MULTINATIONAL CORPORATION

Topics: Foreign exchange market, International economics, Exchange rate Pages: 16 (3968 words) Published: April 22, 2015


NAME: HAMZA .S. MAKANDE
STUDENT NUMBER: TP027192
INTAKE CODE: UC2F1501IBM
MODULE: FINANCIAL MANAGEMENT ()
TOPIC: MULTINATIONAL CORPORATIONS (MNC)
INDIVIDUAL ASSIGNMENT
LECTURER: NEENA DAS A/P GOGILADAS
DATE ASSIGNED: 13th AUGUST 2013
DATE DUE: 27TH MARCH 2015

TABLE OF CONTENTS
INTRODUCTION.3
TYPES OF FOREIGN EXCHANGE EXPOSURE.5
Transaction Exposure5
Translation Exposure.6
Economic Exposure.7
REASONS FOR MNC TO EXPAND GLOBALLY8
To Seek for New Markets8
To Seek New Resources8
To Seek New Technology9
To Seek Production Efficiency9
Global Diversification.9
FACTORS DISTINGUISH MULTINATIONAL FINANCIAL MANAGEMENT FROM DOMESTIC FINANCIAL MANAGEMENT.10 Political Risk10
Role of Government10
Language Differences.11
Cultural Differences.11
Economic and Legal Ramifications11
Different Currency Denominations.12
CONCLUSION12
REFERENCES.13

MULTINATIONAL CORPORATION (MNC)
INTRODUCTION.
Multinational Corporation is any corporation or company which is registered and operates in more than one company at a time. Generally the corporation own its headquarters in one country and operates its business, derives its quarter of its revenue from operations outside of its home country where headquarter exist. A centralized head office (Headquarters) is essential to any Multinational corporation because its help to communicate and coordinate global management. Multinational Corporation also known as Transnational Corporation. Very large Multinational Corporation have budget which exceed those of many small countries. America, Japan and Europe are well known for having many and big multinational companies such as Toshiba, Coca cola, and Nike etc. which play big role in increasing the economy. Many scholars suggest that Multinational Companies helps to create job opportunities, wealth and improving technology in countries where are serious in need of it. It also helps to stimulate competition among many Corporations result to great product and high consumer satisfaction. However there are also critics concerning these corporations such as undue political influence over governments, can exploit developing countries as well as creating job losses in their home countries. Lenovo is one of the biggest multinational company in the world with headquarters in Beijing, China and Morrisville, California United States. Lenovo is all focus about electronic devices such as PC, smartphones, tablets, workstations, servers and electronic storage devices. Lenovo was founded in Beijing in 1984 as Legend and was incorporated in Hong Kong in 1988. Lenovo has operations in more than 60 countries and sells its products around the world in more than 160 countries. In any Multinational company as big as Lenovo, there must be a successful stories which contributed to the rise of the company in many sectors. The following are some of the Lenovo successful stories which made headlines until today;

Lenovo Acquisition of IBM
Perhaps this was and still one of the biggest successful stories the company has ever break to the world. The company acquired IBM’s personal computer in 2005 for $1.75 billion (including $500 million in assumed liabilities), including tablets lines and ThinkPad laptop. The acquisition helped to gain access to foreign markets while improving its branding and technology because at that time IBM was one of the biggest company in the PC market. At the end of acquisition Lenovo was third-largest computer maker worldwide after Dell and Hewlett-Packard. The acquisition also benefited Lenovo from the ThinkPad brand which was very powerful, IBM’s more advanced PC manufacturing Technology and the company’s international resources such as operation team and global sales channels. In April 2006, the company committed to buy genuine Windows software, a deal worth $1 billion a year for Microsoft Corp. In China, most PCs were sold without operating systems installed and cheap pirated...

References: Cheng, R. and googleplus, (2014). It 's official: Motorola Mobility now belongs to Lenovo - CNET. [online] CNET. Available at: http://www.cnet.com/news/lenovo-closes-acquisition-of-motorola-mobility-from-google/ [Accessed 24 Mar. 2015].
eHow, (2015). What Are the Six Key Differences Between Multinational and Domestic Financial Management? | eHow. [online] Available at: http://www.ehow.com/info_8641557_six-multinational-domestic-financial-management.html [Accessed 24 Mar. 2015].
Engitel.com, (2015). Typical functions of an e-commerce system. [online] Available at: http://www.engitel.com/en/products/spingo-commerce/typical-functions-of-ecommerce-system.html [Accessed 24 Mar. 2015].
Fletcher, O. (2015). Lenovo passes Dell to become world 's No 2 PC maker. [online] MarketWatch. Available at: http://www.marketwatch.com/story/lenovo-passes-dell-to-become-worlds-no-2-pc-maker-2011-10-13 [Accessed 24 Mar. 2015].
Fortworthnews.net, (2015). Fort Worth News - US Moto X production plant of Motorola to be shut down by year end. [online] Available at: http://www.fortworthnews.net/index.php/sid/222467207 [Accessed 24 Mar. 2015].
Lemon, S. (2015). Lenovo Completes Purchase of IBM 's PC Unit. [online] TechHive. Available at: http://www.techhive.com/article/120670/article.html [Accessed 24 Mar. 2015].
Mia.org.my, (2015). Currency Exposure and Risk Management. [online] Available at: http://www.mia.org.my/handbook/guide/IMAP/imap_3.htm#Translation%20Exposure [Accessed 24 Mar. 2015].
Phung, A. (2006). What is political risk and what can a multinational company do to minimize exposure?. [online] Investopedia. Available at: http://www.investopedia.com/ask/answers/06/politicalrisk.asp [Accessed 24 Mar. 2015].
strategy+business, (2015). Lenovo Goes Global. [online] Available at: http://www.strategy-business.com/article/00274?pg=all [Accessed 24 Mar. 2015].
Wilkinson, J. (2013). Transaction Exposure • The Strategic CFO. [online] Strategiccfo.com. Available at: http://strategiccfo.com/wikicfo/transaction-exposure/ [Accessed 24 Mar. 2015].
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