Subject: Presented to:

International financial statement Sir Taimoor zahid

Presented by: Sana Javaid 12052054-045 Section T

Semester 4nd (M.com) G.T road science College Gujarat

Reason Why a firm goes to mmc

Companies become multinationals because they will benefit from organizational, internalization and location advantages. One of the greatest organizational advantages is brand recognition, which at international levels of business is highly valued. In the 1980's, the economist John Dunning developed a theory that explains why companies would invest abroad and become multinational corporations (MNCs). This theory was named the eclectic theory. However, today it is more widely known as the OLI model, due to the three factors that are thought to spike foreign investments: Firms go multinational as they are bound to have many advantages such as cheap labor, cheap raw materials which will help them in cost cutting. They enter into a competitive market and strive to increase their sales. There are three important stages to become a multinational firm. The main reason that firms outsource the products is to know what actually the consumer really needs and to understand the market conditions. Outsourcing helps to reduce the overall costs in an organization. So the cost factor becomes less. Once the firm satisfies customer needs and satisfaction then the business and market can be globally expanded. To achieve high success in business, the firm has to design products according to consumer needs and satisfaction than market conditions. To do a business in a particular product, the product has to be patented. The cost of obtaining the patent license is expensive. So if the firms outsource the products then the patent cost becomes less. If the patent license is obtained, then the business can be expanded globally and export cost is also reduced. Globalization is the circulation of goods, services and capital, but also information, ideas and people. It has shaped all of the twentieth century, albeit with large cyclical variations and has become an increasingly visible force in recent decades (World Bank, 2000). FDI Local Packing & Assembly Organizational Advantages

 Location Advantages Internalization Advantages Export through own Supply representative or sale subsidiary Representative or sales subsialary Export via agent or distributor License Time Depth of involvement in foreign market Entry into foreign Market Once the business starts growing globally, the competitive advantage also starts increasing. We will come to know about latest technology in the market and more firms in the world. In the initial stage the firm should target only one country to market the product. Once the firms become success in that country then the firms can target many other countries. If the firm exports the product through agents or through distributors then the firm will come to know about the market conditions and the competitive advantage of the product. Example Coca-Cola is an example of a company with a significant organizational advantage. Its trademark is well-known and enough to sell soft-drinks in numerous countries across the world. According to James W. Harrington, a professor in geographical economics at the University of Washington, organizational advantages also cover company specific factors such as product quality, delivered price, marketing sophistication, distribution networks, low-cost inputs and superior production technology. Natural resources in Greenland are becoming easier to access. Mining companies locating there, such as Nuuk fjord Gold, have a locational advantage. Low wages, local tariffs and other trade barriers are also factors that would make it sensible to locate in a foreign country. Internalization, i.e. owning foreign operations, is sensible when a company seeks to retain all expected profits or wishes to control the quality, marketing and local growth strategies. Being represented and taking responsibility abroad may also make it easier to sway local decision

makers. Finally, according to the economists Jeff Madura and Roland Fox, having a presence in several countries can increase the knowledge of and access to new financing and investment opportunities.

Franchising vs Licensing
A company looking to expand, franchising and licensing are often appealing business models. In a franchising model, the franchisee uses another firm's successful business model and brand name to operate what is effectively an independent branch of the company. The franchiser maintains a considerable degree of control over the operations and processes used by the franchisee, but also helps with things like branding and marketing support that aid the franchise. The franchiser also typically ensures that branches do not cannibalize each other's revenues. Under a licensing model, a company sells licenses to other (typically smaller) companies to use intellectual property (IP), brand, design or business programs. These licenses are usually nonexclusive, which means they can be sold to multiple competing companies serving the same market. In this arrangement, the licensing company may exercise control over how its IP is used but does not control the business operations of the licensee. Franchising Governed by Registration Securities law Required Licensing Contract law Not required Not offered; licensee can sell Territorial rights Offered to franchisee similar licenses and products in same area Not provided

Support training

and Provided by franchiser

Royalty payments Yes

Yes

Franchising Use trademark/logo of Logo and trademark retained by franchiser and used by franchisee McDonalds, Subway sandwiches, Examples 7-11, Dunkin Donuts,Block

Licensing Can be licensed

Microsoft Office

buster,daliy queen Franchiser exercise control over franchisee. licensor does not have control over licensee

Control

Examples of Franchising Companies

Rank Franchise Name Country Industry

SUBWAY

United States of America

Sandwich & Bagel Franchises

McDonald's

United States of America

Fast Food Franchises

KFC

United States of America

Chicken Franchises

Burger King

United States of America

Fast Food Franchises

7 Eleven

United States of

Convenience Store Franchises

America

Pizza Hut

United States of America

Pizza Franchises

GNC Live Well

United States of America

Wellness Products & Services

Wyndham Hotel Group

United States of America

Hotel Franchises

Dunkin' Donuts

United States of America

Bakery & Donut Franchises

10

DIA

Spain

Convenience Store Franchises

Example of Licensing
COMPANY 3M Company EXEMPTION Jacqueline Berry, a spokeswoman for 3M, said the company received this license to sell certain medical and dental products to civilian populations in Iran. It separately received another license to sell specialized window film to a United Nations building in Sudan. Albemarle Corporation Bechtel Aircraft Operations This license authorized the sale of ibuprofin in Iran. This license authorized the company to fly a United States-owned aircraft into Libya so that executives could meet with representatives of the Libyan government.

Becton, Dickinson & Company

This medical device company and its French subsidiary were licensed to export goods, the precise nature of which OFAC redacted, to Iran.

Chiquita Brands International Inc.

This license was one of many given to Chiquita Brands, the banana grower, authorizing it to sell its produce in Iran; the purchasers' names have all been redacted by OFAC. The company was also authorized to sell its products in Libya while that country was still under sanction by the United States.

Cisco Systems Inc.

This license authorizes the company to help the New Zealand Embassy in Iran with a computer project.

Citigroup Inc.

This license had to do with a letter of credit guaranteeing a shipment of goods that Citibank later found out involved a North Korean vessel.

Coca-Cola Company

Coca-Cola does business in Iran through an Irish subsidiary, which sells concentrate to a bottling company called Khoshgovar based in Mashhad, according to a spokeswoman. The company has also received licenses to sell its products in Sudan.

ImEx Gulf Philips Electronics

This license authorized the sale of medical products to Iran. Philips Electronics received a license to sell some sort of medical devices to Iran, the exact nature of which was redacted by OFAC. The division of the company mentioned in the paperwork suggested that the product sold was some sort of ultrasound equipment. OFAC also redacted the names of the Iranian buyers.

Example of Acquisition

A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own

Acquisition date

Company

Business

Country

Value (USD)

February 4, 1982

Music Incorporated

Center Professional audio

USA

N/A

September Crescendo 24, 1993 Communications

LAN switching

United States

$94,500,000

July 1994

12, Newport Solutions

Systems

Router

United States

$95,000,000

August 1994

Redgate Communications

Internet service provider

USA

$33,000,000

November 1994

BookLink

Web browser

USA

$30,000,000

8 1998

June

Mirabilis

Instant messaging

ISR

$287,000,000

August 23, 2005

facebook.com domain name

AboutFace

USA, Boston $200,000

February 19, 2010

Octazen

Contact importer

Malaysia,Taman Melawati,Kuala Lumpur

19 May 2001

InfoInterActive Telecommunications

CAN

15 May 2007

AdTech

Advertising technology provider

DEU

Merge
To cause (two or more things, such as two companies) to come together and become one thing: to join or unite (one thing) with another To become joined or united To change into or become part of something else in a very gradual way

Change of companies Top of Form Name of Company 2013 Mustehkam Cement Limited

Merged Companies

Demerged Companies Delisted Companies

New name of the company / Date of merged with Merger

Paidup Capital

Ratio

Bestway Cement Company Limited

2013-12-26

1292.609

[1 : 0.66 ]

2012 Azam Textile Mills Limited 2011 MyBank Limited Atlas Bank Limited The Royal Bank of Scotland Limited 2010 Shaheen Cotton Mills Limited Askari Leasing Limited Al-Zamin Leasing Corporation Limited Al-Zamin Leasing Modaraba 2009 Orix Investment Bank Limited Automotive Battery Company Limited Network Leasing Corporation Limited International Multi Leasing Bottom of Form Orix Limited Exide Pakistan Limited Leasing Pakistan 2009-10-28 1089.000 [ 43:1 ] Shahzad Limited Askari Bank Limited Invest Capital Investment Bank Limited Invest Capital Investment Bank Limited Textile Mills 2010-08-02 147.294 [ 1 : 0.3 ] [ 1 : 83.1 ] [ 1 : 2.4 ] Summit Bank Limited Summit Bank Limited Faysal Bank Limited 2011-07-06 2011-01-11 2011-01-03 5303.582 5001.466 17179.814 [ 1 : 0.8 ] [ 1 : 0.5 ] [6:1] Saritow Limited Spinning Mills 2012-02-21 132.750 [1.2 : 1 ]

2010-03-10

517.402

2010-01-11

496.071

2010-01-11

308.721

[ 1 : 2.6 ]

2009-05-04

52.648

[9:1]

KASB Bank Limited Al-Zamin Modaraba Leasing

2009-02-17

175.000

[ 500 : 1 ]

2009-01-19

54.000

[1:1]

References
http://www.khistocks.com/index.php?pagelink=merge_demerge&p g_company=merged_companies http://www.nytimes.com/interactive/2010/12/24/world/24sanctions.html?_r=0 http://www.franchisedirect.com/top100globalfranchises/rankings/ http://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL