Lesson 3 - Page 3 - How do MNCs affect competition in trade?
US firms dominate global business with 240 out of the
500 largest MNCs - a figure five times greater than its closest rival,
Japan. At the top of the Financial Times 500 list is the Microsoft
Corporation. This corporation was founded in 1975 by two school friends
- William H. (Bill) Gates and Paul G. Allen. Approximately 90% of the
world's personal computers (PCs) run on a Microsoft operating system.
Currently valued at $US 264 billion with annual revenues in excess of
$US 28 billion (Coggan, 2003b), Microsoft has managed to maintain its
dominance despite legal battles over alleged price-fixing and product
monopolization.
The dominance of US-owned companies is particularly
evident on this list -- 14 out of the 20 most highly-valued MNCs in the
world are US-owned (Table 2). The UK, Japan, France, Canada, Germany,
and Italy follow in terms of their combined market value. Multinational
corporations based in the United States and Japan invest more than 50%
of the capital invested in foreign markets.
Table 2. World's Twenty Largest Corporations, 2003.
| Global Rank 2003 | Global Rank 2002 | Company | Country | Market Value $USm | Sector of Activity |
|---|
| 1 | 2 | Microsoft | US | 264,003 | Software & Computer |
| 2 | 1 | General Electric | US | 259,647 | Div. Industrials |
| 3 | 3 | Exxon Mobil | US | 241,036 | Oil & gas |
| 4 | 4 | Wal-Mart Stores | US | 234,399 | General Retailers |
| 5 | 6 | Pfizer | US | 195,948 | Pharmaceutical. & Biotech |
| 6 | 5 | Citigroup | US | 183,866 | Banks |
| 7 | 9 | Johnson & Johnson | US | 170,417 | Pharmaceutical. & Biotech |
| 8 | 10 | Royal Dutch/ Shell | Neth./UK | 149,034 | Oil & Gas |
| 9 | 8 | BP | UK | 144,381 | Oil & Gas |
| 10 | 12 | IBM | US | 139,272 | Software & Computer |
| 11 | 11 | Ameri. Int. Group | US | 130,038 | Insurance |
| 12 | 15 | Merck | US | 124,291 | Pharmaceutical. & Biotech |
| 13 | 17 | Vodafone | UK | 122,931 | Telecommunication. Service |
| 14 | 21 | Proctor & Gamble | US | 114,603 | Personal Care |
| 15 | 7 | Intel | US | 112,688 | IT Hardware |
| 16 | 13 | GlaxoSmithKline | UK | 107,092 | Pharmaceutical. & Biotech |
| 17 | 22 | Novartis | Switzerland | 106,136 | Pharmaceutical. & Biotech |
| 18 | 29 | Bank of America | US | 103,032 | Banks |
| 19 | 14 | NTT DoCoMo | Japan | 101,133 | Telecommunication Service |
| 20 | 16 | Coca Cola | US | 100,646 | Beverages |
Source: Financial Times Global 500, May 28th, 2003.
Some of the reasons that multinational corporations
attract controversy are the perceived threats they pose to small
businesses and to cultural and national identity. How can developing
countries hope to compete in a global economy dominated by MNCs from a
few rich nations? To conclude this lesson, your team will examine
strategies employed by local coffee growers in Mexico to survive and
compete in a global economy.
Click here  to begin the presentation.
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TEAM DISCUSSION - Go to the Group Discussion
Board and find the forum with the title "Free Trade or
Fair Trade". The full team should use this forum to discuss the
following question. Try to discuss the questions long enough so that
each member has a chance to share a view and respond to at least one
other member of the team.
- The "Coffee Co-Op" presentation introduced a new
term - "fair trade". Some scholars believe that fair trade, which
directly links low-income producers with overseas markets, provides
more economic benefits to developing countries by enabling producers
to keep more of the profits that would normally go to large
corporate suppliers.
Do you think strategies like farm cooperatives and fair
trade will ultimately help less-developed nations survive and prosper in
the global economy? Why or why not?
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