External business environment - multinationals

Question 1

Definition of multinationals

Answer 1

A company that manages productive operations or delivers services in at least two countries

Question 2

Definition of transnationals

Answer 2

Operates on global basis but has no clear head office in any of the countries in which it operates (multinational can still be used to describe it)

Question 3

Definition of micro-multinationals

Answer 3

Small to medium sized businesses who face the limitations and challenges of small businesses, but overcome these challenges with various internet tools

Question 4

Reasons for growth of multinationals

Answer 4

• closeness to local markets (as opposed to just exporting there)
• avoid import tariffs, Japanese car production in US
• lower labour costs
• government incentives, energy firm Clough set up Belshill for £1.5m from Scot Gov

Question 5

Methods of growth for multinationals

Answer 5

• FDI
• joint ventures
• mergers and acquisitions
• franchises