- business organization that operates in two or more countries
- managed from one country
- firm that earns quarter of income outside of country it first started in
2) Define a Holding Company
- type of business that allows the parent company and directors to control other firms (subsidaries)
3) What are the similarities and differences between the 2?
Similarities:
Both types of company can control many different companies. This is due to the fact that they are the parent company. The multinational company has its main branch in its home country while little branches around the world and the holding company consisting of a parent company and subsidaries.
Differences:
Parent companies in holding companies has controlling interest in subsidaries while the main company of a multinational company may not control or take charge of the branch companies.
4) Research one of the following Multinational Companies on the Internet
i) Google was founded in January 1996 by Larry Page and Sergey Brin when they were studying at Stanfurd University. September 4, 1998 was the first time they were incorporated as a private company. The fast pace growth of the company led to the production of many other products and services. Positive work atmosphere and supporting the environment has led to a good brand name for Google.
ii) Most popularly used search engine on the internet - core business
iii) Google has diversified their business due to the many other products offered by Google, such as Google Maps, Google Translator, Google Video and many others. Google has subsequently grown and taken over the internet by introducing e-mail service, Gmail, introducing Google Wave (helps communication like facebook) and introducing Google Chrome (web browser). Google has done this also by earning most of their revenues through advertising.
iv) Google, unlike other companies, offers many different products or services which is advantageous for the firm. Firms offering a few or one product are vulnerable to losses and bankruptcy because they did not produce any other service or product. If one of Google's product does fail it will not affect much because there are other offerings.
v) NASDAQ stock exchange
vi) nine people on Board of Directors
5) American Express
i) An asset stripper is a person or acquirer obtaining a target company with the plan of selling some of the target's assets to pay outstanding debt. The assets remaining will be worth a lot more than the purchase price.
ii)
6) Has the MNC you researched encountered any problems in operating in overseas markets?
Yes, Google has encountered many problems in operating in overseas markets such as China and Russia. An issue raisied by the Chinese government was the fact that it highlighted pornography on the internet and therefore faced denouncing. Mozilla also encountered problems with its relations with Google because of the introduction of Google Chrome to the market. This led to strong competition for Mozilla, a web browser.
7) What are the ramifications for the MNC of any problems you identified in Question 7?
Google could lose its image in the market and could also ruin relations and its customer base. Businesses contributing to Google's income will also be jeopordized.
8) Define the term conglomerate
One business that consists of many firms producing or supplying different types of goods/services.
9) Which of the multinationals listed in Qn4 could be also described as conglomerates?
Coca Cola, Google and Sony
10) Give two advantages and two disadvantages of conglomerates?
Advantages:
- Due to diverse goods or services, target population or customer base continues to increase.
- Due to the many different productions, if one were to fail, it would not affect the company's income by a great amount because there will be other goods or services provided to help revive the small loss the one failure caused.
Disadvantages:
- Many products leads to a lot more work. More organization, more employment etc is required to be taken care of consistently
