1. 3.3 International Business Organizations
Business Principles A
Chapter 3
Mrs. Sorrell

2. 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. 3.3.1 Activities What are the advantages of a multinational strategy?
Find a multinational company online and identify their multinational strategy.

4. 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

5. Activity 3.3.2
How does licensing differ from franchise?

6. 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.

7. Activity 3.3.3
How does the International Monetary Fund assist countries?