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_____________________________________________________________________ Unit 1.6: Multinational companies Globalization: Process in which the world's regional economies are turned into one integrated global unit. Can have a significant impact on the growth of domestic businesses. Globalization’s impact on growth of domestic businesses: - Increased competition - Greater brand awareness - Skills transfer - Closer collaboration Multinational companies: A company which operates in 2 or more countries. It is generally a very large company, but it does not have to be. They are also referred to as a multinational enterprise Reason for growth of multinational companies: - Improved communications - Dismantling of trade barriers - Deregulation of the world's financial markets - Increasing economic and political power of the multinational companies Impact of multinational companies on the host countries: Advantages: - Economic growth - New ideas - Skill transfer - Greater choice of products - Short term infrastructure projects Disadvantages: - Profits being repatriated - Loss of cultural identity - Brain drain

- Loss of market share - Short term plans Explain how globalization has encouraged the growth of multinational companies. (complete in your notes) Globalization has encouraged the growth of multinational companies by allowing the companies to access labour at a cheaper price. This is as businesses can legally hire workers in foreign countries which they operate in which has the potential to reduce costs if the country they reside in and hire from has cheaper labour. This will allow the business to improve its efficiency in production and operations as the businesses overall costs reduce and their ability to achieve economies of scale is much easier. In addition to this, globalization allows a business to be able to purchase materials and production tools at a lower cost. This is as the business will be able to have access to new markets and talents- which lower the cost of ways to produce and operate the business. Which ultimately, helps the business in the long run and brings in new measures of expertise in the business. Explain two benefits and two disadvantages to your country resulting from the operations of a well-known multinational company. (complete in your notes) General Motors: Benefits: 1) A benefit of General Motors to Canada resulting from the operation of the multinational company is the increase of the Canadian economy in a positive boost. This is as there is an increase in exports, spending, and interactions with local suppliers in Canada. In addition to this, there is a positive tax return from the business which the Canadian economy can benefit from. To add onto that, General Motors provides Canada with a more competitive atmosphere which other businesses can benefit from, in order to increase their dedication and management of their business. 2) Another benefit of General Motors operating for Canada is that there will be more access for Canadians to the global market. This is as they will have a more diverse leaveway into other markets to operate in through their relationships with General Motors. Due to this, there will be an increase in employment rates

and training for them in Canada itself. Which can further impact the Canadian economy, and improve the lives of Canadians. Disadvantages: 1) A disadvantage of General Motors operating to Canada is that decision making is primarily done outside the country. Due to this, there is a potential for GM to have its finances created in the country of Canada to be sent to there home country after using- or potentially exploiting- Canadian resources. This may cause local and domestic businesses to be unhappy with the unfair competition on the scarcity which resources may prove to entail. 2) Another disadvantage of General Motors operating in Canada is that the host country of Canada loses control over their economy. This is a result of the business deciding decision making tactics which benefit themselves. Which as a result, may include procuring materials with countries with lower costs. Thus, causing the host countries labor and work to be driven away from its land and causing other countries to profit. _____________________________________________________________________ Unit: Decision Trees Decision Tree: A diagram that sets out the options connected with decision and the outcomes and economic returns that may result Expected Value: The likely financial result of an outcome obtained by multiplying the probability of an event occuring by the forecast economic return if it does occur BENEFITS LIMITATIONS ● Visual representation of decisions and possible outcomes ● Forces managers to consider not only the possible financial ● Accuracy of data used may be inaccurate ● Probability of events occuring is based on past data which may not

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outcomes- but the chances of success or failure, ● Calculation of expected monetary value is a good starting point for the quantitative assessment of different options accurately reﬂect the future ● Explain how decision-tree analysis could be useful when management of a retail business has to choose a store location. Decision-tree analysis could be useful when management of a retail business has to choose a store location as it will allow them to be able to benefit and gain the most profits in an efficient manner. Firstly, the decision tree itself has the ability to visually represent decisions and possible outcomes which a business may endure as a result of choosing certain locations. This will benefit the business as it will require less effort in understanding the consequences of a decision, making it easy to interpret and take informed decisions on. For a retail business in particular, the tool of a decision tree will allow them to be able to accurately choose a location which benefits them, and allow them to understand the consequences of their decisions- inorder to minimize risk and maximize profits through location. Another factor which increases the usefulness of using the decision tree is that it forces the managers of a business to consider all aspects of success and failure- and not just financial outcomes of a decision. Due to this, the decision tree can predict potential problems which may arise from a decision and therefore, can plan potential solutions to the raised issues. This is beneficial for a retail store choosing a store location as the managers of a business can calculate and predict their risks. This is in order for them to outline plans to improve their customer rates of transaction into the business.

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