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Global Inc.Global Inc.
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Multinational CorporationsMultinational Corporations
What is Multinational Corporations?What is Multinational Corporations?While some regard them as ruthless exploiters, others view them asWhile some regard them as ruthless exploiters, others view them asbenign engines of prosperity. But todays multinationals bear littlebenign engines of prosperity. But todays multinationals bear littleresemblance to their forbearers. They are reinventing themselves inresemblance to their forbearers. They are reinventing themselves indiverse ways that confound the assumptions of critics and advocatesdiverse ways that confound the assumptions of critics and advocatesalike.alike.
John Stopford, Multinational CorporationsJohn Stopford, Multinational Corporations
MNCMNC areare International companies, nationalInternational companies, national
trusts and concerns of industrial developedtrusts and concerns of industrial developedcountries, which have foreign assets.countries, which have foreign assets.
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INTRODUCTIONINTRODUCTION(This course examines the emergence and evolution ofMNCs(This course examines the emergence and evolution ofMNCs
In general, historical observations of the growth of MNCsIn general, historical observations of the growth of MNCs
developmental in the pattern of outward FDI from an initialdevelopmental in the pattern of outward FDI from an initialemphasis on trading, resourceemphasis on trading, resource--based or simple marketbased or simple market--seekingseekinginvestments where the competence of leading national firms isinvestments where the competence of leading national firms isembedded in basic engineering skills, complementaryembedded in basic engineering skills, complementaryorganizational routines and structures.organizational routines and structures.
As industrial development of home countries to tries proceedAs industrial development of home countries to tries proceed
and as their firms gain maturity as MNCs, there is the gradualand as their firms gain maturity as MNCs, there is the gradualprogression of their outward FDI towards more sophisticatedprogression of their outward FDI towards more sophisticatedforms of manufacturing and services activities that embodyforms of manufacturing and services activities that embodygreater technological and organizational complexities.greater technological and organizational complexities.
The historical analysis of the developments inThe historical analysis of the developments in sectoralsectoral pattern ofpattern of
outward FDI
at the global level shows that the bulk of thisoutward FDI
at the global level shows that the bulk of thisinvestment was associated with primary commodity productioninvestment was associated with primary commodity productionbefore 1939, and only since the Second World War outward FDIbefore 1939, and only since the Second World War outward FDIin manufacturing and services come into its own in a major way,in manufacturing and services come into its own in a major way,bringing forth the growth in international technologicalbringing forth the growth in international technologicalcompetition in the industrialized countries and the globalcompetition in the industrialized countries and the global
integration of FDIintegration of FDI
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Multinational, Transnational, GlobalMultinational, Transnational, Global
In 1973, when the United Nations Commission on TransnationalIn 1973, when the United Nations Commission on Transnational
Corporations (UNCTC) was established, the UN adopted the termCorporations (UNCTC) was established, the UN adopted the term
transnational for two main reasons: At that time, many developingtransnational for two main reasons: At that time, many developing
nations were antagonistic toward what were then commonly callednations were antagonistic toward what were then commonly called
MC, so the UN chose to avoid the negative connotations associatedMC, so the UN chose to avoid the negative connotations associated
with the term multinational. Also, the UN wished to adopt the widestwith the term multinational. Also, the UN wished to adopt the widestpossible definition of transnational so as to include firms that havepossible definition of transnational so as to include firms that have
even one foreign affiliate.even one foreign affiliate.
Keeping all this in mind, we chose to use the term, multinational,Keeping all this in mind, we chose to use the term, multinational,
since it is at present the most commonly understood term, and does notsince it is at present the most commonly understood term, and does not
generally carry the negative connotations of earlier times.generally carry the negative connotations of earlier times.
There is no clear delineation of what qualifies a multinational firm as aThere is no clear delineation of what qualifies a multinational firm as a
global firm. It is a subjective term, and does not necessary relate to aglobal firm. It is a subjective term, and does not necessary relate to a
single measure of the size , activity or geographic scope of a company.single measure of the size , activity or geographic scope of a company.
We have chose to apply the term global in two instances: to refer to aWe have chose to apply the term global in two instances: to refer to a
single firm when the choice seemed obvious because of the size andsingle firm when the choice seemed obvious because of the size and
geographic spread of ageographic spread of a aa firms activities.firms activities.
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Multinational CorporationsMultinational Corporations
Main features of MNCMain features of MNC
MNC are big and getting biggerMNC are big and getting bigger
In terms of corporate revenue versus the GDP ofIn terms of corporate revenue versus the GDP ofcountries , of the 100 largest economies in the world,countries , of the 100 largest economies in the world,53 are corporations. ExxonMobil, the largest53 are corporations. ExxonMobil, the largestcorporation of the world, is larger than more than 180corporation of the world, is larger than more than 180nationsnations
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Multinational CorporationsMultinational Corporations
MNC are big and getting biggerMNC are big and getting biggerThe world 50The world 50 LLargest Economiesargest Economies
Corporate revenue vs. Country GDPCorporate revenue vs. Country GDP
12
345678910111213
1415161718192021222324
25
USA $ 9,882,842Japan $ 4,667,099
Germany $ 1,870,136UK $ 1,413,432France $ 1,286,252China $ 1,079,954Italy $ 1,068,518Canada $ 689,550Brazil $ 587,553Mexico $ 574,512Spain $ 555,004India $ 479,404Korea $ 457, 219
Australia $ 394,023Netherlands $ 364,948
Argentina $ 285,473Russian Federation $ 251,092Switzerland $ 240,323Belgium $ 231,016Sweden $ 227,369ExxonMobil $ 210,392Turkey $ 199,902Wal-Mart $ 193,295
Austria $ 190,957
General Motors $ 184,632
2627
2829303132333435363738
3940414243444546474849
50
Ford $ 180,598Hong Kong $ 163,261
Denmark $ 160,780Poland $ 158,839Indonesia $ 153,255DaimlerChrysler $ 150,069Norway $ 149,349Royal Dutch Shell $ 149,146BP $ 148,062General Electric $ 129,853Mitsubishi $ 126,579South Africa $ 125,887Thailand $ 121,927
Toyota $ 121,416 Venezuela $ 120,484Finland $ 119,823Mitsui $ 118,013Greece $ 111,955Citigroup $ 111,826Israel $ 110,332Itochu $ 109,756Total FINA Elf $ 105,869Portugal $ 103,871NTT $ 103,234
Enron $ 100,789
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Multinational CorporationsMultinational Corporations
There are a lot of MNC, and their numbers areThere are a lot of MNC, and their numbers aregrowing:growing:
There were arou
nd 3,000M
NC in 1900. By 1970 thereThere were arou
nd 3,000M
NC in 1900. By 1970 therewere 7,000, and by 1990 the number had swelled towere 7,000, and by 1990 the number had swelled toan incredible 30,000. A decade later there weremorean incredible 30,000. A decade later there weremorethan 63,000than 63,000
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Multinational CorporationsMultinational Corporations
0
000020000
30000
40000
50000
6000070000
900 950 970 990 2000
Number of MNC
There are a lot of MNC, and their numbers areThere are a lot of MNC, and their numbers aregrowing:growing:
0
50
00
50
200
250
900 950 970 990 2000
Number ofCountries
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Multinational CorporationsMultinational Corporations
Global Corporations are small, and sizeGlobal Corporations are small, and size
matters less and lessmatters less and less
Most of the 63,000 firms, that operate internationallyMost of the 63,000 firms, that operate internationallyemploy fewer than 250 people, andmany serviceemploy fewer than 250 people, andmany servicecompanies have fewer than 100 employees.companies have fewer than 100 employees.
For example, Denmark is home to more than 9000For example, Denmark is home to more than 9000MNC.MNC.
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Multinational CorporationsMultinational Corporations
Global Corporations are small, and sizeGlobal Corporations are small, and size
matters less and lessmatters less and lessNumber of MNC Headquarters by Country (2000)Number of MNC Headquarters by Country (2000)
Canada 1,722 Brazil 1,225
Iceland 78
Germany 8,492
USA 3,387Denmark 9,356
UK 1,094Norway 900
Peru 10
China 379
Portugal 1,100
Poland 58 India 187Sweden 5,118
Oman 92
Mali 3 Zimbabwe 8
France 1,695
Taiwan 666
Finland 1200
Japan 4,334
Lithuania 16
Pakistan 59
Australia 610
Italy 806
Turkey 357
Romania 20
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Multinational CorporationsMultinational Corporations
Large global corporations are concentratedLarge global corporations are concentrated
in certain areas of the worldin certain areas of the world
More than 90% of the worlds 500 largestMore than 90% of the worlds 500 largestcorporations arecorporations are located in wealthy industrial parts oflocated in wealthy industrial parts ofthe Worldthe World North America, Europe and Japan hostNorth America, Europe and Japan host445 of them.445 of them.
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Multinational CorporationsMultinational Corporations
Large global corporations are concentratedLarge global corporations are concentrated
in certain areas of the worldin certain areas of the worldHome Countries of the Worlds 500 largest Corporations (2000)Home Countries of the Worlds 500 largest Corporations (2000)
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Multinational CorporationsMultinational Corporations
Global Corporations are fast: some of them haveGlobal Corporations are fast: some of them have
grown at breathtaking speedgrown at breathtaking speed..
Lots ofMNC have built billionLots ofMNC have built billion--dollar businesses in adollar businesses in afewyears. Here is a few of them.fewyears. Here is a few of them.
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Multinational CorporationsMultinational Corporations
Developing countries have become home to theirDeveloping countries have become home to their
own large multinationalsown large multinationals
UNCTAD lists the 50 largestMNC headquartered inUNCTAD lists the 50 largestMNC headquartered indeveloping countries ranked by foreign assets. Indeveloping countries ranked by foreign assets. In1999, Hong Kong, South Korea, China, Venezuela,1999, Hong Kong, South Korea, China, Venezuela,Mexico and Brazil had the largest total foreign assetsMexico and Brazil had the largest total foreign assetsof the 50 corporations. For example: Hutchisonof the 50 corporations. For example: Hutchison
Whampoa, Limited, from Hong Kong, is the largestWhampoa, Limited, from Hong Kong, is the largestfirm in developing world, with $48,5 billion in totalfirm in developing world, with $48,5 billion in totalassets.assets.
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Multinational CorporationsMultinational Corporations
Developing countries have become home to theirDeveloping countries have become home to their
own large multinationalsown large multinationalsLargest MNC from developing countries are specialized on:Largest MNC from developing countries are specialized on:
1. Food and Beverages
2. Construction
3. Diversified
4. Glass and Clay
5. Electrical Services
6. Transportation
7. Petroleum
8. Electronics
9. Tourism and Hotel
10. Pulp and Paper
11. Chemicals and Pharmaceuticals
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Multinational CorporationsMultinational Corporations
Global Corporations are powerfulGlobal Corporations are powerful
They play an increasingly important role on the planetThey play an increasingly important role on the planetin terms of wealth creation, resourceuse,in terms of wealth creation, resourceuse,employment, themeeting ofhuman needs,employment, themeeting ofhuman needs,environmental impacts, technological transfer andenvironmental impacts, technological transfer andgovernance.governance.
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Multinational CorporationsMultinational Corporations
Global Corporations are powerfulGlobal Corporations are powerful
They control:They control:
50%50% of World industrial productionof World industrial production
67%67% of International tradeof International trade
80%80% of Patents, licenses and knowof Patents, licenses and know--howhow
90%90% of Direct international investmentsof Direct international investments
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Multinational CorporationsMultinational Corporations
In AdditionIn Addition::
The Global Corporation is an increasinglyThe Global Corporation is an increasingly
im
portant econom
ic force in the worldim
portant econom
ic force in the worldGlobal Corporations impact national andGlobal Corporations impact national and
international governanceinternational governance
Global Corporations have immense cultural effectsGlobal Corporations have immense cultural effects
Competition is brutal and fastCompetition is brutal and fastGlobal corporations drive changeGlobal corporations drive change
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Multinational CorporationsMultinational Corporations
Thank U for attentionThank U for attention
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