EXHIBIT 3.4 Typical Multinational Enterprises as Focal Firms (Ranked by Industry Sector Size) Sources: Based on Fortune, "Fortune Global 500,'' Industries, 2011, accessed at fortune/; FTSE, "FTSE Global Sector Index Series," accessed at .ftse.com; MSCI, "MSCI Global Sector Indices," accessed at .com; S&P Global 1200, 2012, accessed at .com. Focal firms are the most prominent international players. They include well-known mul-tinational enterprises and small and medium-sized exporting firms, as well as contemporary organizations such as the born globals featured in the opening story. Let's learn more about each of these key actors in international business. The Multinational Enterprise (MNE) A multinational enterprise (MNE) is a large company with substantial resources that performs various business activities through a network of subsidiaries and affiliates located in multiple countries. Leading MNEs are listed on the Fortune Global 500 (). Examples include well-known companies like Nestle, Sony, Unilever, Nokia, Ford, Barclays, and Shell Oil. Although such firms employ a range of foreign market entry strategies, MNEs are best known for their foreign direct investment (FDI) activities. They operate in multiple countries, especially in Asia, Europe, and North America, by setting up production plants, marketing subsidiaries, and regional headquarters. MNEs such as Exxon, Honda, and Coca-Cola derive much of their total sales and profits, often more than half, from cross-border operations. While there were fewer than 7,500 MNEs worldwide in 1970, today the total count stands at roughly 80,000. 1 Exhibit 3.4 displays a sample of MNEs and the diverse industry sectors these focal firms represent. Due to the global financial crisis and worldwide recession, the market value of sectors 2012 Market Percentage ! Value (US$ of World Sector billions) Total Representative F1rms Financial Services $3,940 18.0% Capital One, Danske Bank, Mitsui Sumitomo Bank Technology 2,820 13.0 Microsoft, Oracle, Hoya, Taiwan Semiconductor Manufacturing Energy 2,645 12.0 Mobil, Total, China Oilfield Services Consumer 2.476 11.0 Procter & Gamble, Unilever, Staples China Mengniu Dairy, Honda Industrials 2,356 11.0 Landstar Systems, Shenzhen Expressway, Haldex Health Care 2,233 10.0 GlaxoSmithKiine, Novartis, Baxter International Consumer 2,165 10.0 Coach, Adidas, Salomon, Discretionary Matsushita Electric Materials 1,650 7.0 Dow Chemical, Alcan, Vitro SA Communication 1,127 5.0 AT&T, China Mobile, Royal KPN Services Utilities 890 4.0 Duke Energy, Empresa Nacional de Electricidad SA, Hong Kong and China Gas, Ltd. TOTAL 22,302 100.0 Communication Utilities Materials Services -Consumer Discretionary -· Technology ---· Industrials Consumer Staples
CHAPTER 3 • ORGANIZATIONAL PARTICIPANTS THAT MAKE INTERNATIONAL BUSINESS HAPPEN 61 in the exhibit declined substantially in recent years. The largest changes occurred in the financial and consumer discretionary sectors, which declined in value by50 percent or more between 2007 and 2012.