17 Independent company owned by a foreign firm called its parent Chapter 3

17 independent company owned by a foreign firm called

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17. Independent company owned by a foreign firm (called its parent). Chapter 3 Business in a Global Environment 3.2 Opportunities in International Business 135
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Figure 3.6 Where FDI Goes All these strategies have been successful in the arena of global business. But success in international business involves more than merely finding the best way to reach international markets. Doing global business is a complex, risky endeavor. As many companies have learned the hard way, people and organizations don’t do things the same way abroad as they do at home. What differences make global business so tricky? That’s the question that we’ll turn to next. Multinational Corporations A company that operates in many countries is called a multinational corporation (MNC) 18 . Fortune magazine’s roster of the top five hundred MNCs in the world speaks for the growth of non-U.S. businesses. Only two of the top ten multinational companies are headquartered in the United States: Wal-Mart (number 1) and Exxon (number 3). Four others are in the second tier (tenth through twentieth): Chevron, General Electric, Bank of America, and ConocoPhillips. The remaining fourteen are non-U.S. firms. Interestingly, of the twenty top companies, nine are energy suppliers, and seven are insurance or financial service firms. Figure 3.7 "The World’s Twenty Largest MNCs" provides a list of these twenty largest MNC’s according to revenues. 18. Large corporation that operates in many countries. Chapter 3 Business in a Global Environment 3.2 Opportunities in International Business 136
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Figure 3.7 The World’s Twenty Largest MNCs“Global 500,” Fortune (CNNMoney), magazines/fortune/global500/2010/full_list/ (accessed August 21, 2011). MNCs often adopt the approach encapsulated in the motto “Think globally, act locally.” They often adjust their operations, products, marketing, and distribution to mesh with the environments of the countries in which they operate. Because they understand that a “one-size-fits-all” mentality doesn’t make good business sense when they’re trying to sell products in different markets, they’re willing to accommodate cultural and economic differences. Increasingly, MNCs supplement their mainstream product line with products designed for local markets. Coca-Cola, for example, produces coffee and citrus-juice drinks developed specifically for the Japanese market.James C. Morgan and J. Jeffrey Morgan, Cracking the Japanese Market (New York: Free Press, 1991), 102. When such companies as Nokia and Motorola design cell phones, they’re often geared to local tastes in color, size, and other features. For example, Nokia introduced a cell phone for the rural Indian consumer that has a dust-resistant keypad, antislip grip, and a built-in flashlight.“Glocalization Examples—Think Globally and Act Locally,” CaseStudyInc.com, - globally-and-act-locally (accessed August 21, 2011). McDonald’s provides a vegetarian menu in India, where religious convictions affect the demand for beef and pork.McDonald’s India, “Respect for Local Culture,”
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