U8 Multinational companies - TACN3 (Kinh tế và kinh doanh quốc tế) FTU

UNIT 8 MULTINATIONAL COMPANIES 1. What is a multinational company? • The term ‘multinational’ is used for a company which has subsidiaries or sales facilities throughout the world. • Another expression for this type of business enterprise is ‘global corporation’ • Example: Coca Cola, Heinz, Sony, Hitachi, Akzo, General Motors… Definition • Foreign Direct Investment: The establishment of a plant or distribution network abroad. Investors can acquire part or all of the equity of an existing foreign corporation either to control or share control over sales, production, and research and development. 2. What are their characteristics? • They control vast sums of money • They operate in countries with widely differing political and economic systems. 3.Multinational strategy • A strategy of adapting products and their marketing strategies in each national market to suit local preferences. • Multinational strategy allows companies to closely monitor buyer preferences in each local market and respond quickly and effectively as new buyer preferences emerge. • It does not allow companies to exploit scale economies in product development, manufacturing, or marketing. 4. Global strategy • A strategy of offering the same products using the same marketing strategy in all national markets. • The main benefit of a global strategy is its cost savings due to product and marketing standardization. • It allows managers to share lessons learned in one market with managers at other locations. • It may cause a company to overlook important differences in buyer preferences from one market to another. Phân biệt chiến lược toàn cầu và đa quốc gia 5. What are their reasons for going internationally? • Their national markets become saturated. • Some countries set up trade barriers – usually tariffs or quotas – against a company’s products. • Cheap labour and natural resources abroad, especially in developing countries. • Expand sales • Diversify sales • Gain experience