1. Unit 2.03 International Business Organizations
Unit 2 – Business in the global economy
Unit 2.03
International Business Organizations

2. International business organizations
Multinational Corporations (MNCs)
Global Market Entry Modes
International Trade Organizations

3. 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

4. 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

5. Multinational corporations

6. Multinational corporations
Global Strategy – uses the same product and marketing strategy worldwide
Coca-Cola
1886 Coca-Cola invented as fountain drink/tonic
1899 began bottling
1909 nearly 400 bottling plants in operation
1920s bottled sales exceed fountain sales
1930s global expansion begins
1940s 64 bottling plants around world (supplying WWII soldiers)
1950s packaging innovations
1960s new brands introduced (Fanta, Tab, Sprite)
s consolidation to serve customers technology leads  to a global economy international mega-chains
1990s new & growing markets previously closed, now open (eastern Europe, Africa)
Today Coca-Cola is sold in more than 200 countries and is the most recognized brand in the world

7. Multinational corporations
Multinational strategy – treats each country market differently
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

8. Multinational corporations
Benefits
Large amount of goods available
Lower prices
Career opportunities
Foster understanding, communication, and respect
Friendly international relations
Drawbacks
Economic power
Worker dependence on the MNC
Consumer dependence
Political power

9. Global market entry modes
Licensing
Franchising
Joint Venture

10. LICENSING
Selling the right to use some intangible property (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

11. Right to use a company name or business process in a specific way
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

12. An agreement between two or more companies to share a business project
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

13. INTERNATIONAL TRADE ORGANIZATIONS
World Trade Organization
International Monetary Fund
World Bank

14. 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

15. 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

16. Created in 1944 to provide loans for rebuilding after WW II
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

17. assignment
MNCs Pros & Cons