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Text I. Multinational Corporation

Multinational corporation (MNC) or transnational corporation (TNC) is a corporation or enterprise that manages production or delivers services in more than one country.

The first modern MNC is generally thought to be the Dutch East India Company, established in 1602. Very large multinationals have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization.

In a highly competitive world, companies seek to reduce their costs as much as possible. The prospect of a foreign company setting up in a country where labour is cheap is attractive both for the company and a host country's government.

Many MNCs are large in relation to the national income of the countries in which they are located. This means that it is not as easy for the host governments to enforce national laws on MNCs. Generally speaking, governments want investment from these MNCs because they generate jobs and incomes. Other benefits include training of local workers in new and potentially transferable skills. Technology transfer is also an incentive. The local community would benefit since land would develop, eg. New roads.

· Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (example: McDonald's)

· Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas or Nike, Inc.)

· Diversified multinational corporations manage production establishments located in different countries that are neither horizontally nor vertically nor straight, nor non-straight integrated. (example: Best Western or Hilton Hotels)

Others argue that a key feature of the multinational is the inclusion of back office functions in each of the countries in which they operate. The globally integrated enterprise, which some see as the next development in the evolution of the multinational, does away with this requirement.

 


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Text II. International Power

Large multinational corporations can have a powerful influence in international relations, given their large economic influence in politicians' representative districts, as well as their extensive financial resources available for public relations and political lobbying.

Multinationals have played an important role in globalization. Countries and sometimes subnational regions must compete against one another for the establishment of MNC facilities, and the subsequent tax revenue, employment, and economic activity. To compete, countries and regional political districts sometimes offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labor standards enforcement. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom, a push towards greater autonomy for corporate bodies, or both.

However, some scholars, for instance the Columbia economist Jagdish Bhagwati, have argued that multinationals are engaged in a 'race to the top.' While multinationals certainly regard a low tax burden or low labor costs as an element of comparative advantage, there is no evidence to suggest that MNCs deliberately avail themselves of lax environmental regulation or poor labour standards. As Bhagwati has pointed out, MNC profits are tied to operational efficiency, which includes a high degree of standardisation. Thus, MNCs are likely to tailor production processes in all of their operations in conformity to those jurisdictions where they operate (which will almost always include one or more of the US, Japan or EU) which has the most rigorous standards. As for labor costs, while MNCs clearly pay workers in, e.g. Vietnam, much less than they would in the US (though it is worth noting that higher American productivity—linked to technology—means that any comparison is tricky, since in America the same company would probably hire far fewer people and automate whatever process they performed in Vietnam with manual labour), it is also the case that they tend to pay a premium of between 10% and 100% on local labor rates. Finally, depending on the nature of the MNC, investment in any country reflects a desire for a long-term return. Costs associated with establishing plant, training workers, etc., can be very high; once established in a jurisdiction, therefore, many MNCs are quite vulnerable to predatory practices such as, e.g., expropriation, sudden contract renegotiation, the arbitrary withdrawal or compulsory purchase of unnecessary 'licenses,' etc. Thus, both the negotiating power of MNCs and the supposed 'race to the bottom' may be overstated, while the substantial benefits which MNCs bring (tax revenues aside) are often understated.

 


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Text III. Market Withdrawal

Because of their size, multinationals can have a significant impact on government policy, primarily through the threat of market withdrawal. For example, in an effort to reduce health care costs, some countries have tried to force pharmaceutical companies to license their patented drugs to local competitors for a very low fee, thereby artificially lowering the price. When faced with that threat, multinational pharmaceutical firms have simply withdrawn from the market, which often leads to limited availability of advanced drugs. In these cases, governments have been forced to back down from their efforts. Similar corporate and government confrontations have occurred when governments tried to force MNCs to make their intellectual property public in an effort to gain technology for local entrepreneurs. When companies are faced with the option of losing a core competitive technological advantage or withdrawing from a national market, they may choose the latter. This withdrawal often causes governments to change policy. Countries that have been most successful in this type of confrontation with multinational corporations are large countries such as India and Brazil, which have viable indigenous market competitors.

Multinational corporate lobbying is directed at a range of business concerns, from tariff structures to environmental regulations. There is no unified multinational perspective on any of these issues. Companies that have invested heavily in pollution control mechanisms may lobby for very tough environmental standards in an effort to force non-compliant competitors into a weaker position. Corporations lobby tarrifs to restrict competition of foreign industries. For every tariff category that one multinational wants to have reduced, there is another multinational that wants the tariff raised. Even within the U.S. auto industry, the fraction of a company's imported components will vary, so some firms favor tighter import restrictions, while others favor looser ones. Says Ely Oliveira: Manager Director of the MCT/IR This is very serious and is very hard and takes a lot of work for the owner.

Many multinational corporations hold patents to prevent competitors from arising. For example, Adidas holds patents on shoe designs, Siemens A.G. holds many patents on equipment and infrastructure and Microsoft benefit from software patents. The pharmaceutical companies lobby international agreements to enforce patent laws.

Enabled by Internet based communication tools, a new breed of multinational companies is growing in numbers."How startups go global". These multinationals start operating in different countries from the very early stages. These companies are being called micro-multinationals. What differentiates micro-multinationals from the large MNCs is the fact that they are small businesses. Some of these micro-multinationals, particularly software development companies, have been hiring employees in multiple countries from the beginning of the Internet era. But more and more micro-multinationals are actively starting to market their products and services in various countries. Internet tools like Google, Yahoo, MSN, Ebay and Amazon make it easier for the micro-multinationals to reach potential customers in other countries.


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Text IV. Groupe Danone

Groupe Danone (known as Dannon in the United States) is a French food-products company based in Paris. It claims world leadership in fresh dairy products, marketed under the corporate name, and also in bottled water. In 2007 it swapped its world number 2 position as producer of cereals and biscuits for the same position in baby foods, having sold the biscuits division to Kraft Foods and acquired Numico.

Besides the Danone/Dannon brand of yoghurts, the company owns several internationally known brands of bottled water: Volvic, Evian, and Badoit. About 56% of its 2006 net sales derived from dairy, 28% from beverages, and 16% from biscuits and cereals.

Danone owns many water brands worldwide. In Asia, it has acquired Yili, Aqua (Indonesia), and Robust (92%), and has a 51% holding in China's Wahaha Joint Venture Company, giving it a total market share of 20%, making it the leading vendor of packaged water in Asia.

The original company bearing the corporate name was founded in 1919 by Isaac Carasso in Barcelona (Spain) as a small factory producing yoghurt. The factory was named "Danone", a Catalan diminutive of the name of his first son, Daniel.

Ten years later, the first French factory was built, but during World War Ⅱ, Daniel Carasso moved the company to New York, where Dannon Milk Products Inc. was founded. In the United States, Daniel partnered with the Swiss-born Spaniard Joe Metzger and changed the brand name to Dannon to sound more American.

In 1951, Daniel Carasso returned to Paris to manage the family's businesses in France and Spain, and the American business was sold off in 1959. In Europe, Danone merged with Gervais, the leading fresh cheese producer in France in 1967, becoming Gervais Danone.

 


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Text V. Electrolux

The Electrolux Group is a Swedish manufacturer of home and professional appliances. According to the company, it sells more than 40 million products to customers in 150 countries annually. Electrolux products include refrigerators, dishwashers, washing machines, vacuum cleaners and cookers sold under brand names like Electrolux, Germany's AEG, Italy's Zanussi, Australia's Kelvinator and, in the US, Eureka and Frigidaire.

In 2003 Electrolux began a company restructuring program throughout Europe to improve negative trends in operational results. Existing facilities in Western Europe were closed, while new factories in Eastern Europe were opened – despite strong EU objections. The merits (or failings) of these business moves remain elusive. However, in 2006, Electrolux still managed to retain approx. 57,000 employees and record global sales of SEK 104 billion (about €11 billion). Electrolux owns and operates 22 factories in Europe and, after Whirlpool Corp., is the world's second-largest appliance manufacturer. Electrolux had held the number-one spot prior to Whirlpool's 2006 merger with Maytag. In that same year, Electrolux spun off its lawn and garden and outdoor products division called Husqvarna AB - known in the USA as "Husqvarna Outdoors," with its Husky product line – in accordance with its restructuring plan.

Marcus Wallenberg is the chairman of the board.

Electrolux UK is the co-sponsor with Coca Cola in England's third-highest football league called Football League One.

Electrolux North America launched an integrated marketing campaign for its new line of premium appliances on April 3rd, 2008. The campaign includes celebrity spokesperson Kelly Ripa.

Electrolux was founded in 1910 as Elektromekaniska AB, and changed its name to Elektrolux after merging with Lux AB in 1919. The merger with Lux was brokered by the Swedish entrepreneur Axel Wenner-Gren. (The direct sales division of Electrolux kept the name "Lux" and is now autonomous.) The legal name spelling was changed to Electrolux in 1957. The company was organized as a holding company in 1928 and during the 1970s grew rapidly under the leadership of Hans Werthén.

In North America, the Electrolux name was long used by a vacuum cleaner manufacturer, founded by a Swedish businessman who emigrated to the U.S. In 1998, that company transferred its rights to the trademark in North America to the Electrolux Group, and now operates under the name Aerus LLC. Following the return of its trademark, Electrolux of Sweden added a new line of Electrolux home appliances for sale in the U.S. and Canada.

In 2002 Hans Stråberg was appointed president.


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