Difference between a global, transnational, international and multinational company

18 06 2007

We tend to read the following terms and think they refer to any company doing business in another country.

  • Multinational
  • International
  • Transnational
  • Global

Andrew Hines over at BNET has brief and clear definitions of each of these terms, Get your international business terms right.

Each term is distinct and has a specific meaning which define the scope and degree of interaction with their operations outside of their “home” country.

  • International companies are importers and exporters, they have no investment outside of their home country.
  • Multinational companies have investment in other countries, but do not have coordinated product offerings in each country. More focused on adapting their products and service to each individual local market.
  • Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency.
  • Transnational companies are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market.

Andrews’s advice is if in doubt about the right term to use, try the generic term “international business”.

Related Links

Get your international business terms right

BNET

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Sourcing and supply chain strategy – Mexico

16 11 2006

Purchasing from Mexico and Mexican suppliers?

Don Gringo at Catemaco News and Commentary brought these items to our attention.

Sourcing in Mexico gets easier.  The article points out that doing business with Mexico is easier than in the past.

  • The proximity of Mexico to the US markets impacts communication, logistics, costs and time factors.
  • Mexico has a history of dealing with the US, and are familiar with competitive manufacturing techniques.
  • Relationships are critical to success.
  • Beware of stereotypes.
  • Take the time to find the “right” partner.
  • Do’s and don’ts for doing business in Mexico

Does your supply chain strategy include Mexico?  It should.  Al Brown president of SupplyMex writes that Mexico offers:

  • Logistics infrastructure, highways, rail and port system that has been improved over the past 10 years.
  • Free trade agreements with 42 countries.
  • Global production and quality standards.
  • Stable political and economic environment.
  • Skilled workforce.

Thanks Don.
Related Links

Purchasing.com

Why you should pay attention to free-trade treaties 

Maquiladoras in Mexico

Industrial and Business Parks in Mexico





Corruption in Mexico

15 11 2006

Corruption in Mexico.

Quite a bit of interest generated from the piece regarding corruption and bribery in Mexico. Corruption, bribes, mordidas, tips – Doing Business in Mexico

Don Gringo says “Mexico possibly has one of the best governments anyone could buy. And cheap, too.” Catemaco News and Commentary

Bernard Wasow writes in the Globalist “It is no secret that the at law enforcement in Mexico is a “for-profit” business.” Greasing Palms: Corruption in Mexico.

Wide Angle presents a Corruption Chart; How big is Mexico’s problem. Which gives a great state by state overview and comparison of corruption levels in Mexico.

A quote from the page: “According to anti-corruption czar Francisco Barrio, the cost of corruption by government officials and by everyday Mexicans surpassed the amount budgeted for education by more than three percentage points — some 9.5 percent of Mexico’s GDP of $550 billion. Recent studies by the World Economic Forum, an international organization that works to improve worldwide economic conditions, found that the business environment such as rule of law, transparency and corruption were disincentives for foreign investment in Mexico. Corruption, which is often described as a tax, adds to the cost of doing business. The Opacity Index, a study conducted by Pricewaterhouse Coopers, found that Mexico lost $8.5 billion in foreign direct investments in 1999 due to corruption and other suspect legal or economic practices.”

Corruption exists in every country in the world, in politics, in business, in everyday life. In some countries it’s more sophisticated or hidden, in others it’s obvious and required in order to get things done. Mexico is no exception.

People seem to ignore corruption in their own countries, and react with shock and anger to corruption in others.

Depending on where you live in Mexico, what you are trying to do, and who you are dealing with, your experience with corruption and bribery will not echo anyone else.

Evaluation of Mexico, China, Brazil, India or any other country as a potential business location or market should include an analysis of how corruption will threaten and affect your operations, efficiency and bottom line.

Your organization should have a clear understanding of the situation and create a set of rules governing how to deal with the reality and any situations that might arise.

You have to ask and answer the question, “do I want my organization to participate and be involved in corruption and bribery, and at what levels”?

Get advice and information from local businesspeople and consultants on the reality of corruption and bribery. Learn how the culture deals with it, detects it and punishes it before you commit to a strategy, path or action plan.

Related Links

How to do business in Mexico, Parts 1 – 28

Tipping guidelines for Mexico

Doing Business in Mexico – cultural tips

World Corruption Perception Index – 2006

Patience chaos and doing business in Mexico





Mexico manufacturing, US inventories and safety stock

21 10 2006

Manufacturers are returning to Mexico after “experimenting” in the Asia Pacific region. Some of the big reasons for this return are ; to reduce time to market, eliminate the financial costs of inventories in transit, lower the logistics costs, and to strengthen the supply chain by moving closer to just-in-time deliveries.

But moving to Mexico isn’t going to solve all the problems.

A September 2006 article in CFO magazine points out how US businesses are increasing safety stocks “just in case”. Delayed in the USA The article points out how supply chain disruptions are being provoked by an increasingly saturated US highway system and bottlenecks in deepwater ports and railyards.

The good news is that Mexico is close to the USA, a truckload of goods can leave any point in Mexico and arrive at the US destination in as little as 4-5 days. The railyards and new multimodal Interior Port in Guanajuato, Mexico allow manufacturers to establish production facilities in the interior of the country. Exporters can now clear customs and load the sealed container onto the rail-car at the new (2006) high capacity Customs port located in the geographic center of Mexico.

The bad news is that unless the US begins to upgrade their highway, port and rail facilities, supply chain managers in the US will be buying and storing higher levels of inventory to assure continuity of operations, “just in case”.

Related Links

Delayed in the USA – Supply Chain

Industrial and Business Parks in Mexico

AMPIP Mexican Association of Industrial and Business Parks





Illegal immigration – USA and Mexico

18 10 2006

Immigration control is a global challenge, and yet not one developed country has developed a good workable and acceptable legal immigration plan that eliminates illegal immigration.

There are political solutions, and then there are real solutions.

Immigration between nations occurs when there are marked differences in economic wealth or living conditions between two regions. In order to eliminate massive immigration, wealth (and it’s distribution) of the economically disadvantaged country must improve or the wealthier country must lose it’s wealth.

The long-term solution to immigration will be found in changing economic conditions, policies and the creation of opportunities in the disadvantaged country.

A short-term solution will be found by building walls and increasing border enforcement (This is effective where the border areas are limited and can be totally controlled).

The current immigration situation between Mexico and the US has become a political football, and it appears political solutions are all that matter.

It’s time for both countries to work and invest in real, long-term economic solutions to solve fundamental problems in order to help and protect both countries. The US is facing a problem, and Mexico should assist their neighbor in finding solutions.

The Mexican perspective:

  • There are many opportunities and jobs available that pay much better than in Mexico.
  • There are no jobs available in Mexico for the majority of immigrants.
  • Going to the US is a “rite of passage” for many Mexicans in certain areas. Most return to Mexico after 3 – 5 years.
  • Many cross the border illegally to meet family members already in the US, and have jobs waiting for them once they arrive. Most immigrants have jobs in the US.
  • Most of the immigrants come from rural areas in Mexico, with low levels of education.
  • Mexican immigrants in the US send enormous sums of money to support family members in Mexico. Petroleum sales bring Mexico the most foreign currency income, followed by money sent by Mexicans in the USA (not all illegal immigrants) to family in Mexico.
  • For many Mexican state governments, this injection of foreign capital is very important for maintaining local economies.
  • Crossing the border illegally is dangerous and life threatening, and in many cases expensive.
  • US employers are open and supportive to employing illegal immigrants, and in many cases provide false identification and protection to the workers.
  • The majority of the millions of illegal immigrants currently in the US are working, and spending money in the local US economies.
  • The legal immigration mechanisms available (visas) reject those who are economically disadvantaged (the ones with the highest need to immigrate).
  • Mexicans believe that the US has the sovereign right to restrict and control immigration.
  • They would like to see a realistic legal migration program created.
  • The immigrants in the US pay sales taxes, and they consume goods and services in the US.

The US perspective

  • Illegal immigration takes jobs away from US citizens.
  • Illegal immigrants use social, health and welfare services paid for by US taxpayers.
  • Illegal immigrants bring crime, drugs and violence to communities.
  • Illegal immigrants don’t speak English and don’t learn English, and are forcing communities to spend money on bilingual teachers and government programs.
  • Illegal immigration can be stopped by building a wall or by enforcing the border.
  • Illegal immigrants don’t pay taxes.
  • US agricultural businesses cannot survive with competitive prices if illegal workers are eliminated. Legal immigration will increase labor costs.
  • Elimination of illegal immigrants will cause substantial increases in the costs of food, restaurants, hotels, construction and certain consumer and industrial goods and services. Immigrant labor is needed to maintain the US economy.
  • The US Border Control has stated many times that the solution is in enforcing and penalizing US employers that hire illegal workers, not by penalizing and deporting the illegal immigrant.
  • The US government and state governments understand the economic situation and provide political solutions for voters, but understand that the total elimination of immigration would severely hurt the US economy. A legal immigration solution must be implemented.
  • There is a fundamental dilema. America is the land made of immigrants, and yet now must begin to control this immigration. Huge uncontrolled borders, wealth and opportunity, and willingness of employers to hire undocumented workers combine to make the US an attractive immigration destination.

Opportunities and possible solutions

If we agree that the illegal immigration problem is a consequence of economic situations and differences in the distribution of wealth, then the following ideas are possible solutions. None of them are easy, all of them have costs, but they are the only real long-term solutions to the immigration situation.

  • US government and businesses coordinate with the Mexican government and business sector to invest in economic development projects in the areas in Mexico with the highest degree of poverty and immigration.
  • The Mexican government must aggressively work and invest in order to improve opportunities and wealth in their country, especially for the economically disadvantaged.
  • US businesses push for immigration reform that allows for temporary workers and legal immigration. The program would increase costs to the US employers, and the workers would be paying taxes.
  • US government makes laws and enforces them against US employers that hire illegal immigrants.
  • US government finds a method to legalize current immigrants that have been and are working in the US.

Related Links

Observations on illegal immigration in the US, possible solutions

How to do business in Mexico, Parts 1 – 28

Official government websites of the Mexican States

The definitive dialing guide for calling Mexico

Top States in Mexico for for doing business – World Bank Report 2007





Lessons in international business – negotiations

17 10 2006

Observations on how to create trust, effective meetings and excellent negotiations with overseas customers, suppliers and partners.

  • Whenever you are involved in international negotiations or global meetings keep in mind that you might be working with the same person for the next 10 – 20 years.
  • Negotiations should be open and straightforward.  Hidden agendas will eventually be discovered and make the next meeting very difficult.
  • Negotiations should involve creating value for both parties.
  • Meetings are important moments where trust is being built and confirmed.  Be honest and clear about your desires.
  • Never agree to something you cannot deliver or perform.
  • Listen, understand and evaluate what your partner is requesting.   What are they saying, and what does it mean.
  • Be certain of what you are negotiating and agreeing to.  If not 100% sure, stop and request clarification.
  • Prepare for the meeting several weeks before it happens.  Refresh and add information weekly.  When you reach the meeting, you will be in control of the information and feel comfortable during the talks.
  • At the end of the meeting, write down the most important points or agreements, with names and dates, and have it signed by those present.  This little tip will save lots of time and trouble for everyone involved.
  • Any agreement must have 100% follow-through.  If for any reason problems arise in the follow-through, immediately contact and communicate the situation to your partner.

Related Links

How to negotiate with Mexican business people

Great international business trip results





Great International Business Trip Results

16 10 2006

In any international relationship communication and understanding are critical for success.

Problems created by; language, stereotypes, misinformation, lack of information, and cultural misunderstandings combine with normal business problems to create a complicated scenario for anyone involved in international relationships and global business.

Prepare your international meetings and business presentations using the following questions as a guide to organize your ideas and focus on actions that will produce positive results for everyone involved.

6 Questions – Create Great International Business Trip Results

  1. What does this organization know about me, my company and my country?
  2. What do they think they know about me?
  3. What can I tell them that they do not know?
  4. What do I know about my international partner, culture and country?
  5. What do I think I know about this business, culture and country?
  6. What can they tell me that I do not know?

1. What does this organization know about me and my company. When you walk in the room an opinion has already been formed about you, your organization, and your ability to perform in the future. These ideas are based upon facts, information and past experience.

  • What has been the history of our relationship in their country?
  • Who has been involved in our mutual business, and why?
  • What promises have been made and kept by both?
  • What promises have been made and not delivered upon?
  • What have the major problems and success been in the past?
  • Press and media, our organizations promotional material.

2. What do they think they know about me. Clarifying the unknowns or presumed realities in a relationship is crucial to success. These ideas may be very damaging and limit your ability to trust one another. What stereotypical behaviour can you avoid or prevent? What can you clarify or refute through information or actions?

  • Behaviour and reacts based upon past experience with your organization.
  • Rumour and innuendo, press and media reports.
  • Negotiation styles.
  • Business objectives.
  • Behaviour, goals and methods of doing business based upon country and cultural stereotypes.

3. What can I tell them that they do not know. Today’s business world requires trust, information and solutions. Reinforcing your need to work with your international partner, providing important information or solutions, and clarifying misunderstandings can only help the relationship.

  • Clarify or destroy cultural stereotypes.
  • Clarify business objectives and why they are important in order to reach these objectives.
  • Provide solutions and alternatives to existing situations and challenges.
  • Provide information of value for their business and strategy.
  • Clearly identify current or potential business problems.
  • Predict and have answers ready for their questions.

4. What do I know about my International partner, culture and country? What do I know is true and not innuendo or interpretation? The numbers, facts, information, agreements and past performance history of the business. Information about the country and the business culture.

5. What do I think I know about this business, culture and country? What preconceived ideas and stereotypes are you working with? What are you assuming and what has been proven?

6. What can they tell me that I do not know? What questions do you need to ask in order to verify information or create plans. What pieces of your information puzzle are missing? This is the time to get your questions answered, what are they?

Related Links

Cultural misunderstanding it can happen to you

Stereotypes and global business

Create great international business relationships

16 Essential questions – the international business traveller’s quiz

Lessons in international business