WHAT IS THE DIFFERENCE OF MULTINATIONAL, GLOBAL AND TRANSNATIONAL COMPANY? | NATURE OF INTL BUSINESS

Summary

The script discusses the distinctions between multinational, global, and transnational companies in the context of international business. Multinational companies adapt their products to local markets, global companies maintain consistent offerings worldwide, while transnational firms delegate decision-making to local markets. It also touches on international business challenges like restrictions, inflation, and benefits such as economic growth and job creation. Furthermore, it highlights the integration of economies, dominance of developed countries, market segmentation, and sensitivity to political and economic changes.

Takeaways

• 🌐 Multinational companies adapt their products and services to local markets, like McDonald's offering a salad or KFC serving rice in some regions.
• 🌏 Global companies maintain consistent offerings and processes across all countries, such as Adobe, Hilton, and Hyatt.
• 🌍 Transnational companies have a central corporate facility but delegate decision-making, R&D, and marketing to local markets, exemplified by Nestlé.
• 📉 International restrictions like foreign exchange, trade blocs, and barriers can significantly impact international business operations.
• 💹 International businesses can lead to economic growth and development for participating countries, providing jobs and technology transfer.
• 🔝 International businesses often start at a domestic level before expanding globally, reaching larger markets.
• 🤝 The integration of economies allows companies to utilize resources from different countries, creating a win-win situation.
• 💼 Developed countries, with their financial capacity and advanced technology, tend to dominate international business.
• 📊 Market segmentation is crucial in international business, as consumer demands vary greatly across different countries.
• 🔍 International businesses are highly sensitive to political, economic, and technological changes, which can affect them positively or negatively.

Q & A

What is the primary focus of multinational companies?

Multinational companies primarily focus on adapting their products and services to each individual local market.

How does McDonald's illustrate the concept of multinational companies?

McDonald's illustrates the concept by offering slightly different menu items like a name salad in some regions, adapting to local tastes and preferences.

What is the main difference between multinational and global companies?

The main difference is that multinational companies adapt their products and services to local markets, while global companies offer consistent products and processes across all countries.

Can you provide an example of a global company mentioned in the script?

Adobe is given as an example of a global company with consistent offerings and processes in each country.

What is the defining characteristic of a transnational company?

Transnational companies have a central corporate facility but delegate decision-making, R&D, and marketing to local markets, aiming for a global perspective.

How does the script describe the impact of international restrictions on business?

International restrictions such as foreign exchange, trade blocs, and trade barriers can greatly affect international businesses by imposing limitations on operations across different countries.

What benefits do countries gain from participating in international business?

Countries that participate in international business tend to become richer and more developed, gaining access to foreign capital, latest technology, rapid industrial development, and employment opportunities.

How does international business affect the scale of operations?

International businesses often operate on a larger scale compared to domestic businesses, serving a broader market which can lead to greater earnings and economic growth.

What is meant by the integration of economies in the context of international business?

Integration of economies refers to companies utilizing labor, resources, finance, and establishments from different countries, creating a win-win situation and fostering mutual economic benefits.

Which countries tend to dominate international business according to the script?

Developed countries like the USA, Japan, and Europe tend to dominate international business due to their large financial capacity, advanced technologies, and significant investment in R&D.

How does market segmentation play a role in international business?

Market segmentation is a nature of international business where companies produce goods according to the demand of consumers in different countries, tailoring their offerings to meet varying consumer demands.

Why is international business considered sensitive?

International business is sensitive due to its susceptibility to changes in the political environment, economic policies, and technological advancements, which can positively or negatively impact operations.