3.3 International Business Organizations Business Principles A Chapter 3 Mrs. Sorrell

Multinational Companies Definition: an organization that does business in several countries Parent company in home country Host country Strategies Global strategy—same product and marketing worldwide Multinational strategy—treats each country market differently MNC Benefits Increased goods available Often lower prices More career opportunities Fosters friendly relations with other countries Drawback of MNC Economic power, host country becomes dependent, consumers depend on the goods and services, could actually influence or control the political power Global: Coca-Cola Multinational—products and marketing adapts to the customs, tastes, and buying habits of a distinct national market MNC BENE

3.3.1 Activities What are the advantages of a multinational strategy? Find a multinational company online and identify their multinational strategy.

Global Market Entry Modes Licensing Selling the right to use some intangible property for a fee or royalty Franchising Right to use company name or business process in a specific way Royalty payment will be received Joint Venture Partner with two or more companies to share a business project Production process, trademark, or brand name Gerber Company started selling its baby food products in Japan by licensing. Sports team logos, movie characters also involve licensing agreements. Franchising Commonly involves selling products or services; popular with fast-food companies

Activity 3.3.2 How does licensing differ from franchise?

International trade organizations World Trade Organization (WTO) Promotes trade around the world Lowers tariffs that discourage free trade Eliminates import quotas Reduces barriers for banks, insurance companies, and other financial services Assists poor countries with economic growth International Monetary Fund (IMF) Tax placed on imported products World Bank =International Bank for Reconstruction and Development Economic aid to less-developed countries to fund communications systems, transportation networks, and energy plants Crude oil may have quotas so that the supply will remain low and prices will stay at a certain level. Quotas may be set on imports from another country to express displeasure at the policies of that country. Quotas can be set by a country to protect one of its industries from too much competition from abroad. Sometimes tariffs make the cost so high that the consumer decides to buy one in their own country. High tariffs ten to lower the demand for the product and reduce the quantity of that import. Many people believe tariffs should be used to protect US jobs from foreign competition. Some tariffs are a set amount per pound, gallon, or other unit, while others are figured on the value of the good. i.e. bicycles Many people believe that tariffs should be used to protect US jobs from foreign competition. Embargoes offer more protection from international competition for their own industries than the quota or tariff. Could prevent sensitive products from falling into the hands of unfriendly groups or nations. May express disapproval of the actions or policies of another country.

Activity 3.3.3 How does the International Monetary Fund assist countries?