Multinational Companies - Business Essay Example
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In the past decade, a rapidly growing portion of worldwide economic activity has been taking place between people who live in different countries instead of those living in the same country. This growth in cross-border economic activities takes various forms all of which can be termed globalization (PREM, 2000).
Globalization has caused multinational companies to play increasingly larger roles in modern lives. Today, people in China may well use the same global brand for clothing, food, and vehicles as people from thousands of miles away in the US. Globalization strengthens the connection between societies from one region to another and reveals the need to work together for an improved standard of living and a better future for all. Because of globalization’s enormous potential to improve the quality of life for everyone, a close look at multinational companies is well warranted. This paper will address some of the most recognized multinational companies in the world and their present conditions in their own industries.
II.1. Company Profile
Wal-Mart Stores, Inc. is an American public corporation established in 1962 by Sam Walton. Wal-Mart is the largest retailer in the world and the second largest corporation in the world behind Exxon Mobil. Wal-Mart is the largest private employer in the United States and Mexico. The company is also the largest grocery retailer in United States (Wal-Mart, 2006).
In addition, Wal-Mart is a giant retailer that originates its services in the U.S. the company, like other retailers; present a vast selection of high-quality merchandises, friendly service, and attractive campaign like “Every Day Low Prices”. As of May 31, 2006, Wal-Mart operates 1,163 stores, 2,056 Supercenters, 566 SAM’s clubs, and 104 Neighborhood Markets in the United States. Totally, the company operates in 15 countries worldwide, serves more than 138 million customers per week, and employs about 1.6 million associates (Wal-Mart Stores, 2006).
II.2. Corporate Segments
Wal-Mart operations are divided into three retiling subsidiaries: the Wal-Mart Stores Division US, Sam’s Club and Wal-Mart International. The three subsidiaries perform their operations under 9 different retail formats: super centers, food and drugs, general merchandise stores, small markets (bodegas), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants (Wal-Mart, 2006).
The Wal-Mart Stores Division US is Wal-Mart’s largest business subsidiary. It operates three traditional retail formats: discount stores, super centers and neighborhood markets, all of which operate on US soil. Sam’s Club on the other hand, is a chain of warehouse clubs that sells groceries and general merchandise in large volume. Sam’s Club is only open to customers who subscribe to a paid, annual membership. The last subsidiary of the company is Wal-Mart international. This particular operation consists of 2,700 stores in 14 countries outside US (Wal-Mart, 2006).
II.3. Corporate Products and Services
The company sells retail products and toys in stores of various formats. The company accounts for approximately 20% of the retail grocery and consumable business and 22% of the toy market in the US. In addition, 67% of the merchandise is sold through the Wal-Mart Stores Division US, 12.7 % are sold through Sam’s Club and 20% are sold through Wal-Mart International (Wal-Mart, 2006).
II.4. Financial Performance
The company reported net income of $11.2 billion and $312 billion of sales revenue in the fiscal year that ended on January 31, 2006, which represents a 3.5% profit margin. One year before, the company filed a profit of $10.2 billion and net sales of $285.2 billion (Wal-Mart, 2006). Table 1 shows summary of Wal-Mart financial performance in 2005.
Table 1 Wal-Mart’s Key Financial Performance
2006 Sales (million)
1-year Sales Growth
2006 Net Income (million)
1-year income growth
Source: (Hoover’s, 2006c)
II.5. Corporate Personnel
The company refers to its employees as associates. In 2006, the company has 1.8 million associates in 6,100 stores worldwide, 1.3 associates are working on US soil. The total figure includes 50,000 new associates resulted from opening new international stores in Japan this year (Wal-Mart, 2006; Hoover’s, 2006c). In addition, the employees’ growth recorded 5.9% in 2006.
II.6. Corporate Markets
The largest market where the company sells its products is the United States market. Other international markets include Argentina, Brazil, Canada, China, Germany, Japan, South Korea, Mexico, Puerto Rico and United Kingdom (Wal-Mart, 2006).
II.7. Corporate Strategies
The Wal-Mart business model is based on selling a wide variety of general merchandise and marketing ‘always low prices’. All Wal-Mart stores in US and Canada have designated greeters whose general role is to welcome shoppers at the store entrance. Different from most retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear on store shelves. Instead, they focus on selling products that are more saleable and sometimes pressure managers to drop out unpopular products for ones that are more saleable (Wal-Mart, 2006).
Concerning the strategy, Thomas Friedman says that Wal-Mart shows how globalization affects business. He considers that Wal-Mart, if it is an individual economy, can be perceived as China’s eight-biggest trading partner ahead of Russia and Canada (Anderson, 2006).
III.1. Company Profile
Nokia Corporation is the market leader in the mobile telephone industry. The company is the world’s largest manufacturers of mobile telephones owning a global market share of approximately 36%. Nokia is also by far the largest Finnish company, repeatedly receiving the best Finnish brand and employer awards and accounting for almost 50% of the market capitalization of the Helsinki Stock Exchange. The company has a very large role in the economy of Finland (Nokia, 2006).
At Nokia, for instance, the terminology of mass customization has come by providing customers with various Xpress Color Covers to cope with different customers’ tastes. At recent days, Nokia floods the market with various types of handhelds, each with different features, size, models, and accessories (IDC, 2004).
III.2. Corporate Segments
Nokia operates through four business groups: Mobile Phones, Multimedia, Enterprise Solutions and Networks. However, there are also various horizontal entities such as customer and market operations and technology platforms (Nokia, 2006).
III.3. Corporate Products and Services
Nokia Mobile Phones division provides people with mobile voice and products across a wide range of mobile devices. This particular division targets primarily the high-volume category sales of mobile phones and devices. The devices are designed with GSM, 3G and CDMA technologies. Through the Mobile Phones segment, the company has become the world’s leading supplier of mobile phones, digital cameras and digital audio players (Nokia, 2006).
In the Multimedia division, the company designs services and applications that bring multimedia experiences to customers, enable them to create, access, consume and share multimedia experiences with others. This particular division also works with other companies outside the telecommunications industry to make advances and bring new innovations in various areas like internet services, optics, music synchronization and streaming media (Nokia, 2006).
In the enterprise solutions division, the company offers businesses, corporations and institutions a broad range of products and solutions, like the enterprise-grade mobile devices, underlying security infrastructure, software and services. This division also works with a range of companies to provide network security and enables mobilized corporate e-mail to customers (Nokia, 2006).
In the networks division, Nokia provides mobile networks infrastructure, communications, networks service platforms, professional services to operators and service providers. The network operates with GSM, EDGE and 3G/WCDMA networks. In 2005, the company supported 150 mobile networks in more than 60 countries and served in excess of 400 million subscribers (Nokia, 2006).
III.4. Financial Performance
In the year ended December 31, 2005, the company reported a profit of 3.6 billion Euros with the net sales of 34.1 billion Euros. In the previous year, the company had a net profit of 3.1 billion Euros with sales of 29.3 billion Euros. This describes a 16% increase in net sales and a 13% increase in net profit (Nokia, 2006). Table 2 shows the summary of Nokia’s key financial performance
Table 2 Nokia’s Key Financial Performance
2005 Sales (million)
1-year Sales Growth
2005 Net Income (million)
1-year income growth
Source: (Hoover’s, 2006a)
III.5. Corporate Personnel
The average number of personnel for Nokia in 2005 was 58,874. In 2004, the average number of personnel was 53,511. The year brought an increase of approximately 3500 employees (Nokia, 2006). This number represents the 6.1% of employee growth (Hoover’s, 2006).
III.6. Corporate Markets
Nokia’s products are widely distributed to a vast number of countries. The company enjoys its largest number of sales in China, followed by the United States and Great Britain. Other markets include Finland, India, Germany and other countries. The ‘other’ segment however, accounts for by far the largest sales number, which indicated that the products are sold widely throughout the globe (Nokia, 2006).
III.7. Corporate Strategies
The company performs its business activity under the corporate philosophy of ‘the Nokia Way’. This philosophy emphasizes the speed and flexibility of decision making in a flat, networked organization. Nokia values include customer satisfaction, respect, achievement and renewal. The company stresses the importance of equality in opportunities and openness of communication, along with leadership and employee participation. The company is especially proud to be a progressive and forward-thinking mobile technology that often becomes the first to market new products and applications to its global markets (Nokia, 2006).
In order to speed up the sales, Nokia starts using local celebrities to advertise Nokia’s products. In addition, the customization also occurs when showcasing the phones, such as using a marketplace in Italy or a bazaar when advertising in the Middle East (Byte Level Research LLC, 2004).
IV.1. Company Profile
Sony is a Japanese multinational corporation and one of the world’s largest media conglomerates. The company is a world-leading producer of electronics, video, communications, video games and information technology products for both individual consumer and professional markets (Sony, 2006).
Sony is popular among business industries as the provider of reliable electronic equipments. The name is also popular among science and development groups as provider of enhanced technological instruments. Furthermore, Sony is also popular in common living rooms as provider of high-quality home entertainment appliances.
IV.2. Corporate Segments
Sony Corporation is an operating-holding company. Sony Corporation is the parent company of the Sony Group who has 5 operating segments, electronics, games, motion pictures, financial services and other (Sony, 2006).
IV.3. Corporate Products and Services
As mentioned, the company produces wide selections of media-related products and more, which can be divided into its 5 segments. The electronics business comprises audio, video, televisions, information and communications equipments. The Game business encompasses Sony’s game console and software business, performed by Sony Computer Entertainment. The pictures business encompasses motion pictures, television programming and other business conducted by Sony Pictures Entertainment Inc (Sony, 2006).
The Financial services account for the businesses of Sony Life Insurance Co. Ltd, Sony Assurance Inc, Sony Bank Inc and Sony Finance International. The last segment includes a variety of businesses, which account for the music-content business of Sony Music Entertainment, the music-publishing business of Sony Music Entertainment Inc, the network service business of Sony Communication Network Corporation and an animation products production & marketing business (Sony, 2006).
IV.4. Financial Performance
In the fiscal year that ended March 31 2006, the company reported a net income of 123.6 billion yen; with net sales and operating revenue of 6,754.8 (which accumulated to 67) billion yen. In 2005, the company reported net sales of 163.8 billion yen with net sales of 6,621.9 billion (Sony, 2006). Table 3 exhibits Sony’s 2005 financial performance.
Table 1 Sony’s Key Financial Performance
2006 Sales (million)
1-year Sales Growth
2006 Net Income (million)
1-year income growth
Source: (Hoover’s, 2006b)
IV.5. Corporate Personnel
According to the latest available data, the company employs approximately 158,100 people worldwide (Sony, 2006). According to Hoover’s.com, Sony’s employee growth in 2006 was 4.7% into 158,500 employees worldwide (Hoover’s, 2006b).
IV.6. Corporate Markets
The company is a worldwide popular brand. It receives sales revenues literally from all over the globe. Nevertheless, the largest sales and operating revenue comes from its local market of Japan followed by USA and Europe. Sales from other markets are also significant, amounting to more than half the size of revenues produced in Japan (Sony, 2006).
II.7. Corporate Strategies
Sony’s strategies include the corporate philosophy of constant innovation toward a better life. The company is also known for its excellence in managing employees. Managers treat employees like partners and encourage them toward innovative ideas. The company strives to enhance its market focus by identifying new challenges to overcome. In the latest financial report, the new key challenges are:
Eliminating the ‘silo’ organizational structure
Strategically focusing the overly broad range of products
Enhancing limited product interoperability
Strengthening software and services development
Divesting non-strategic assets that divert management’s focus
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