Multinational Corporations Vocabulary

Multinational Corporations

• Definition: A company that operates in its home country as well as in other countries around the world.

Examples of Multinational Corporations

• A large listing of company names and logos are displayed including:
  • Kellogg's
  • Canon
  • Amazon
  • Tetley
  • Visa
  • Levi's
  • Many others across various industries.

Flavors of Japan (Illustrative Example)

• Pictures of Japanese-themed food items are shown, such as:
  • Teriyaki Samurai Burger
  • Konnic-hi Wow! Flavors
  • Strawberry Sakura McFloat
  • Nori Shake Shake Fries
  • Ebi Burger (contains shrimp)
  • Greek Mac

Procter & Gamble (P&G) as an Example

• Main Office: Two Procter & Gamble Plaza, Cincinnati, Ohio.
• International Offices: Japan Office, Singapore Office, Philippines Plant.

Salomon (Illustrative Example)

• Salomon HQ in Annecy, France.
• Activities:
  • Sells Shoes
  • Creates Trail Races (e.g., Golden Trail World Series)
• Examples of races in different locations:
  • Kobe Trail (Japan)
  • Jinshanling Great Wall Trail (China)
  • Il Golfo Dellisola Trail Race (Italy)
  • Zegama Aizkorri (Spain)
  • Broken Arrow Skyrace (USA)
  • Pitz Alpine Glacier Trail (Austria)
  • Sierre Zinal (Switzerland)
• Annecy Design Center in Annecy, France.

Breaking Misconceptions

• Having one office but reaching different locations doesn't automatically qualify a company as multinational.
• Offices must be located around the world.
• A company that exports goods from one location is not necessarily a multinational company.
• Multinational corporations have business operations in other countries and Foreign Direct Investment (FDI).

Foreign Direct Investment (FDI)

• Definition: One company or country invests in business opportunities in another country.
• Example: P&G, a U.S. company, invests in efficiency by building a factory in Shiga, Japan.
• Types:
  • Horizontal FDI: Same business and activity; copy and paste into a new location.
  • Vertical FDI: A company acquires assets to help with process and distribution.
• Examples to Understand Different Foreign Direct Investments
  • Starbucks opens an office and store in Cyprus (Horizontal).
  • Starbucks invests in a farm in Costa Rica to make their coffee beans (Vertical).

Pros of a Multinational Company

• More Jobs & Money: New opportunities to work and enter foreign markets.
• Costs Down: Lower average costs and prices for consumers.
• Creates Standards: Meets customer expectations.
• Impact on Developing Countries: Introduction of capital and jobs.
• Research & Development: Can explore new ideas.

Cons of a Multinational Company

• Profit Driven: Leads to monopoly power and more money.
• Tax Avoidance: Set up in low tax-paying countries.
• Environmental Damage: Pollution and use of non-renewable sources.
• Sweat Shops: Low-paid workers and harsh working conditions.
• Anti-Local: Dominant presence making it hard for local sellers to thrive.

Activity: Guess the MNC

• Examples Include indicators to guess the MNC

Review Quiz for MNC

• Questions to test understanding of MNC concepts

Scenarios

• A new bed company from Japan has only one FDI. Is this a MNC? (True or False)
• Erewhon opens up a new store and office in Japan. (Horizontal or Vertical FDI)
• Popeyes buys a farm with a barn to grow their own chickens. (Horizontal or Vertical FDI)
• Is This a Multinational Company - Example Erewhon with money mama's Or Nah
• Is this a multi-national company Example IN-N-OUT BURGER

Vocabulary Quiz

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