A company headquartered in one country but with operations in one or more other countries. MNEs often downplay the fact that they are foreign-held.

1. ADVANTAGES OF INTERNATIONAL
COMPANIES OVER THE COMMON FIRMS
ABDUL RUHULLA
IFF 2-2
Moscow 2016
Financial University under the Government
of the Russian Federation

2. THE MULTINATIONAL ENTERPRISE (MNE)
• A company headquartered in one country but with operations in one
or more other countries.
• MNEs often downplay the fact that they are foreign-held.

3. MOTIVATIONS FOR GOING
INTERNATIONAL
Proactive Motivations
• Profit advantage
• Unique products
• Technological
advantage
• Exclusive information
• Tax benefit
• Economies of scale
Reactive Motivations
• Competitive pressures
• Overproduction
• Declining domestic sales
• Excess capacity
• Saturated domestic markets
• Proximity to customers and
ports

4. PROFIT RISK DURING EARLY
INTERNATIONALIZATION
In the short term, firms may experience increased risk and
decreasing profits when going international.
Profit
Risk
Market
Gap
International Experience
Before
Going
International

5. COST CONTROLS
- Lower labor costs
- Outsourcing (a practice used by different companies to reduce
costs by transferring portions of work to outside suppliers rather
than completing it internally)
- Reduced transportation costs.

6. TAXATION
- Advantages of tax variations
- Lower tax rates

7. CONSUMER BENEFITS
- Make increased profits while reducing prices, which benefits
consumers
- Have access to knowledge and skills in multiple countries that could
help produce better products

8. BENEFITS TO COUNTRIES
- It increases tax revenues for the country
- It increases employment (the multinational
corporation may attract staff by paying
higher wages than local counterparts)

9. MORE REVENUE STREAMS
- Gain access to new sources of revenue
- Creating new revenue while minimizing costs is key to earning
profits

10. Belgium Finland Germany Nether
lands
Poland Spain

12. RESOURCES AND SUPPLIES
- Global companies can use capital raised in other markets for further
marketing and expansion
- Global companies gain access to new materials and resources and
have the ability to form strategic alliances around the globe

13. MARKET DEVELOPMENT
- Globalization also provides your business some level of isolation from
slumping performance in one country or region
- If the economy, supply issues, environment or government regulations in
one country negatively affect you, you can still find success in other
countries

14. COMPARING COMPANIES
BY MARKET
CAPITALIZATION
$830 million
$141 billion
$177 billion
$243 billion

15. INTERNATIONAL MARKET ENTRY
AND DEVELOPMENT MODEL
Domestic
Focus
Multinational
Focus
Alternative
Strategies
•Trading
Export/Import
•Licensing/
Franchising
•Local
presence
alliances
full ownership
Level of
Management
Commitment
•Aware
•Interested
•Trial
•Evaluation
•Adaptation
Motivations
•Proactive
•Reactive
Inter-
mediaries
•EMC
•Trading Co.
•Facilitators
Concerns
•Information
•Mechanics
•Communication
•Sales Effort
•Service
•Regulations

16. ADVANTAGES TO CONSIDER
• Enhance your domestic competitiveness
• Increase sales and profits
• Gain your global market share
• Reduce dependence on existing markets
• Exploit international trade technology
• Extend sales potential of existing products
• Stabilize seasonal market fluctuations
• Enhance potential for expansion of your business
• Sell excess production capacity
• Maintain cost competitiveness in your domestic market

17. DISADVANTAGES TO KEEP IN MIND
• You may need to wait for long-term gains
• Hire staff to launch international trading
• Modify your product or packaging
• Develop new promotional material
• Incur added administrative costs
• Dedicate personnel for traveling
• Wait long for payments
• Apply for additional financing
• Deal with special licenses and regulations

18. REFERENCES
• http://smallbusiness.chron.com/advantages-multinational-
organizations-20820.html
• http://smallbusiness.chron.com/advantages-global-companies-
57127.html

19. THANK YOU FOR YOUR ATTENTION!