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 these trade relationship is the first step in the development of a multinational business.At 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 estabilishing a foreign assembly plant,engage in contract manufacturing,or build a foreigen manucturing company or subsidiary.Therefore,a multinational corporation is a company that is primarily based in one country and has production and marketing activities foreign countries.

Since World War II,multinational corporations have grown rapidly.The names and products of many of the multinational have become well-knownin the world marketplace:international Business machines(IBM),Royal Dutch shell,Panasonic,Coca-cola,and volkswagen.coca-cola,for example,now has operations in more then 180 countries.

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

A.Answer the following question about multinationals.Questions with asterisks(*)cannot be answered directly from the text.

1. What is the first step in the development of a multinational business?

2. Where is the company’s emphasis when it is simply trading with other countries?

3. What market does a multinational corporation focus on?

4. A company may estabilish its manufacturing operations in foreign countries what are

Three forms that these operations may take?

5. What is a multinational corporation?

6. When have multinational grown rapidly?*Why do you think they have experienced

Period of rapid growth?

7. *What are some products that are produced by the following multinational

Corporations:IBM,coca-cola,Panasonic,shell,and Volkswagen?

8. *Why does a multinational corporation operate in a more complex businnes

Environment than a domestic company?

9. *What are some of the social and political factors that can vary from country to

Country?

10. Why does a multinational corporation need a basic understanding of foreign

Business environments?*How can a multinational gain this understanding?

ANSWER:

1. The first step(it)is estabilishing the trade relation ship with another countri.

2. The companies emphasis(it)is still on the domestic market.

3. A multinational corporation (it)focuses on the world market.

4. The three forms(they)are:it may estabilish a foreign assembly plant,engange in contract manufacturing,and build a foreign manufacturing company or a subsidiary.

5. A multinational corporation(it)is a company that is primary bosed in one country and has production and marketing activities in foreign countries.

6. Multinationals(they)have grown rapidly since world II.Because during the war many countries knew what resources are scarce or abundant in outhor countries.

7. IBm business machine;rayal,dutch,shell;oil;Panasonic;electronic;coca-cola;soft drink;Volkswagen;auto mobils;

8. Because a multinational, corporation focuses on the world market,and each country has its own systems culturally;economic;political;and technologically where as a domestic company only operates in one coutry which its systems its already familiar.

9. Socially;in japan life time employment systems is applied,where as in Indonesia contract system employment is used,politically;Thailand is monarchism;Indonesia is domestic.

10. In order to operate successfully,this understanding can be gained throught market research.