Name : Ade Robby Hidayat
Npm : 30107032
Kelas : 3DB01
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 exporting finished products to a foreign market. Establishing these trade relationships is the first step in the development of a multinational business. At this stage, however the corporation's emphasis is still on the domestic market. As trade expands, the corporation's dealing 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 establish a foreign assembly plant, engage in contract manufacturing, or build a foreign manufacturing company or subsidiary. Therefore, a multinational corporation is a company that is primarily based in one country and has production and marketing activities in foreign countries.
Since World War II, multinational corporations have grown rapidly. The names and products of many of the multinational have become well-known in 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 corporation operates in a complex business environment. Cultural, social, economic, political, and technological system vary from country to country. In order to operate successfully, a multinational company needs a basic understanding and appreciation of the foreign business environment.
Comprehension
A. Answer the following questions about multinationals. Questions with asterisk (*) 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 establish its manufacturing operations in foreign countries? What are three forms that these operations may take?
5. What is a multinational corporation?
6 When have multinationals grown rapidly? *Why do you think they have experienced this 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 business 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:
A. 1. The first step (it) is establishing the trade relationship with another country.
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 establish a foreign assembly plant, engage in contract manufacturing, and build a foreign manufacturing company or a subsidiary.
5. A multinational corporation (it) is a company that is primary based in one country and has production and marketing activities in foreign countries.
6. Multinationals (they) have grown rapidly since World War II. Because during the war many countries knew what resources are scarce or abundant in other countries.
7. IBM: International Business Machines, Royal Dutch Shell oil, Panasonic electronic, Coca-Cola soft drink, Volkswagen automobiles.
8. Because a multinational corporation focuses on the world market, and each country has its own system: culturally, economically, politically and technologically. Where as a domestic company only operates in one country which its system its already familiar.
9. Socially: In Japan life time employment system is applied, where as in Indonesia contract system employment is used.
Politically: Thailand is monarchism, Indonesia is democratic.
10. In order to operate successfully. This understanding can be gained through market research.
B. Determine which of the following statement are true and which are false. Then put T or F in the blanks. Rewrite false statements to make them true.
1. T Multinational corporations have grown rapidly since 1945.
2. F Any company engaged in international trade is a multinational business.
3. T In order to operate successfully, a multinational company needs to be aware of national and international business environments
4. F A multinational corporation focuses on its “home country,” or domestic market.
5. F A multinational company does not establish factories in foreign countries.
Vocabulary Exercises
A.Write down any terms that you did not understand in the reading. Find each term in the reading, look at its context, and try to figure out the meaning. Discuss these terms with your classmates.
B.Look at the terms in the left-hand column and find the correct synonyms or definitions in the right-hand column. Copy the corresponding letters in
the blanks.
1. _j_ corporation (line 5) a. chiefly; principally
2. _e_ expand (line 6) b. function in; work in
3. _g_ view (line 8) c. change
4. _i_ stage (line 5) d. a company having more than half of
its stock owned by another company
5. _a_ primarily (line 13) e. increase the dimensions of
6. _h_ base (line 8) f. growth; expansion
7. _c_ vary (line 21) g. see; look at
8. _d_ subsidiary (line 21) h. foundation
9. _b_ operate in (line 20) i. a step in development
10._f_ development (line 4) j. a type of business organization
formed by an association of
stockholders
C.Fill in the blanks in the following paragraph with the most appropriate terms form the list.
base operate in appreciation of expands
vary corporation development subsidiary
stages involved in view relationships
During the development of a corporation, the organizational structure may vary over time and pass through a number of stages. As the corporation grows, it expands its operations. It might become involved in setting up a subsidiary. Although the corporation still has a primary or “home base,” establishment of a subsidiary allow the company to enter into new relationships with a view toward increasing its production and marketing capabilities.
Text Analysis
Look at the reading to answer these questions.
1.What does each of the following refer to?
LINES WORDS REFERENTS
2 it a company
5 this stage first step
17 IBM International Business Machine
2.Match the connective words or phrases with the appropriate
functions.
_c_ however (line 5) a. summarizing
_d_ then (line 8) b. illustrating
_a_ therefore (line 12) c. contrasting
_b_ for example (line 18) d. sequencing information
3.Summarize the two general steps in the
development of a multinational corporation.
a. establishing these trade relationship. (line 3-5)
b. focusing on the world market. (line 8-10)
4.Sometimes the definition of a term takes this form:
a controls the
A restrictive trade law → is → law → that → number of goods
imported or exported
{ that }
term being defined → verb to be → class→ { which } → definition
This type of definition is known as a formal definition.
In a formal definition the term or word being defined occurs first.
It is followed by the verb to be (usually is or are).
Next the class states the general group that the term belongs to:
TERMS CLASSES
multinational corporation company
typewriter business machine
absolute advantage theory of specialization
After the class, either that or which is used. Finally,
the definition itself includes information distinguishing this
term other members of its class.
Write formal definitions for multinational corporation (page 56),
corporation (page 57), and subsidiary (page 57).
a.A multinational corporation is a company that is primarily based
in one country and has production and marketing activities in
foreign countries.
b. __________________________________________________________________
__________________________________________________________________
c. __________________________________________________________________
__________________________________________________________________
5.Formal definitions may be shortened to a more general form, which
includes less information. This is often called a semi-formal
definition. The class, that or which, and the verb to be are
omitted.
A restrictive trade law → controls → the number of goods imported
or exported
Term being defined → verb → definition
Change the formal definition from the previous exercise into
semi-formal definitions.
a.A multinational corporation is primarily based in one country
and has production and marketing activities in foreign countries.
b.____________________________________________________________________
____________________________________________________________________
c.____________________________________________________________________
____________________________________________________________________
Pr – Present; Ps-Past; S-Simple; C-Continuous; F-Future; Pf-Perfect
1. Pr.S - He writes many letters everyday. (habitual action)
2. Ps.S - He wrote m.1 yesterday. (occurred in the past)
3. Pr.C - It is writing m.1 now. (is occurring right now)
4. Ps.C - He was writing m.1 when it rained yesterday. (two actions in the past).
5. Pr.F - He will write m.1 tomorrow. (will happen in the future).
6. Ps.F - He would write m.1 yesterday, but he didn't have time.
7. Pr.Pf - He has written m.1 already (has just happened now).
8. Ps.Pf - He had written m.1 when it rained yesterday. (two actions in the past)
9. Pr.Fc - He will be writing m.1 when you visit him tomorrow. (in the future)
10.Ps.Fc - He would be writing m.1 when you visited him yesterday. (in the past)
11.Pr.FPf - He will have written m.1 when you come tomorrow (in the future)
12.Ps.FPf - He would have written m.1 when you come yesterday. (in the past)
13.Pr.Pfc - He has been writing m.1 for two days until now. (continuously from past
until now).
14.Ps.Pfc - He had been writing m.1 for two days until yesterday (continuously
from past to past)
15.Pr.Fpf.C - He will have been writing m.1 for two days will tomorrow. (until in
the future)
16.Pr.F.Pfc - He would have been writing m.1 for two days until yesterday. (until
in the past)
