Text I. INTERNATIONAL INVOLVEMENT IN BUSINESS

    Trillions of dollars’ worth of business in international trade is conducted every year. Certain trading nations – Japan, the United Kingdom, Hong Kong, Korea, and Taiwan among them – draw their economic lifeblood from foreign trade, while others, such as the United States, France, Germany, Russia, and China, are relatively self-sufficient. Yet even the U.S. has become increasingly dependent on imported TVs, VCRs, compact cars, oil, and other consumer goods. Ukraine is also dependent on imported oil, gas, cars, electronic equipment, etc. Various foreign firms conduct international trade and help products to compete well internationally.

    There are 3 main types of firms involved in international activities. They are exporting firms, international firms and multinational firms.

    Exporting Firms. This lowest level of involvement in international business is an excellent way for a firm to learn some of the ins and outs of doing business in an international arena. As its name implies, an exporting firm simply exports its product to a single (or very small number of) foreign countries. The majority of firm’s business is conduct in its original location. Only a small part of the business is conduct across an international boundary.

    Many small firms do some international trade and thus may be considered exporting firms. A number of large international firms began as exporting firms. For example, IBM and Coca-cola exported their products to Europe for several years before building manufacturing facilities there.

    International Firms. The next level of involvement is international business. An international firm is one with a significant portion of its business in several foreign countries. And increasingly, it has some of its manufacturing plants in overseas locations. However, while an international firm may be very large and have a major impact on the global economy, it is still basically a domestic firm with international operations. That is, the domestic market in its headquarters country is its central concern. Product and manufacturing decisions typically reflect this concern. The international firm then sells these products throughout the world. Examples of international firms include McDonald’s, Burlington Industries, and BMW.

    Multinational Firms. The highest level of involvement in international business is the multinational firm. A multinational firm does not think of itself as having a domestic part of its business and an international part of its business. Rather, planning and decision making are geared to international markets. The location of multinational’s headquarters is almost irrelevant. Examples of truly multinational firm include Royal Dutch Shell, Nestle, IBM, and Ford.

    An excellent example of a truly multinational firm is the British firm ICI. ICI-more formally know as Imperial Chemical Industries – is one of the 50 largest industrial firms in the world. To compete in a global economy, ICI has undergone a dramatic transformation in its evolution to a multinational firm. ICI has nine major business units, four of which are now headquartered outside of Britain. Until 1998, all 16 of ICI’s directors were British, but now there are two Americans, a Canadian, a Japanese, and a German on the board. Rather than managing businesses within countries, managers are now in charge of business units that compete around the world. ICI has major operations in 25 different countries.

 

Vocabulary notes

to be dependent – зависеть от

level of involvement – уровень вовлечения

boundary – граница

to conduct business – заниматься предпринимательской деятельностью

manufacturing facilities – производство, производственные мощности, оборудование

overseas – за границей

major impact – значительное влияние

to reflect concern – тревожится

to have a concern in a business – быть участником какого-либо дела

decision making – принятия решения

gear – приводить в движение

headquarters – главное управление, центр, штаб-квартира

to  headquarter – размещать

to be in charge of – быть ответственным за

on the board -  в совете директоров

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