1. Multinational Companies Chapter 5.2, pages 150-156

2. Corporation A corporation or limited company is a legal entity created by law and established by a corporate charter. A corporation can enter agreements, own land and property, and hold contracts just like an individual. The liability of business owners is limited to the amount they invest in the corporation. Corporations are often managed by a board of directors elected by shareholders. This board appoints a president and managers to take care of the everyday operation of the business. Ownership is divided into shares, and their can be one owner or thousands of owners.

3. Multinational Company (MNC) AKA transnational company A business enterprise that conducts business in several countries Must observe national regulations in countries where they operate Account for more than 70% of world trade Over 90% of parent companies are in the northern hemisphere

4. MNC’s can be very economically powerful  extract, refine and distribute most of the world’s oil and gas  build most of the world’s hydroelectric and nuclear plants  manufacture most of the world’s communications equipment, chemicals and medicine (including H1N1 vaccines and anti-viral medicines)

5. MNC’s usually have there HQ in a major city and operate in one of three ways Ethnocentric MNC  Operates internationally like it does at home, with tight controls over foreign operations (i.e. Coca Cola) Polycentric MNC  Understands the differences in other countries and gives more autonomy to foreign operations (i.e. 3-M) Geocentric MNC  global in the true meaning of the word, since there is no strategic base left in the home country; not traditionally bound to any particular place; looks at the world as one big market, therefore being located in the most suitable place in relation to its activities

6. Global Organizational Structure There are various organizational structure possibilities for MNC’s Separate International Divisions – separate from company, own systems Functional Divisions – by departments Product Divisions – by product groupings Geographic Divisions – by global regions Matrix Organization – reporting flows through all departments

7. Functional Division

8. Geographic Division