Principles of Business Finance and Marketing
Unit 2 – Business in the Global Economy
Section 2.03 – International Business Organizations
NOTES
MULTINATIONAL CORPORATION
 An organization that does business in several countries
o Home country – the country where parent company
o Host country – the country in which the MNC places
is located
business activities
Global Top 100
 Leading Industries
1. industrials
2. technology
3. financials
 Leading Countries
1. USA
2. United Kingdom
3. China
 Leading Companies
1. apple
2. exxon Mobil Corp
3. google Inc
Global Strategy
 Uses the same
 Example:
Coca-Cola
1886
1899
1909
1920s
1930s
1940s
1950s
1960s
1970-80s
1990s
Today
product and marketing strategy worldwide
Coca-Cola invented as fountain drink/tonic
began bottling
nearly 400 bottling plants in operation
bottled sales exceed fountain sales
global
expansion begins
64 bottling plants around world (supplying WWII soldiers)
packaging innovations
new brands introduced (Fanta, Tab, Sprite)
consolidation to serve customers
technology leads  to a global economy international mega-chains
new & growing markets previously closed, now open (eastern Europe, Africa)
Coca-Cola is sold in more than 200
countries and is the most recognized
brand in the world
Multinational Strategy
 treats each country market differently
 Example:
List 3 different McDonald’s menu items found around the world and where they’re from:
Multinational Corporations
Benefits
 large
amount of goods available
 Lower prices
 Career opportunities
 Foster understanding, communication, and respect
 Friendly international relations
Drawbacks
 Economic power
 Worker dependence
on the MNC
 Consumer dependence
 political
power
GLOBAL MARKET ENTRY MODES
Licensing
 Selling the right to use some intangible property (production process, trademark, or brand
name) for a fee or royalty
o
Allows companies to produce items in other countries without being actively involved
o
Has a low
company is often low
The risk
Example:
o
o
financial investment, so the potential financial return for the
for the company is low
Franchising
 Right to use a company name or business process in a specific way
o
o
o
Allows organizations to enter into contracts with people in other countries to set up a
business that looks and runs like
the parent company
Marketing elements, such as food products, packaging, and advertising, must meet both
cultural sensitivities
and legal requirements
Commonly involves selling a product or service
Joint Venture
 An agreement between two or more companies to share a business project
o
o
o
Allows two or more companies to share raw materials, shipping facilities, management
activities, or production activities
Concerns include the sharing of profits
and not as much control
because several companies are involved
Very popular for manufacturing
, such as Japanese and U.S. automobile
manufacturers
INTERNATIONAL TRADE ORGANIZATIONS
World Trade Organization (WTO)
 Created in 1995
to promote trade
around the world
o 150
member countries
o Settles trade disputes
o Enforces free-trade agreements
o Other goals
 Lowering tariffs that discourage free trade
 Eliminating import quotas
 Reducing barriers for banks, insurance companies, and other financial services
 Assisting poor countries
with economic growth
International Monetary Fund (IMF)
 Established in 1946
to help promote economic cooperation
o Maintains an orderly system of world trade and exchange rates
o Includes more than 150
member nations
World Bank
 Created in 1944
to provide loans
for rebuilding after WW II
o AKA the International Bank for Reconstruction and Development
o Today the World Bank has more than 180
member countries and two main
divisions
 International Development Association (IDA), which makes loans to help
developing countries
 International Finance Corporation (IFC), which provides technical capital and
technical help to private businesses
in nations with limited
resources