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Global Company 3RA
3
Global Company
Business Plan
pages 20 -21
March / 16 / 2020
Multinational
What
Multinational are large businesses that operate in several different countries. They usually have their headquarters in one country, but assembly and production facilities in other countries.
Multinationals have played an important role in the development and spread of globalisation.
The large company is known as the ‘parent company’. Its subsidiary is a smaller company that it either owns entirely or controls more than 50% of the voting share.
extra
UPDATE
Multinational companies often expand by merging or acquiring other smaller companies.
They do this for many reasons, including lessening competition or receiving greater tax benefits.
Reasons why companies become multinational
raw materials
Reasons
COMPANY NEWS
cheap labour
NEWS
EVENTS
NEW EMPLOYEES
NEW HIRE
NEW HIRE
Name
Department
Start date
NEW HIRE
NEW HIRE
Name
Department
Start date
trade barriers
SPECIAL DATE
Name
Birthday
Department
Name
Years with company
Department
reduce tax
subsides
foreign markets
foreign exchange
Advantages &
Disadvantages
Pro&Con
A multinational can have A&D for the host country
Advantages
• investment of money in a host country
• employment and training opportunities
• experience and working methods
• source of taxation revenue(entrata fiscale) for the host country
Disadvantages
• unskilled (non specializzato) and low paid and bad working conditions
• destroy small businesses
• environmental problems
• strong influence on governments
•benefits for the shareholders rather than the host countries.
• selling sub-standard products to Third World countries
Reloction of business
Multinationals often transfer aspects of their production or services to other countries, so that they can take advantage of lower costs or be closer to their markets.
RELOCATION OF BUSINESS
Offshoring
Offshoring involves the relocation of business
activities from the home country
to a different international location.
Over the last twenty years, for example, a lot of call centres have been set up in India.
Offshoring
Why India?
This is because India has an enormous English-speaking population and an education system that produces more than a million graduates every year. In addition, compared to European or American workers, Indian workers are cheap.
why India?
Reasons for
offshoring
There are two types of offshoring:
Types of
offshoring
- Production offshoring
- Service offshoring
Production offshoring
Production
Production offshoring involves the relocation of manufacturing processes to a lower-cost destination.
Examples of this include the manufacture of electronic components and the production of toys, clothes and consumer goods in China.
Service offshoring
Service
Service offshoring involves the relocation of support processes, such as accounting, information technology (IT) and customer service processes, such as call centres.
These services are often outsourced to external companies.
TOP
Location
Outsource
Outsource
Outsourcing is a more specific term. It means contracting work out to an external organisation.
Outsourced functions can be performed by the third party either onsite or offsite of the business.
Why Outsourcing?
The two main reasons that organizations decide to outsource are to reduce costs and to have the ability to focus on core business goals and planning.