government.
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The downside of Multinational
Corporations
Dumping strategy. Lowering the price tocompete with small enterprises and later raiseprice,
Price subsidies by government
Endorsing bribe culture
Too big to run.
To big to fail Collusion with the local government
pollution
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The Wallstreet occupy protesters view
1. MNEs are Greedy.
2. MNEs dont follow the law. They are above
the law. Multinationals possess huge power
and huge cash.
Ex: Rupert Murdoch and News Corp
3. Corporations have no morality. As long as
there is a profit, nothing matters!
Do you agree with them?
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Rupert Murdochs Media Empire
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Rupert Murdochs Media Empire
Some facts:
1.Rupert Murdoch's family trust owns 38.4% ofvoting class B in News Corp, a company thatpublishes books, films and magazines and TVprograms.
2.The hacking scandal using illegal means to getto sensitive information. Nothing is sacred.
3.After the scandal broke out, the family tried toescape the public scrutiny.
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The controversial multinational media
mogul
Born 11 March 1931
Attended Oxford University majoring politicsand economics.
1953 left Oxford to inherit a controlling sharein News Limitedof Adelaide, Australia, uponhis fathers death.
After 3 years he was making money and couldafford to buy other media firms. One of them,the Daily Mirror.
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The controversial multinational media
mogul, continues
Launched The Fox News Channelin 1996
In 2005 Murdochs News Corp. purchasedIntermix Media Incorporated, owner of the
wildly popular online socializing hub,MySpace.
Murdoch also acquired controlling interest of
IGN Entertainment, a multimedia video-basedcompany that owns websites likeAskMen,GameSpy, and RottenTomatoes.
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The controversial multinational media
mogul, continues
Amid controversy, in 2007,
Rupert Murdoch put up $5.6-
billion US Dollar (USD) bid to
acquire Dow Jonesand one ofthe most well-respected
newspaper in the country.
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News Corp has it plans to invest in the
Journal's headquarters in New York andexpanding its operations in India and China.
James Murdoch: deputy chief
operating officer of News Corp
http://www.google.se/url?sa=i&source=images&cd=&cad=rja&docid=rfNXJ2y8S6vcwM&tbnid=pfjIvTjYItF2TM:&ved=0CAgQjRwwAA&url=http%3A%2F%2Fwww.guardian.co.uk%2Fmedia%2F2009%2Ffeb%2F02%2Fjames-murdoch-in-glaxosmithcline-role&ei=_ZacUc_yIaip4ASyr4CoBQ&psig=AFQjCNGf5bXe7mtC3C-cbw1iZ7Ldj2xK3g&ust=1369303165669593 -
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The controversial multinational media
mogul, continues
While he was powerful, he also managed to
attract powerful enemies.
FOX News Network (FNN), the fair and
balanced ?
Their right wing view was known.
The slogan we report, you decide is under
attack.
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News Corp. (NWS)
-Nasdaq GS
19.63 0.05(0.26%) 25 May 21:00
Thescandal
broke
out.
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News Corporation (NASDAQ: NWS) 4:00 PM ET on May 21, 2013
Last Price Change Open Day High 52-Week High
33.37
0.20 (0.603%) 33.17 33.49 34.12
Volume Previous Close Day Low 52-Week Low
3,129,900 33.17 32.95 18.52
l b d h ll h
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James Murdoch, deputy chief operating officer of News Corp and son of chairman Rupert Murdoch,
sold $US25.1 million of nonvoting shares in the company, capitalising on a 65 per cent gain in the
stock over the past year.
Mr Murdoch sold 752,000 Class A shares at $US33.32, representing more than a fifth of his stake,according to a US Securities and Exchange filing. Mr Murdoch still owns 1,644 Class B shares, which
have voting rights in News Corp.
The sale comes ahead of a proposed split of News Corps entertainment assets from the declining
publishing business, where earnings sagged 35 per cent in the most recent quarter from the year
earlier. The companys lucrative cable-network division rose 17 per cent in sales for the period.
This is James Murdochs second-biggest stock sale in the past six months. The executive, who made$US16.8 million in salary, bonus and stock awards last year, made a gift in December of 402,260
Class A shares to his charitable foundation Quadrivium, which deals in conservation and educational
issues in developing nations.
News Corp's shares have been on a tear since the company announced in June that it would spin off
its newspapers and HarperCollins book publishing house into a separate company.
Wall Street cheered because investors had long lobbied for the senior Murdoch to exit the paper-and-ink business. The company split is expected to be complete next month.
In recent days, News Corp Class A stock hit a 52-week high of $US34.04.
Rupert Murdoch also has sold tens of millions of dollars in stock in recent months as the price
climbed.
Last weekend, Rupert Murdoch bought the Moraga Vineyard Estates in Bel Air. The 82-year-old
tycoon announced the purchase on Twitter, but he stopped short of disclosing the price. Theproperty had been listed for $US29.5 million.
Bloomberg News: James Murdoch sells News shares: May 16, 2012
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On News Corp homepage:
Corporate Governance
News Corporation's Board of Directors andmanagement are committed to strong corporate
governance and sound business practices.
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Discussion
What would be the best ownership structure ofNews Media?
(to best preserve Jounalist independence, to bestguard the public interest, etc)
What have we missed? Are journalists not theuncrowned king anymore?
The owner manager turned a blind eye on all this,is it wilful blindness?
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What to come?
There will be a lot of noise, but at the end, not
a lot of change.
-----Digby Gilmour, head of
telecommunications and media research at
C.L.S.A. Australia.
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Related readings
A good book to read:
Wilful blindness: Why We Ignore the Obvious
at Our Peril
By Margaret Heffernan
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Related sites
http://www.newscorp.com/corp_gov/index.ht
ml
http://www.youtube.com/capitalaccount