Chapter 3-3 : International Business Organizations

Chapter 3-3 : International Business Organizations

Multinational company (MNC) - -An organization that does business in several countries

-Global market entry modes - -Licensing, Franchising, Joint venture

-Drawbacks of multinational companies - -An MNC can become a major economic power in a
host country. The workers of the host country may depend on the MNC for jobs. Consumers
become dependent upon it for goods and services. The MNC may actually influence or control
the political power of the country.

-Licensing - -Selling the right to use some intangible property (production, process, trademark,
or brand name) for a fee or royalty

-Franchising - -Another method often used to expand into other countries. The right to use a
company name or business process in a specific way.

-Franchising and Licensing (Comparison) - -Involve a royalty payment for the right to use a
process or company name

-Joint venture - -An agreement between two or more companies to share a business project

-World Trade Organization - -Created in 1995 to promote trade around the world

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