Subject: International financial statement

Presented to: 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 non-

exclusive, 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 Licensing

Governed by Securities law Contract law

Registration Required Not required

Territorial rightsOffered to franchisee

Not offered; licensee can sell

similar licenses and products

in same area

Support and

training

Provided by franchiser Not provided

Royalty payments Yes Yes

Use of

trademark/logo

Logo and trademark retained by

franchiser and used by franchisee

Can be licensed

Examples McDonalds, Subway sandwiches,

7-11, Dunkin Donuts,Block

Microsoft Office

Franchising Licensing

buster,daliy queen

ControlFranchiser exercise control over

franchisee.

licensor does not have control

over licensee

Examples of Franchising Companies

Rank Franchise Name Country Industry

1 SUBWAY®United States of

America Sandwich & Bagel Franchises

2 McDonald'sUnited States of

America Fast Food Franchises

3 KFCUnited States of

America Chicken Franchises

4 Burger KingUnited States of

America Fast Food Franchises

5 7 ElevenUnited States of

America Convenience Store Franchises

6 Pizza HutUnited States of

America Pizza Franchises

7 GNC Live Well United States of Wellness Products & Services

America

8 Wyndham Hotel GroupUnited States of

AmericaHotel Franchises

9 Dunkin' DonutsUnited States of

AmericaBakery & Donut Franchises

10 DIA Spain Convenience Store Franchises

Example of Licensing

COMPANY EXEMPTION

3M Company 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 This license authorized the sale of ibuprofin in Iran.

Bechtel Aircraft

Operations

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 This license authorized the sale of medical products to Iran.

Philips Electronics 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

dateCompany Business Country Value (USD)

February

4, 1982

Music Center

Incorporated

Professional

audio USA N/A

September

24, 1993

Crescendo

CommunicationsLAN switching

 Unite

d States$94,500,000

July 12,

1994

Newport Systems

SolutionsRouter

 Unite

d States$95,000,000

August

1994

Redgate

Communications

Internet service

provider USA $33,000,000

November

1994BookLink Web browser  USA $30,000,000

8 June

1998Mirabilis

Instant

messaging ISR $287,000,000

August

23, 2005facebook.com domain name AboutFace

 USA, Bo

ston$200,000

Februar

y 19,

Octazen Contact importer Malaysia,Taman

2010 Melawati,Kuala Lumpur

19 May

2001InfoInterActive Telecommunications  CAN

15 May

2007AdTech

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 Merged Companies Demerged Companies Delisted Companies

Top of Form

Name of CompanyNew name of the company /

merged with

Date of

Merger

Paidup

CapitalRatio

2013

 Mustehkam Cement

Limited

 Bestway Cement Company

Limited 2013-12-26  1292.609  [1 : 0.66 ]

2012

 Azam Textile Mills

Limited

 Saritow Spinning Mills

Limited 2012-02-21  132.750  [1.2 : 1 ]

2011

 MyBank Limited  Summit Bank Limited  2011-07-06  5303.582  [ 1 : 0.8 ]

 Atlas Bank Limited  Summit Bank Limited  2011-01-11  5001.466  [ 1 : 0.5 ]

 The Royal Bank of  Faysal Bank Limited  2011-01-03  17179.814  [ 6 : 1 ]

Scotland Limited

2010

 Shaheen Cotton Mills

Limited

 Shahzad Textile Mills

Limited 2010-08-02  147.294  [ 1 : 0.3 ]

 Askari Leasing Limited  Askari Bank Limited  2010-03-10  517.402  [ 1 : 83.1 ]

 Al-Zamin Leasing

Corporation Limited

 Invest Capital Investment

Bank Limited 2010-01-11  496.071  [ 1 : 2.4 ]

 Al-Zamin Leasing

Modaraba

 Invest Capital Investment

Bank Limited 2010-01-11  308.721  [ 1 : 2.6 ]

2009

 Orix Investment Bank

Limited

 Orix Leasing Pakistan

Limited 2009-10-28  1089.000  [ 43:1 ]

 Automotive Battery

Company Limited Exide Pakistan Limited  2009-05-04  52.648  [ 9 : 1 ]

 Network Leasing

Corporation Limited KASB Bank Limited  2009-02-17  175.000  [ 500 : 1 ]

 International Multi

Leasing

 Al-Zamin Leasing

Modaraba 2009-01-19  54.000  [ 1 : 1 ]

Bottom of Form

References

http://www.khistocks.com/index.php?

pagelink=merge_demerge&pg_company=merged_companies

http://www.nytimes.com/interactive/2010/12/24/world/24-

sanctions.html?_r=0

http://www.franchisedirect.com/top100globalfranchises/rankings/

http://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL