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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