Transcript Unit 2.03 PowerPoint

UNIT 2 – BUSINESS IN THE
GLOBAL ECONOMY
Unit 2.03
International
Business
Organizations
INTERNATIONAL BUSINESS
ORGANIZATIONS
Multinational Corporations (MNCs)
Global Market Entry Modes
International Trade Organizations
MULTINATIONAL CORPORATION
An organization that does business in several countries
 Home country – the country where parent company is located
 Host country – the country in which the MNC places business
activities
MULTINATIONAL CORPORATIONS
 Global Top 100
 Leading Industries
 Financials
 Technology
 Health Care
 Leading Countries
 USA (53)
 China (11)
 United Kingdom (9)
 Leading Companies
 Apple
 Exxon Mobil Corp
 Google Inc
PWC Global Top 100 Companies by Market Capitalization
MULTINATIONAL CORPORATIONS
MULTINATIONAL CORPORATIONS
Coca-Cola
MULTINATIONAL CORPORATIONS
 Global Strategy – uses the same product and marketing strategy
worldwide
 Coca-Cola
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1886
1899
1909
1920s
1930s
1940s
1950s
1960s
1970-80s
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
 1990s
 Today
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
COCA-COLA
1971 Advertisement – I’d Like to Buy the World a Coke
COCA-COLA
 “Open Happiness” campaign
 Global integrated marketing
 Launched in U.S. on "American Idol"
 Worldwide advertising
MULTINATIONAL CORPORATIONS
 Multinational strategy – treats each country market
dif ferently
 i.e. McDonald’s
Asia
Middle East
Europe
McHotdog Mega Breakfast
Sausage
McArabia (grilled chicken or kofta)
CBO (chicken, bacon, & onions)
Bacon Potato Pie
Chicken Big Mac
Crocque McDo (ham & cheese)
Shrimp Burger
Veg McPuff Pizza
Lakse wrap (fish)
Bubur Ayam (chicken
porridge)
Chicken McCurry Pan
McTurco (beef on pita)
McRice Burger
Paneer Salsa Wrap
Bacon roll
MULTINATIONAL CORPORATIONS
 Benefits
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Large amount of goods available
Lower prices
Career opportunities
Foster understanding, communication, and respect
Friendly international relations
 Drawbacks
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Economic power
Worker dependence on the MNC
Consumer dependence
Political power
GLOBAL MARKET ENTRY MODES
Licensing
Franchising
Joint Venture
LICENSING
Selling the right to use some intangible proper ty (production
process, trademark, or brand name) for a fee or royalty
 Allows companies to produce items in other countries without
being actively involved
 Has a low financial investment, so the potential financial
return for the company is often low
 The risk for the company is low
FRANCHISING
Right to use a company name or business process in a
specific way
 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
 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
International Monetary Fund
World Bank
WORLD TRADE ORGANIZATION (WTO)
Created in 1995 to promote trade around the world
 150 member countries
 Settles trade disputes
 Enforces free-trade agreements
 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
 Maintains an orderly system of world trade and
exchange rates
 Includes more than 150 member nations
WORLD BANK
Created in 1944 to provide loans for rebuilding after WW II
 AKA the International Bank for Reconstruction and
Development
 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
ASSIGNMENT
 MNCs Pros & Cons