multinational coorperations

8/8/2019 multinational coorperations

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Global Inc.Global Inc.


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Multinational CorporationsMultinational Corporations

What is Multinational Corporations?What is Multinational Corporations?While some regard them as ruthless exploiters, others view them asWhile some regard them as ruthless exploiters, others view them asbenign engines of prosperity. But todays multinationals bear littlebenign engines of prosperity. But todays multinationals bear littleresemblance to their forbearers. They are reinventing themselves inresemblance to their forbearers. They are reinventing themselves indiverse ways that confound the assumptions of critics and advocatesdiverse ways that confound the assumptions of critics and advocatesalike.alike.

John Stopford, Multinational CorporationsJohn Stopford, Multinational Corporations

MNCMNC areare International companies, nationalInternational companies, national

trusts and concerns of industrial developedtrusts and concerns of industrial developedcountries, which have foreign assets.countries, which have foreign assets.


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INTRODUCTIONINTRODUCTION(This course examines the emergence and evolution ofMNCs(This course examines the emergence and evolution ofMNCs

In general, historical observations of the growth of MNCsIn general, historical observations of the growth of MNCs

developmental in the pattern of outward FDI from an initialdevelopmental in the pattern of outward FDI from an initialemphasis on trading, resourceemphasis on trading, resource--based or simple marketbased or simple market--seekingseekinginvestments where the competence of leading national firms isinvestments where the competence of leading national firms isembedded in basic engineering skills, complementaryembedded in basic engineering skills, complementaryorganizational routines and structures.organizational routines and structures.

As industrial development of home countries to tries proceedAs industrial development of home countries to tries proceed

and as their firms gain maturity as MNCs, there is the gradualand as their firms gain maturity as MNCs, there is the gradualprogression of their outward FDI towards more sophisticatedprogression of their outward FDI towards more sophisticatedforms of manufacturing and services activities that embodyforms of manufacturing and services activities that embodygreater technological and organizational complexities.greater technological and organizational complexities.

The historical analysis of the developments inThe historical analysis of the developments in sectoralsectoral pattern ofpattern of

outward FDI

at the global level shows that the bulk of thisoutward FDI

at the global level shows that the bulk of thisinvestment was associated with primary commodity productioninvestment was associated with primary commodity productionbefore 1939, and only since the Second World War outward FDIbefore 1939, and only since the Second World War outward FDIin manufacturing and services come into its own in a major way,in manufacturing and services come into its own in a major way,bringing forth the growth in international technologicalbringing forth the growth in international technologicalcompetition in the industrialized countries and the globalcompetition in the industrialized countries and the global

integration of FDIintegration of FDI


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Multinational, Transnational, GlobalMultinational, Transnational, Global

In 1973, when the United Nations Commission on TransnationalIn 1973, when the United Nations Commission on Transnational

Corporations (UNCTC) was established, the UN adopted the termCorporations (UNCTC) was established, the UN adopted the term

transnational for two main reasons: At that time, many developingtransnational for two main reasons: At that time, many developing

nations were antagonistic toward what were then commonly callednations were antagonistic toward what were then commonly called

MC, so the UN chose to avoid the negative connotations associatedMC, so the UN chose to avoid the negative connotations associated

with the term multinational. Also, the UN wished to adopt the widestwith the term multinational. Also, the UN wished to adopt the widestpossible definition of transnational so as to include firms that havepossible definition of transnational so as to include firms that have

even one foreign affiliate.even one foreign affiliate.

Keeping all this in mind, we chose to use the term, multinational,Keeping all this in mind, we chose to use the term, multinational,

since it is at present the most commonly understood term, and does notsince it is at present the most commonly understood term, and does not

generally carry the negative connotations of earlier times.generally carry the negative connotations of earlier times.

There is no clear delineation of what qualifies a multinational firm as aThere is no clear delineation of what qualifies a multinational firm as a

global firm. It is a subjective term, and does not necessary relate to aglobal firm. It is a subjective term, and does not necessary relate to a

single measure of the size , activity or geographic scope of a company.single measure of the size , activity or geographic scope of a company.

We have chose to apply the term global in two instances: to refer to aWe have chose to apply the term global in two instances: to refer to a

single firm when the choice seemed obvious because of the size andsingle firm when the choice seemed obvious because of the size and

geographic spread of ageographic spread of a aa firms activities.firms activities.


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Main features of MNCMain features of MNC

MNC are big and getting biggerMNC are big and getting bigger

In terms of corporate revenue versus the GDP ofIn terms of corporate revenue versus the GDP ofcountries , of the 100 largest economies in the world,countries , of the 100 largest economies in the world,53 are corporations. ExxonMobil, the largest53 are corporations. ExxonMobil, the largestcorporation of the world, is larger than more than 180corporation of the world, is larger than more than 180nationsnations


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MNC are big and getting biggerMNC are big and getting biggerThe world 50The world 50 LLargest Economiesargest Economies

Corporate revenue vs. Country GDPCorporate revenue vs. Country GDP

12

345678910111213

1415161718192021222324

25

USA $ 9,882,842Japan $ 4,667,099

Germany $ 1,870,136UK $ 1,413,432France $ 1,286,252China $ 1,079,954Italy $ 1,068,518Canada $ 689,550Brazil $ 587,553Mexico $ 574,512Spain $ 555,004India $ 479,404Korea $ 457, 219

Australia $ 394,023Netherlands $ 364,948

Argentina $ 285,473Russian Federation $ 251,092Switzerland $ 240,323Belgium $ 231,016Sweden $ 227,369ExxonMobil $ 210,392Turkey $ 199,902Wal-Mart $ 193,295

Austria $ 190,957

General Motors $ 184,632

2627

2829303132333435363738

3940414243444546474849

50

Ford $ 180,598Hong Kong $ 163,261

Denmark $ 160,780Poland $ 158,839Indonesia $ 153,255DaimlerChrysler $ 150,069Norway $ 149,349Royal Dutch Shell $ 149,146BP $ 148,062General Electric $ 129,853Mitsubishi $ 126,579South Africa $ 125,887Thailand $ 121,927

Toyota $ 121,416 Venezuela $ 120,484Finland $ 119,823Mitsui $ 118,013Greece $ 111,955Citigroup $ 111,826Israel $ 110,332Itochu $ 109,756Total FINA Elf $ 105,869Portugal $ 103,871NTT $ 103,234

Enron $ 100,789


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There are a lot of MNC, and their numbers areThere are a lot of MNC, and their numbers aregrowing:growing:

There were arou

nd 3,000M

NC in 1900. By 1970 thereThere were arou

nd 3,000M

NC in 1900. By 1970 therewere 7,000, and by 1990 the number had swelled towere 7,000, and by 1990 the number had swelled toan incredible 30,000. A decade later there weremorean incredible 30,000. A decade later there weremorethan 63,000than 63,000


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0

000020000

30000

40000

50000

6000070000

900 950 970 990 2000

Number of MNC

There are a lot of MNC, and their numbers areThere are a lot of MNC, and their numbers aregrowing:growing:

0

50

00

50

200

250

900 950 970 990 2000

Number ofCountries


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Global Corporations are small, and sizeGlobal Corporations are small, and size

matters less and lessmatters less and less

Most of the 63,000 firms, that operate internationallyMost of the 63,000 firms, that operate internationallyemploy fewer than 250 people, andmany serviceemploy fewer than 250 people, andmany servicecompanies have fewer than 100 employees.companies have fewer than 100 employees.

For example, Denmark is home to more than 9000For example, Denmark is home to more than 9000MNC.MNC.


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Global Corporations are small, and sizeGlobal Corporations are small, and size

matters less and lessmatters less and lessNumber of MNC Headquarters by Country (2000)Number of MNC Headquarters by Country (2000)

Canada 1,722 Brazil 1,225

Iceland 78

Germany 8,492

USA 3,387Denmark 9,356

UK 1,094Norway 900

Peru 10

China 379

Portugal 1,100

Poland 58 India 187Sweden 5,118

Oman 92

Mali 3 Zimbabwe 8

France 1,695

Taiwan 666

Finland 1200

Japan 4,334

Lithuania 16

Pakistan 59

Australia 610

Italy 806

Turkey 357

Romania 20


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Large global corporations are concentratedLarge global corporations are concentrated

in certain areas of the worldin certain areas of the world

More than 90% of the worlds 500 largestMore than 90% of the worlds 500 largestcorporations arecorporations are located in wealthy industrial parts oflocated in wealthy industrial parts ofthe Worldthe World North America, Europe and Japan hostNorth America, Europe and Japan host445 of them.445 of them.


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Large global corporations are concentratedLarge global corporations are concentrated

in certain areas of the worldin certain areas of the worldHome Countries of the Worlds 500 largest Corporations (2000)Home Countries of the Worlds 500 largest Corporations (2000)


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Global Corporations are fast: some of them haveGlobal Corporations are fast: some of them have

grown at breathtaking speedgrown at breathtaking speed..

Lots ofMNC have built billionLots ofMNC have built billion--dollar businesses in adollar businesses in afewyears. Here is a few of them.fewyears. Here is a few of them.


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Developing countries have become home to theirDeveloping countries have become home to their

own large multinationalsown large multinationals

UNCTAD lists the 50 largestMNC headquartered inUNCTAD lists the 50 largestMNC headquartered indeveloping countries ranked by foreign assets. Indeveloping countries ranked by foreign assets. In1999, Hong Kong, South Korea, China, Venezuela,1999, Hong Kong, South Korea, China, Venezuela,Mexico and Brazil had the largest total foreign assetsMexico and Brazil had the largest total foreign assetsof the 50 corporations. For example: Hutchisonof the 50 corporations. For example: Hutchison

Whampoa, Limited, from Hong Kong, is the largestWhampoa, Limited, from Hong Kong, is the largestfirm in developing world, with $48,5 billion in totalfirm in developing world, with $48,5 billion in totalassets.assets.


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Developing countries have become home to theirDeveloping countries have become home to their

own large multinationalsown large multinationalsLargest MNC from developing countries are specialized on:Largest MNC from developing countries are specialized on:

1. Food and Beverages

2. Construction

3. Diversified

4. Glass and Clay

5. Electrical Services

6. Transportation

7. Petroleum

8. Electronics

9. Tourism and Hotel

10. Pulp and Paper

11. Chemicals and Pharmaceuticals


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Global Corporations are powerfulGlobal Corporations are powerful

They play an increasingly important role on the planetThey play an increasingly important role on the planetin terms of wealth creation, resourceuse,in terms of wealth creation, resourceuse,employment, themeeting ofhuman needs,employment, themeeting ofhuman needs,environmental impacts, technological transfer andenvironmental impacts, technological transfer andgovernance.governance.


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Global Corporations are powerfulGlobal Corporations are powerful

They control:They control:

50%50% of World industrial productionof World industrial production

67%67% of International tradeof International trade

80%80% of Patents, licenses and knowof Patents, licenses and know--howhow

90%90% of Direct international investmentsof Direct international investments


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In AdditionIn Addition::

The Global Corporation is an increasinglyThe Global Corporation is an increasingly

im

portant econom

ic force in the worldim

portant econom

ic force in the worldGlobal Corporations impact national andGlobal Corporations impact national and

international governanceinternational governance

Global Corporations have immense cultural effectsGlobal Corporations have immense cultural effects

Competition is brutal and fastCompetition is brutal and fastGlobal corporations drive changeGlobal corporations drive change


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Thank U for attentionThank U for attention

multinational coorperations

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