Multinational corporations

UNIT 3. INTERNATIONAL BUSINESS

Write your answers to the following questions.

1. The next reading discusses the development of multinational corporations. International Business Machines (IBM), Royal Dutch Shell, Panasonic, Pepsi, and Volkswagen are listed as examples of these corporations. List other multinational corporations that you can think of.

2. A multinational corporation is primarily based in one country. Where are the following multinational corporations based?

a. IBM __________________________________________

b. Royal Dutch Shell _______________________________

c. Panasonic ______________________________________

d. Pepsi __________________________________________

e. Volkswagen _____________________________________

2. Below is a list of terms that you will find in the text. As you read " Multinational Corporations", see if you understand each term (translate them). Use this as a working list and add other terms with which you are unfamiliar.

MULTINATIONAL CORPORATIONS

A company often becomes _; involved in international trade by exchanging goods or services with another country — importing raw materials it: may need for production or exporting finished products to a foreign market.

Establishing these trade relationships is the first step in the development of a multinational business. At this stage, however, the corporation’s emphasis is still on the domestic market. As trade expands, the corporation’s dealings with companies or people outside the " home country" of that corporation increase.

The corporation then begins to view the whole world as a base for production and marketing operations. The next step in the development of a multinational business is focusing on the world market. The company may establish a foreign assembly plant, engage in contract manufacturing, or build a foreign manufacturing company or subsidiary. Therefore, a multinational corporation is a company that is primarily based in one country and has production and marketing activities in foreign countries.

Since World War II multinational corporations have grown rapidly. The names and products of many of the multinationals have become well-known in the world marketplace: International Business Machines (IBM) Royal Dutch Shell, Panasonic, Pepsi, and Volkswagen. Pepsi, for example, now has operations in more than one hundred countries.

A multinational corporation operates in a complex business environment. Cultural, social, economic, political and technological system vary from country to country. In order to operate successfully, a multinational company needs a basic understanding and appreciation of the foreign business environment.