3-3

International Business
Organizations

Goal 1 Discuss activities of multinational

organizations.
Goal 2 Explain common international
business entry modes.
Goal 3 Describe activities of international
trade organizations and agencies.
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SLIDE 1

C H AP T E R

MULTINATIONAL COMPANIES
(MNC)

SLIDE 2

Organizations that do business in several

countries
Home country where the parent
company is located
Host country where the business
activities take place

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Principles of Business, 8e

C H AP T E R

SLIDE 3

MNC STRATEGIES
Global strategy use the same product
and marketing strategy world wide
Multinational strategy treats each
countries market individually

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Principles of Business, 8e

C H AP T E R

SLIDE 4

MNC BENEFITS
Large amount of goods available
Lower prices
Career opportunities
Foster understanding, communication,
and respect
Friendly international relations

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Principles of Business, 8e

DRAWBACKS OF
MULTINATIONAL COMPANIES

C H AP T E R

SLIDE 5

Economic power
Worker dependence on the MNC
Consumer dependence
Political power

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Principles of Business, 8e

C H AP T E R

SLIDE 6

Checkpoint
What are two strategies commonly used
by multinational companies?
Global strategy (offering the same product
the same way everywhere)
Multinational strategy (approaching each
country market differently).

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Principles of Business, 8e

GLOBAL MARKET
ENTRY MODES 3 TYPES

C H AP T E R

SLIDE 7

Licensing
Franchising
Joint venture

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Principles of Business, 8e

LICENSING EX. GERBER

COMPANY

C H AP T E R

SLIDE 8

Selling the right to use some intangible property

(process, trademark, brand name)
Allows companies to produce items in other
countries without being actively involved
Has a low financial investment, so the potential
financial return for the company is often low
The risk for the company is low

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Principles of Business, 8e

FRANCHISING EX:
MCDONALDS

C H AP T E R

SLIDE 9

Allows organizations to enter into contracts with

people in other countries to set up a business
that looks and runs like the parent company
Marketing elements, such as food products,
packaging, and advertising, must meet both
cultural sensitivities and legal requirements
Commonly involves selling a product or service

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Principles of Business, 8e

JOINT VENTURE
FORD/MAZDA (PARTS)

C H AP T E R

SLIDE 10

Allows two or more companies to share raw

materials, shipping facilities, management
activities, or production activities
Concerns include the sharing of profits and not
as much control because several companies are
involved
Very popular for manufacturing, such as
Japanese and U.S. automobile manufacturers

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Principles of Business, 8e

C H AP T E R

SLIDE 11

Checkpoint
How does licensing differ from a
franchise?
Licensing does not require as much
financial investment or risk as franchising.
Both licensing and franchising involve
royalty payments, but licensing usually
involves a manufacturing process, while
franchising commonly involves selling a
product or service.
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Principles of Business, 8e

INTERNATIONAL TRADE
ORGANIZATIONS

C H AP T E R

SLIDE 12

World Trade Organization

International Monetary Fund
World Bank

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Principles of Business, 8e

WORLD TRADE
ORGANIZATION (WTO)

C H AP T E R

SLIDE 13

150 member countries

Promotes trade
Settles trade disputes
Enforces free-trade agreements
Other goals
Lowering tariffs that discourage free trade
Eliminating import quotas
Reducing barriers for banks, insurance companies,
and other financial services
Assisting poor countries with economic growth
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Principles of Business, 8e

C H AP T E R

INTERNATIONAL MONETARY
FUND (IMF)

SLIDE 14

Helps to promote economic cooperation

Maintains an orderly system of world trade
and exchange rates
Includes more than 150 member nations

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Principles of Business, 8e

C H AP T E R

SLIDE 15

WORLD BANK
Created in 1944 to provide loans for rebuilding
after World War II
Today the World Bank has more than 180
member countries and two main divisions

International Development Association (IDA), which

makes loans to help developing countries
International Finance Corporation (IFC), which
provides technical capital and technical help to private
businesses in nations with limited resources

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Principles of Business, 8e

C H AP T E R

SLIDE 16

Checkpoint
How does the International Monetary
Fund assist countries?

The International Monetary Fund assists

countries by promoting economic
cooperation and maintaining an orderly
system of world trade and exchange rates.
This cooperation makes harmful trade wars
among IMF nations less likely.
2012 Cengage Learning. All Rights Reserved.

Principles of Business, 8e