MULTINATIONAL CORPORATION 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 Volkwagen. 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 asteris (*) cannot be answered directly from the text. Answer: 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. 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 colomn and find the correct synonyms or definitions in the right-hand colomn. 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 staged involved in view relationship 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 relationship 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 restrictive trade law ? is ? law ? that ? a controls the number of goods imported or exported 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 ar 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 primatily 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 semiformal 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 semiformal definitions. a A multinational corporation is primatily 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-PerfectTENSES
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