The Multinational Corporation
Introduction
A multinational corporation or worldwide enterprise [1] is an organization that owns or controls production of goods or services in one or more countries other than their home country. [2] It can also be referred as an international corporation, a "transnational corporation", or a stateless corporation. [3]
One of the first multinational businesses was the India Trading [4] company and was created around 1600, around 1602 the Dutch India Trading company was created and remained the largest corporation in the world for nearly 200 years. [5] When we think of Multinational Corporations a few the ones that come to mind are FedEx, Exxon Oil and Gas, United Airlines, Coca Cola, McDonalds, Microsoft and
According to the McDonald 's Corporation website (as of January 2015), McDonald 's has, "retailers in more than 100 countries, with more than 36,000 restaurants serving approximately 69 million people every day."[5} I have eaten at McDonalds restaurants in the United States, Canada and Mexico and while the menus are not all that different what and how it is displayed in very different. The United States, Canada & Mexico have pretty much the same requirements such as nutrition facts the way they need to be listed is very different. Not all countries require they be listed and some have no laws whatsoever with regard to labeling, this is why it is important that they have the ability to control their own production of goods not just for quality but safety as
Language would definitely be an issue, the world has many languages and the same word in English might have a different meaning in another country. The same document might have to be produced in 5 or 6 different languages, interpreters might be needed in certain cases.
Cultural differences might require different delivery hours in the case of FedEx, an altogether different menu for McDonalds, uniform styles may need to be adjusted so as not to offend certain cultures.
The world is not on the same calendar when it comes to holidays, schedules would most certainly need to be adjusted.
Banking and financial transactions involving many different currencies, taxes, exchange rates that change fairly often, financing if needed. While most Multinational Corporations have offices in the countries they do business in, some do not. With the advances in technology, handling the day to day operations would be easier than even 5 years ago, technology cannot handle it
With the continuous development and progress of society, globalization gradually becomes the main trend toward the development within the company. Therefore, correct understanding of a multinational company becomes extremely important. This research will introduce a multinational company in accordance with the three thesis from the perspective of comprehensively and objectively. It is helpful to understand multinational companies
A multinational corporation (MNC) that came to my mind was Frito-Lay. Frito-lay has produced many products over the years from when they first started which was 1961. Four years later Frito-Lay merged with the Pepsi-Cola Company. When I visited Jordan last summer I noticed that in their markets they had Lay's, but not the usual flavors that we have in the US. Frito-Lay customizes its produce to appeal to the people that live there. Lay’s were created and produced by a company named Frito-Lay. Frito-Lay was created here in North America but it sells its produce in many countries such as Jordan. Frito-lay sells its products in Jordan nothing more. Frito-Lay manufactures and distributes to countries such as United Kingdom, Gamesa and Sabritas
The purpose of this research is to provide a substantial assessment/explanation/analysis of the degree to which the McDonald’s operates based on a universal cultural or whether it is most strongly influenced by the national culture of that country. The researcher will explain how McDonald’s uses diversity and organizational initiatives to contribute to the corporate bottom line. Finally, the researcher will evaluate the company’s bottom-line rationale for diversity initiatives.
Multinational corporations play a captious role in the global economy. Production by MNCs accounts for over one-fourth of the world’s output and over one third of the worlds’ trade (Ritzer, 2011). For the purpose of this essay, a MNC is defined as a cross-border business enterprise which owns and controls income generating assets in more than one country (Tang, 2008). Well recognised examples include Shell, McDonalds, IMB, General Motors, etc. The main aim of these entities is profit and growth. MNCs have emerged due to structural and inherent market imperfections such as unstable exchange rates, restrictions on imports, marketing and distribution costs, excise duties and subsidies and they have grown promptly due to economies of scale and because of their burst t...
Contemporary companies utilize global resources and markets to produce and sell their products. Managing a multinational company is vastly more complex than running a retail store in one location. Operating internationally increases the complexity
Other types of exchange rate risks are translation risk and so-called hidden risk. The translation risk relates to cases where large multinational companies have subsidiaries in other countries. On the financial statement of the whole group, the company may have to translate the assets and liabilities from foreign accounts into the group statement. The translation will involve foreign exchange exposure. The term hidden risk evolves around the fact that all companies are subject to exchange rate risks, even if they don’t do business with companies using other currencies. A company that is buying supplies from a local manufacturer might be affected of fluctuating foreign exchange rates if the local manufacturer is doing business with overseas companies. If a manufacturer goes out of business, or experience heavy losses, it will affect all the companies it does business with. The co...
When a firm own and facilitates its product and services in more than one country it becomes Multinational Corporation and this report is based on the issues in a global business faced by a Multi National Corporation. Nestle is a multinational corporation. Nestle achieved it through globalization and trade liberalization which tend to encourage firms to globalize followed the norms of other countries. Some internal factors which led Nestle to globalize are that
Multinational Strategy: Basically focuses on the tastes of local bazaar. The participation of company in a number of local bazaar besides its national market. Hence a particular strategy should be adopted to cater to the needs of each different country considering its consumer needs. This leads to a competitive advantage in each different country.
McDonalds also uses diversification in its global marketing. McDonalds recognizes that different countries have different values, customs, and tastes. Therefore, McDonalds satisfies these diverse global tastes by diversifying the menu according to each country’s unique preferences. This added diversification tactic, allows McDonalds to stay competitive in a global market. Examples of McDonalds globally diversified menu would be that McDonalds offers an exclusive beefless menu to its customers who live in India. This is because eating beef in India is sacrilegious. To meet the tastes of customers in India, McDonalds created new offerings such as the “Pizza McPuff” and the “McVeggie.” McDonalds considers the cultural tastes in every country it opens its doors
This paper offers a global business analysis of ABC Corporation that is a proposed multinational corporation (MNC) in the auto and IT (information technology) sector based in the United States. It looks at issues of business structure approach to be used by the firm for purposes of global expansion and the strategic advantages and disadvantages of the Global Business approach of the company. Also, the paper will review the structure and strategies of other leading MNCs, the Ford Motor Company (FMC), in comparison. It is important to note that the Global Business strategy of MNC is similar to those of other leading MNCs in the global market like McDonald 's,
An enterprise operating in more than one country is known to be a Multinational Enterprise or an MNE. The foremost aim of all MNE’s is to globalize their operations. Top managers of large organisations argues that globalization is one of the most critical challenge they face today. Economic globalization refers to the fast increase in the international markets for goods and services and cross border interdependence and integration of production. (Dunning, 1997a).
The progression and evolution of international business has played an integral role in the overall development and progress of the world economy, culture, and politics. The multinational corporation was an essential part of this process and has roots as far back as the 15th and 16th centuries in Western Europe, specifically in the nations of England and Holland, during a period known as mercantilism. This was a time of unprecedented global exploration, colonization, and other imperialist ventures. Organizations such as the British East India Trading Company, promoted both global trade and the acquisition of natural resources, primarily for their home countries in areas including Africa, East Asia, and the Americas. Global trade was the primary factor in the growth of the world economy during this time. However the modern MNC, as it is known today, did not appear until the 19th century. These new entities provided a new level of inter-firm connectedness, a wider division of labor, and a higher level of product integration across countries in which MNCs are growing. Studies have shown that modern MNCs are characterized by a high degree of complexity, and have not followed a linear pattern in their development. In addition, it is crucial to understand the geographical context in which these MNCs were founded. This paper will analyze the development of the multinational corporation (MNC) from the 1870s to the modern day and examine it what ways, and to what degree it has changed over time.
Multinational corporations are another type of nongovernmental actor and are private businesses headquartered in one state that invest and operate extensively in other countries. These transnational corporations or international corporations have a lot of controversy surrounding them. Multinational companies try to avoid the restrictions government puts in place by doing business in that country. Multinational corporations use the corrupt government in the lesser developed countries to avoid the restrictions that are put in place. These governments are offered bribes in exchange for their cooperation. They are in business to make profit, and they do so by minimizing the cost of the factors they use in production, both the primary factors, land, labor and capital and secondary factors such as taxes and regulations.
It is true that some companies are registered and operating in more than one country at a time—this is, generally, that the company has its headquarters in one country and operates wholly or partially owned subsidiaries in others. In economic terms, establishing a multinational company includes both vertical and horizontal economies of scale and an increased market share. The purpose of this essay is to analyze if multinational companies apply a regional or global strategy on their way of working. For carrying they were taken some relevant cases of two authors. According to Alan Rugman, the world’s largest 500 companies are often called multinational enterprises, producing and/or distributing products and services across national borders. On
Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).