...is similar for drug manufacturers. Ensure minimum standards. The success of multinationals is often because consumers like to buy goods and services where they can rely on minimum standards. i.e. if you visit any country you know that the Starbucks coffee shop will give something you are fairly familiar with. It may not be the best coffee in the district, but it won’t be the worst. People like the security of knowing what to expect. Financial and Technological Resources and Expertise: MNCs provide immense resources and investments, technology, innovation and expertise to the host societies. A culture of research and development is encouraged and human resources are developed, at least within the organization. MNCs also contribute significantly to the national exchequer by paying taxes. Good Business Practices: Good governance, organizational transparency, clear command structures, and performance-based evaluation and incentives programs for employees encourage the merit system. MNCs introduce a professional working environment and culture for local organizations to emulate, thereby promoting sound management and business education. Comforts of Life: In some cases,...
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...Chapter 1 Multinational Financial Management: An Overview Specific Objectives • Identify the main goal of the MNC and conflicts with that goal • Describe the key theories that justify international business • Explain the common methods used to conduct international business Outline Goals of the MNC Maximize shareholder wealth Problems encountered in meeting goals: 1) Agency problems larger for MNCs than purely domestic firms because: a) monitoring more difficult because of geographic distance b) different cultures c) MNC size d) subsidiary managers may maximize the value of their subsidiary but not of the MNC as a whole 2) Centralized vs. decentralized management a) centralized reduces agency costs because it gives parent more control; downside is that local managers may be better informed b) decentralized management increases agency costs but may result in better decisions c) Internet may facilitate monitoring of foreign subsidiaries 3) Corporate control used to reduce agency problems a) executive compensation with stock b) threat of hostile takeover c) monitoring by large shareholders Constraints encountered in meeting goals 1) Environmental - other countries may be tougher (e.g., pollution controls) 2) Regulatory - e.g., currency convertibility...
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...WHAT IS FOREIGN DIRECT INVESTMENT (FDI) Foreign Direct Investment (FDI) is the process whereby residents of one country (the source/home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country) The International Monetary Fund (IMF) defines foreign direct investment (FDI) as a category of international investment where a resident in one economy (the direct investor) obtains a lasting interest in an enterprise resident in another economy (the direct investment enterprise). (IMF, 1993) * Two parts of this definition are important to note: 1. The “lasting interest” implies the existence of a long-term relationship between the direct investor and the direct investment enterprise, 2. The “direct investment” implies the acquisition of at least 10 percent of the ordinary shares or voting power of an enterprise abroad. * Foreign Direct Investor - an individual, an incorporated or unincorporated public or private enterprise, a government, a group of related individuals, or a group of related incorporated and/or unincorporated enterprises which has a direct investment enterprise – that is, a subsidiary, associate or branch – operating in a country other than the country or countries of residence of the foreign direct investor(s). Common Misconceptions of FDI. * FDI does not necessarily imply control of the enterprise since only a 10 percent ownership...
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...CONCEPT OF MNC A multinational corporation is an enterprise that carries on business operations in more than one country. It extends its manufacturing and marketing operations through a network of branches and subsidiaries which are known as its foreign affiliates. According to a report of international labour office the essential nature of multinational enterprises lies in the fact that its managerial headquarters are located in one country while the enterprise carries out operations in a number of other countries as well.´ CHARACTERISTICS OF MNC: * Large size * Worldwide operations * Centralized control * Sophisticated technology * Professional management * International market * High brand equity ROLES OF MNC 1) MNC’s help to increases the investment level & thereby the income & employment in host country. 2) The transnational corporations have become vehicles for the transfer technology, especially to developing countries. 3) They also initiate a managerial revolution in host countries through professional management and employment of highly sophisticated management techniques. 4) The MNCs enable that host countries to increases their exports & decreases their import requirements. 5) They work to equalize cost of factors of production around the world. 6) MNC’s provide and efficient means of integrating national economies. 7) The enormous resources of multinational enterprises enable them to...
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...evidence from the organisation known as ‘British Petroleum’. The purpose of this assignment is to grasp a comprehensive understanding of the critical aspects of British Petroleum’s internationalization process, the implications it holds for the international business environment and achieving their internationalization objectives through contemporary context. Overview of organisation When discussing globalization it is critical to emphasis the importance a multinational corporation holds over the international business environment. A Multinational corporation (MNC) is an organisation that has registered facilities and assets in business endeavors in more than one country. MNC’s are highlighted for their success in incorporating products, ideas and cultures from more than one country in order to achieve a common goal. With reference to the definition of a MNC, British Petroleum (BP) is undoubtedly a MNC as it undergoes its business ventures throughout the entire world and in countries such as China, Australia, Canada and Mexico. A key aspect of MNC’s is to multi nationalize every aspect of your organisation when aiming to expand internationally, BP are successful in ensuring that every branch of BP around the world has the common sustainable goals. BP has a direct correlation in Foreign Direct Investment (FDI). A FDI is when an organisation finances into production or business ventures in an external country to the one they are operating in. There are many forms of FDI...
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...Marked socio-economic differences in Mexico are playing an important role in pushing the uptake of generics, and these issues are starting to affect multinational corporations (MNCs). MNCs are being forced to open up and diversify, quite simply to have their fingers in as many pies where they can compete successfully. Alternatively they are applying a more focused sales strategy to concentrate on niche markets. Alvarez Tostado of AstraZeneca believes that MNCs need to adjust their activities to become competitive in both the private and public sector. “Mexico provides a uniquely generous market structure where you have the institutional sector, the private out-of- pocket segment of the market, and then you have the new up-and-coming popular insurance systems that will cater to those who have very little access to medical care, if they have access at all. So in that regard, I think the industry has to realign itself to make sure that it is able to provide adequate services to the institutional sector; provide broadened access to the out-of-pocket consumer, and obviously realign to be competitive in the Seguro Popular concept.” Mexico is no exception to the global trend of companies moving towards branded generics, a successfully growing sector in a very much brand-driven Mexican society. Bertrand Baron, general director of Sanofi Mexico, is confident that Sanofi’s global strategy of diversification fits well with the current climate in Mexico. “I believe that Sanofi in Mexico...
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...Multinational Companies in India The multinational companies in India represent a diversified portfolio of companies from different countries. The list of multinational companies in India is long and growing. There are few main reasons why multinational companies are coming down to India. Large MNCs have looked and still look at this country as potential growth market. India has got a huge market and one of the fastest growing economies in the world. Besides, the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market. However, the scenario changed during the financial liberalization of the country, especially after 1991. Government, nowadays, makes continuous efforts to attract foreign investments by relaxing many of its policies. As a result, a number of multinational companies have shown interest in Indian market. The country has got many MNCs operating here. Following are names of some of the most famous and successful multinational companies in India: Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of the US based Microsoft Corporation, one of the software giants has got their headquarter in New Delhi. Working in close association with all the stakeholders including the Government...
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...Sri Lankan Journal of Human Resource Management Sri Lankan Journal of Human Resource Management Vol.2, No.1 2008 Sharing the Pie: Trade Unionism and Industrial Relations in Multinationals in Bangladesh Monowar Hossain Mahmood East West University Bangladesh Abstract Using the ‘convergence-divergence’ thesis as the baseline for the study of industrial relations and trade union activities in multinational subsidiaries, the present study tried to investigate extent of the trade union activities and IR practices of MNCs in a developing country context, i.e. Bangladesh, as well as influence of the MNCs on trade unions and IR activities within the existing social and economic contexts. The study revealed that comparative power dominance of multinationals over the host country industrial relations actors emerge as the vital factor in employer-union bargaining process, as well as their capacity to manipulate the existing bargaining process also helped them to implement their desired practices in Bangladesh. However, multinationals were not in confronting mode at all the circumstances, but their potential lobbying power created difficulties for the employees and the trade unions to develop countervailing power in the collective bargaining process and IR activities. Keywords: Convergence-Divergence, Bangladesh, Multinationals, Trade Unions Introduction Empirical studies of international human resource management (IHRM) often reveal that industrial relations practices...
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...MNC Structure Ken Shall MA405 Multinational Management Grantham University Professor : Angela Au 6/05/2012 A Multinational Company In business today, the boundaries of the world have seemed to almost disappear. More and more companies have a much broader reach and expanding globally is almost the norm. Many years ago, few companies were able to sell products to other parts of the world, let alone conduct business operations in other countries. Then we began to see some of the world’s largest companies begin to expand globally, not only in sales, but in operations, creating a physical presence in many foreign countries. In the early 1980’s, Honda opened up operations and began building cars in Ohio. This was a real twist, and probably a brilliant move, as it was when many Americans began to realize global expansion yet we wanted to keep jobs here and buy what was built in America. Today, with the help of the World Wide Web and Social Marketing, even a fairly small business can not only sell in other countries, but also have a physical presence there. An example of a US business expanding globally is Le Gourmet Gift Basket Inc. As early as 2004, it had 510 franchise locations including 25 outside the United States. (Le Gourmet Gift Basket Inc) Forming a Multinational Company There are two primary ways that a multinational organization is created - organically or inorganically. The Le Gourmet Gift Baskets example above is a great example of organic growth...
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...Journal of International Business Studies (2012) 43, 84–106 & 2012 Academy of International Business All rights reserved 0047-2506 www.jibs.net Multinationals and corporate social responsibility in host countries: Does distance matter? Joanna Tochman Campbell1, Lorraine Eden1 and Stewart R Miller2 1 Department of Management, Mays Business School, Texas A&M University, College Station, USA; 2Department of Management, College of Business, University of Texas at San Antonio, USA Correspondence: JT Campbell, Department of Management, Mays Business School, Texas A&M University, 420 Wehner Building, 4221 TAMU, College Station, TX 77843-4221, USA. Tel: þ 1 979 845 4851; Fax: þ 1 979 845 9641 Abstract Prior studies have found that foreign affiliates of multinational enterprises (MNEs) suffer from liability of foreignness (LOF). Foreign affiliates may be able to improve their social legitimacy and overcome LOF by demonstrating social commitment to host-country constituents through corporate social responsibility (CSR). If LOF is positively related to the distance between the home and host countries, and CSR activities confer social legitimacy benefits on foreign affiliates, we should expect CSR activities and distance to be positively related. However, we argue that, despite this potential motivation, foreign affiliates from more distant home countries are in fact less likely to engage in host-country CSR. Our argument focuses on the ways in which distance affects the MNE’s...
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...Multinational Italy 2008 The “Multinational Italy 2008” survey by ICE examines the activities of multinational companies that involve the domestic economy: the Italy-based multinationals and their foreign subsidiaries and the Italian firms in which foreign-based multinationals hold an interest. The sectors considered are: extraction and manufacturing; energy, gas, water; construction; wholesaling; logistics and transport; telecommunication services; software and IT services; other professional services. There are 7,152 Italian investee companies in which 3,961 investor companies own equity. Their employees in Italy total 852,741, while 2006 revenues of the investee companies was € 429,512 million. Controlling interests predominate, in this case, involving 92.1% of the companies, 91.1% of the employees, and 89% of total revenues. The foreign companies invested in Italy operate primarily in the service industries. The growth of investments in logistics and transport and in professional services reflects the trend of new infrastructure and the transition to services in the economies of the major industrialized countries and, at the same time, expresses the competitive superiority of international businesses in those sectors with respect to our companies. The wholesaling sector is also expanding, though at a slower rate, and is largely composed of the commercial subsidiaries of industrial multinationals. On the whole, however, the IT and telecommunication services sector...
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...When the Legends Die When I bought my first steer I was deceived by the owner because he told me that this steer would win the show. So I went and feed and worked the steer the way he said and come to find out he got last in the class. So I went and talk to some of the other people who had bought steers from him and they told me the same thing had happened to them too. So I went back and told him what had happened and he said that I was lying and said I did something wrong. I went on to tell him that I had feed him right that he grew and finished but that he was just a calf not a show quality steer. So he told me that the reason I had gotten this steer was that he need to sell it and I was gullible and bought the calf had that he had lied to me. A couple of years later I was buying a lamb and the owner told me the same thing. So by that time I knew I could call a good friend of mine that was a livestock judge and he would come and look at the animal and tell me whether or not to buy the lamb. So he came and looked at the lamb and told me that the guy was lying to me again and I ended up getting the smallest lamb there and I did the best with it that year. So I have finally learned that to never trust a seller unless you know them and so far that has worked out for me. I have successfully gone and bought animals that have done a lot better then when I listen to...
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...Technical Information Pureshield protection Glass & Ceramic sealant Product description: The Pureshield protection Glass & ceramic is an alcohol based system,which generates an easy-to-clean effect on glass and ceramic surfaces. On the surface a thin hydro-and oleophobic film is created,which prevents the sticking of dirt,limescale & impurities and increase the rolling off of Liquid.This results in a very easy cleaning of the coated surfaces.Pureshield protection glass & ceramic is excellently suitable for sealing surfaces in the kitchen or bathroom such as shower cubicles,washing basins,flagging,etc.it protects the substrate from wetting, and it is permeable towards water vapour,and thus prevents the treated parts from moisture expansion and rotting. When the roll-off effect decreases,it can be easily renewed. Suitable substrates: Glass and Ceramic surfaces for example in the kitchen or in the bathroom, all type of glass materials Material: Siloxane compound, free of silicone . Colour: Colourless Liquid Consumption: 5-15ml/meter square(depending on the kind of application) Preparation: ready to use Substrate pre-treatment: The substrate must be dry and free of dirt,oil and grease Application method: Spray as a thin film (wet varnish method or airless-spraying system) or by reaming with a lint-free cloth. After drying...
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...FOREIGN DIRECT INVESTMENT AND THE MULTINATIONAL CORPORATION CHAPTER 2. 2.1. INTRODUCTION International business activity is by no means a recent phenomenon. The lives of Phoenicians and Carthaginians, in the ancient world, were deeply dependent on international business. This economic activity included foreign direct investment (FDI), joint ventures and strategic alliances, among other forms of internationalisation (Moore and Lewis, 1999). Several multinational corporations (MNEs) can also be identified in Europe in the middle ages and in the beginning of the modern era (Dunning, 1993a; Jones, 1996). The origins of modern international business activity however, are associated with the industrial revolution. Modern MNEs, in particular, have their roots in the massive international movement of factors that took place in the nineteenth century (Dunning, 1993a: p.99). Resource-seeking was the most common motivation of FDI in this period, even if by 1850 many firms had already crossed the Atlantic, in both directions, in what can be defined as market-seeking investment (Dunning, 1993a: p.100; Jones, 1996: p.5). 8 Despite the presence of FDI, most foreign investment in the nineteenth century - and indeed until the late 1940s – was portfolio capital. As a result, international business activity was largely ignored in economic theory until the late 1950s. On the one hand, the phenomenon did not have a major perceived economic impact. It was widely assumed that MNEs were...
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...Nike Inc. Company Profile * Founded in 1964 as Blue Ribbon but became official Nike in 1971. * Founders are Phillip Knight and Bill Bowerman * Headquartered in Beaverton, Oregon * Slogan “Just Do It” * Owns Jordan, Air Force One, Converse, Hurley and more Products * Sneakers, Shoes, Jerseys, Shorts, Cleats, * Air Jordan * Sparq Training * Fly wire and Lunar light foam to reduce sneaker weight Controversy * Sweatshops in Cambodia, Mexico, and Vietnam. Nike was accused of violating wage and overtime laws. Nike has stated that more than two thirds of its factories are yet up to their companies standards. * Child Labor Allegations in Cambodia and Pakistan where Nike manufactures soccer balls. Since the accusations Nike has tried to fix the issue but they still manufacture in Pakistan and Cambodia and those countries are difficult to regulate child labor. * Strike in Chinese Factory over Nike duping workers out of 250 Yuan per month. It had been in practice for over 20 years but has now been rectified. Environmental Issues * Nike ranks in the top 3 out of 56 companies when it comes to the least environmental impact. Nike is truly a pioneer when it comes to cleaning up the environment. Examples of this are the reuse a shoe program and recycled material used for soles. Finances * Nike Inc. will buy back 8 billion dollars worth of Nike stock over the next 4 years. Since 2012 Nike has bought back 10 billions dollars...
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