SOURCE: © James Leynse/SABA
CHAPTER
Multinati onal Financi al
Ma na ge me n t *
744
16
Successful global companies such as Coca-Cola must
conduct business in different economies, and they must
be sensitive to the many subtleties of different cultures
and political systems. Accordingly, they find it useful to
blend into the foreign landscape to help win product
acceptance and avoid political problems.
At the same time, foreign-based multinationals are
arriving on American shores in ever greater numbers.
Sweden’s ABB, the Netherlands’s Philips, France’s
Thomson, and Japan’s Fujitsu and Honda are all waging
campaigns to be identified as American companies that
employ Americans, transfer technology to America, and
help the U.S. trade balance. Few Americans know or care
that Thomson owns the RCA and General Electric names
in consumer electronics, or that Philips owns Magnavox.
The emergence of “world companies” raises a host of
questions for governments. For example, should
domestic firms be favored, or does it make no difference
what a company’s nationality is as long as it provides
domestic jobs? Should a company make an effort to
keep jobs in its home country, or should it produce
where total production costs are lowest? What nation
controls the technology developed by a multinational
corporation, particularly if the technology can be used
in military applications? Must a multinational company
adhere to rules imposed in its home country with
respect to its operations outside the home country? And
if a U.S. firm such as Xerox produces copiers in Japan
rom the end of World War II until the 1970s, the
United States dominated the world economy.
However, that situation no longer exists. Raw
materials, finished goods, services, and money flow
freely across most national boundaries, as do innovative
ideas and new technologies. World-class U.S. companies
are making breakthroughs in foreign labs, obtaining
capital from foreign investors, and putting foreign
employees on the fast track to the top. Dozens of top
U.S. manufact