Global Business - Business Revision Notes

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Global Business 4

Transnational Companies 4

Global Companies 4

Transnational Companies 4

What are the Reasons for the Development of Transnational Companies? 4

Advantages 5

Disadvantages 5

Global Companies 5

Reasons for the Development of Global Companies 5

Global Marketing 6

Global Product 6

Global Price 6

Global Promotion 7

Global Place 7

Importance of the Global Market for a Global Business 7

Global Business

Transnational Companies

  • These are companies which sell their goods in several different countries.
  • They have a head office in one country which controls the business and branches in different countries.
  • Example: Ryanair are a transnational company that only fly to European destinations.

Global Companies

  • These are companies that sell their goods worldwide.
  • They treat the world as one country with a single market.
  • Example: Coca Cola are a global company.

Transnational Companies

What are the Reasons for the Development of Transnational Companies?

  • Diversify: transnational companies are not solely dependent on one market. They spread their risk so if one market is in a downturn the hope is that other markets will keep the company profitable.
  • Communication and Technological Advances: improvements in the area of technology have made it easier to run overseas branches. Video- conferencing allows meetings to take place in different countries without travel expenses.
  • Saturated Home Market: if the business has expanded its sales to all possible target markets it can look to increase sales by expanding to other countries with larger populations and markets.
  • Overcome Trade Barriers: if transnational companies expand into the EU, they can overcome EU Quotas on products from outside the EU. Example: If a Japanese car company opens a branch in Ireland they will avoid EU quotas on Japanese cars.
  • Increase in Sales: expanding overseas creates the opportunity to sale to more customers and increase profits of th...

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