The Rise of Multinational Corporations

The Rise of Multinational Corporations

A multinational corporation is some sort of a corporation or business, that is headquartered in one country and does business in one or more foreign countries. Multinationals have been able to flourish over the past 50 years or so, because of a policy of liberalization,
Liberalization is a policy of lowering tariffs and other barriers for the purpose of encouraging trade and investment.
5 Steps – Most multinationals go through a series of steps in the internationalization process.
Export Sales – it basically means I am headquartered in country A and I am going to start selling my products to people or other businesses or governments in country B.
Licensing – you have local people in that foreign country who are paying for the right to use your name or your trademark. Example, while stationed in South Korea, right off base there was a Century 21 office ran by this guy named Mr. Kim. It seemed as though Mr. Kim did not use a lot of Century 21 processes and there was very little similarity from Mr. Kims Century 21 and a Century 21 office in the States. But he was paying to use the Century 21 trademark and it made people, such as an Americans in Korea, feel like going into his and getting real estate services. So he was able to help in getting an apartment in Korea. So, he paid for the right to use the name Century 21. Another example of licensing is country specific, a summer job working a front desk at a hotel, there was a Starbucks kiosk, none of the hotel employees were trained in Starbucks products but were serving customers as baristas, so as an employee he was using the Starbucks name and products to make sudo Starbucks beverages for customers but was never trained in the Starbucks way of making them.
Franchising – not only is the local franchisee paying for the use of the Trademark but you are also teaching them all the techniques, tools, and processes, so that if you go to McDonalds in France, they are using not only the McDonalds trademark but they are suing McDonalds products, McDonalds equipment, and they are also being trained by McDonalds, this is the whole McDonalds experience, and is a way for McDonalds to export its brand overseas.
Foreign Sales Office – you send some of your people over and set up and office, that serves as a point to distribute your products within that country,
Direct Investment – this can mean a lot of things when it comes to multinationals, it can mean buying a competitor to obtain a foothold in the market, it could mean buying facilities or products in that country directly,
Global Production – means that you have set up factories, set up multiple offices, that foreign country is fully integrated into your supply chain