INTERNATIONAL BANKING

AND FINANCE [ CBA 4107]

BLESSING ANESU MANJENGWA(N0171544Y) CONVENTIONAL
TRANSNATIONAL VS MULTINATIONAL EXERCISE [25 MARKS]
1) Unilever in Zimbabwe(Transnational Company)
What form of business is the company in?
 Unilever is in the business of selling food and refreshment(nutritious foods
,indulgent ice creams and refreshing teas),beauty and personal care(luxurious
shampoos) and home care products(affordable ,disease-combating soaps) around
the world.
 That means you’ll find at least one of unilever products in seven out of ten
households on the planet.
 Unilever is the largest producer of soap in the world. It is one of the transnational
companies and its products are available in around 190 countries.
Where did it start from?

 Unilever was started in United Kingdom/Holland.

 Unilever was founded on 2 September 1929, by the merger of the Dutch
margarine called Margarine Unie and the British soap maker called Levers
Brothers.
 During the second half of the 20th century, the company increasingly diversified
from being a maker of products made of oils and fats and expanded its operations
worldwide
Where does it operate and why?

 London
 Unilever is a dual-listed company consisting of Unilever NV in Rotterdam and
Unilever PLC in London.
 It has research and development facilities in China, India, the Netherlands, the
United Kingdom, and the United States.
What impact does it have on the host country?

 It creates jobs in the country hence the economic growth of the host country is increased.
 Unilever helps by providing sanitation and hygiene products. health and hygiene brands like
Lifebuoy, Domestos, Signal, Pureit and Vaseline which aim to improve health through better
hygiene. These everyday products like soaps, toilet cleaners and toothpastes as well as our
innovative water purifiers, can help prevent disease and improve people’s health and well-being.
And ultimately, help to save lives
 Improved educational and skills
 Helps to exploit natural resources
 Investment in infrastructure eg new roads
What impact has it had on the origin
country?
 It inspire innovations. About 6% of the average budget for a transnational corporation is
dedicated to research and development. Some companies contribute a little more , while others
designate a little less.
 It develop ethnic and cultural awareness. It does not have a centralised management system that
allows it to gain more interest in a local market because they are able to maintain their own
systems
 It can be a job killer. It is because the structure of ,the standard cost of living requirements are
much lower elsewhere for example when you pay someone $3 per hour to complete a job that
offer a good quality of life instead of paying them $23 per hour ,there is a strong chance that
outsourcing will happen
2) Microsoft in South Africa(Multinational Company)
History of the multinational corporation

 It is a multinational computer technology corporation. Microsoft was founded on April 4, 1975,

by Bill Gates and Paul Allen in Albuquerque, New Mexico.
 In 1980, Microsoft formed a partnership with IBM to bundle Microsoft's operating system with
IBM computers; with that deal, IBM paid Microsoft a royalty for every sale. In 1985, IBM
requested Microsoft to develop a new operating system for their computers called OS/2.
Microsoft produced that operating system, but also continued to sell their own alternative, which
proved to be in direct competition with OS/2. Microsoft Windows eventually overshadowed OS/2
in terms of sales.
Main features of the MNC(Microsoft
Company)
 It develops, manufactures, licenses, supports, and sells computer software,
consumer electronics, personal computers, and related services.
 Its products include operating systems for personal computers ("PCs"), servers,
phones, and other intelligent devices; server applications for distributed
computing environments; productivity applications; business solution
applications; desktop and server management tools; software development tools;
video games;
 It has sales offices throughout the world. In addition to its main research and
development centre at its corporate headquarters in Redmond, Washington, U.S.,
Microsoft operates research labs in Cambridge
Role of the MNC(Microsoft company)

 It transact business in a large number of countries and often operate in diversified

business activities. The movements of private foreign capital take place through
the medium of these multinational corporations. Thus multinational corporations
are important source of foreign direct investment (FDI).
 modern high technology is transferred to the developing countries. The
multinational corporations exist because they are highly efficient. Their
efficiencies in production and distribution of goods and services arise from
internalising certain activities rather than contracting them out to other firms
 to take advantages of lower labour costs, and not strict environmental standards,
multinational corporate firms set up production units in developing countries
Impact of the MNC in the domestic and
International environment
 Multinationals can often overcome trade problems. Example, when the
environmentally conscious Green movement challenged the biotechnology
research conducted by BASF, a major German chemical and drug manufacturer,
BASF moved its cancer and immune-system research to Cambridge,
Massachusetts.
 The ability to sidestep regulatory problems.
 Multinationals can also shift production from one plant to another as market
conditions change. When European demand for a certain solvent declined, Dow
Chemical instructed its German plant to switch to manufacturing a chemical that
had been imported from Louisiana and Texas.
Make a SWOT analysis of the MNC
What are the merits/ demerits of operating
in that country?(Microsoft in South Africa)

 Specialisation in production. The scale of many industries means firms split

production into different countries. For example, Microsoft design electronics in
the US, where they have access to skilled labour. However, some designs are then
manufactured in South Africa, where labour costs make production much more
efficient than producing in relatively high cost US.(Merit)
 Outsourcing. Related to specialisation is the concept of outsourcing.(Merit)
 Economies of scale(Merit)
 Civil Wars (Xenophobia in South Africa) demerit
3)Comparison of Uniliver (Zimbabwe) and
Microsoft (South Africa)
 For a transnational company like Unilever Operations become more complex
within transnational companies for instance, an operating unit in Zimbabwe may
be responsible for manufacturing, while one in the Botswana handles global
marketing, and another in South Africa leads research and development whereas
on multinational companies like Microsoft every thing is centralized in one place
which is in USA(Washington)
 One of the most distinctive benefits of operating a transnational company is the
ability to respond to the local markets where it maintains facilities. This flexibility
leads some transnational businesses to make custom products or provide varied
services for strategic distribution across target audiences
3)Comparison of Uniliver (Zimbabwe) and
Microsoft (South Africa)
 Much like transnational companies, multinational businesses have locations or
facilities in multiple countries. The difference is that each operates as its own
entity rather than forming the integrated network characteristic of transnational
companies.
 The obvious differences between transnational and multinational companies is that
transnational are decentralised whereas on the other hand multinational companies
are centralised.
3)Comparison of Uniliver (Zimbabwe) and Microsoft
(South Africa)-Similarities
BASIS

PORATIONS) and TNC (TRANSNATIONAL CORPORATIONS) TABULAR FORM

Here are the similarities

Both the corporations have their headquarters in one country and they do
1. OPERATIONS business and operate in many other countries. The headquarter nation is
known as the home country and other affiliates are known as host countries

MNC and TNC are massive in terms of budget as well as highly influential
2. BUDGET
to globalization ,economic and environmental lobbying in most countries.

Both have local services as well as production hence affect employment ,

3. SERVICES
standard of living and household incomes.