1. HIGHER BUSINESS MANAGEMENT
MULTINATIONALS

2. A multinational company is one that operates in more than one country, and typically operates in a number of major global markets.
The three main developed trading areas of the world are North America, The European Union, and South-East Asia (and Australasia).
Examples of multinationals are Coca-Cola, Cadbury Schweppes, McDonalds, Kellogg's and many more.

3. They are major employers, and they bring in new technologies, new skills and new management techniques.
In central belt Scotland, a major electronics industry has been established with multinational companies like IBM setting up major operations. In the northeast, the oil industry is dominated by multinationals such as Total, Shell and BP Amoco and suppliers such as Kvaerner.

4. An important characteristic of these organisations is that they have well established corporate brands that are widely recognised - for example, Coca-Cola is the second best known expression in the world after OK.
Many of these multinationals produce global brands with similar marketing mixes across the world - e.g. with the same or similar advertising, distribution and retailing techniques and promotions.

5. Reasons pushing UK businesses to develop a multinational presence are:
1. Size of market. Although there are only about 60 million people in the UK to sell to, there are literally billions in the global market.
2. Foreign companies are increasingly selling their own products in the UK market. Many of these companies are very big - like the US retailer Wal-Mart, which took over ASDA in If UK businesses lose some of their UK market they have to make up these losses by selling abroad.

6. Reasons pushing UK businesses to develop a multinational presence are:
3. In the world today billions of consumers are for the first time earning enough money to buy modern consumer goods like Coca-Cola and Mars bars. We are seeing the rise of global consumers, who have similar tastes and lifestyles whatever country they live in.
Many multinationals are setting up factories in
eastern Europe and China because the labour and
production costs are so low.

7. PRO’s FOR MULTINATIONALS
Offers employment to local workers (cheaper workers and cheaper premises)
Promotes peace internationally
Creates sense of community crossing international borders
Allows entire world to improve standard of living
Gives access to quality products regardless of location
Promotes economic stability

8. PRO’s FOR MULTINATIONALS
Raises standard of living for regions involved in production
Gives local economies new economic opportunities
Fact of life which needs to be accepted
Reflects global economy
Saves on transporting goods abroad
Avoids Trade Barriers
Minimises International Tax Costs
Cheaper Labour

9. CON’s FOR MULTINATIONALS
Ruins local economies
Depletes local work forces by drawing to metro centres
Stifles cultural growth and expansion on local level
Provides little help with problems which are local in nature
Creates cultural ‘sameness’ (homogenization)
Too big, little interest in the individual

10. CON’s FOR MULTINATIONALS
Gives political power to outside interests
Creates economic instability by being subject to the
whims of the global economy
Replaces traditional values with materialistic values
Makes local economies subject to mass layoffs
Exploits Cheaper Labour
Strips countries of natural resources

11. TASK
Group Discussion: Discuss whether your group agrees with Multinational Business.
Explain each point in detail.

12. Question
Describe the main characteristics of a multi-national corporation. (4)

13. Answer Multinational organisations will:
involve operations in several different countries
have a distinct ‘home’ base country
have a global brand
be able to dominate markets across many countries
have budgets that are larger than some individual countries
be able to greatly influence local economies
have cultural variations

14. Question
Many companies are now classed as multinationals. Explain the advantages and disadvantages of operating as a multinational. (5)

15. Answer Some advantages may include:
An organisation may be given grants from governments to locate in that country and the grants will not require to be paid back improving their financial position
Organisations will become larger which may result in them being safer from takeovers
Can allow organisations to increase their sales which in turn should increase their overall profits
Will allow organisations to take advantage of economies of scale and reduce unit costs of products

16. Answer
Could allow organisations to employ cheaper staff which will result in greater profitability
May help avoid legal restrictions in the organisation’s own country which could allow them to sell/produce their products abroad
Could allow for tax advantages which will increase profitability
Will mean the organisation can avoid restrictions on imports into a country which will help overall sales

17. Answer Some disadvantages may include:
Legislation may be different in other countries which may require the organisation to alter its product/service
Legislation may exist on how a product/service is marketed and may result in some marketing techniques having to be changed
Cultural differences will mean that organisations have to be sensitive to different countries cultures
Different languages will exist and this may mean that organisations have to employ specialist linguists to work with the organisation
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