Multinational Companies (MNCs) (DP IB Business Management: HL): Exam Questions

GreenHarvest Agriculture, an Ireland-based company, specialises in sustainable farming equipment. Over the last decade, GreenHarvest has grown domestically by providing eco-friendly machinery for small farms. Recently, it has decided to expand globally and is exploring the opportunity to establish manufacturing plants in developing countries like Kenya and India. The company is drawn to these locations due to lower labour costs, government tax incentives, and growing agricultural markets.

GreenHarvest’s management believes global expansion will help achieve economies of scale, lower production costs, and diversify its markets. However, some stakeholders are concerned about potential issues such as weak labour laws in host countries, which might harm GreenHarvest’s reputation if exploited. Additionally, establishing operations in these countries may disrupt local competitors and strain GreenHarvest’s resources in the short term.

GreenHarvest Agriculture, an Ireland-based company, specialises in sustainable farming equipment. Over the last decade, GreenHarvest has grown domestically by providing eco-friendly machinery for small farms. Recently, it has decided to expand globally and is exploring the opportunity to establish manufacturing plants in developing countries like Kenya and India. The company is drawn to these locations due to lower labour costs, government tax incentives, and growing agricultural markets.

GreenHarvest’s management believes global expansion will help achieve economies of scale, lower production costs, and diversify its markets. However, some stakeholders are concerned about potential issues such as weak labour laws in host countries, which might harm GreenHarvest’s reputation if exploited. Additionally, establishing operations in these countries may disrupt local competitors and strain GreenHarvest’s resources in the short term.

TechNova Electronics, a multinational corporation (MNC) headquartered in Germany, specialises in consumer electronics like smartphones and smart home devices. Over the last decade, TechNova has expanded rapidly into developing markets such as Brazil, South Africa, and Vietnam. Its strategy has focused on leveraging low-cost manufacturing in these regions while using its strong brand reputation to gain market share.

Recently, TechNova has faced criticism in Brazil for its working conditions in local factories. Reports suggest that workers are paid below the living wage, and safety standards are not being enforced. Local businesses in South Africa have also expressed concerns that TechNova’s aggressive pricing strategies are driving smaller competitors out of business. Despite these challenges, TechNova remains committed to its expansion strategy, citing the benefits of economies of scale, increased market reach, and stronger global brand recognition.

TechNova Electronics, a multinational corporation (MNC) headquartered in Germany, specialises in consumer electronics like smartphones and smart home devices. Over the last decade, TechNova has expanded rapidly into developing markets such as Brazil, South Africa, and Vietnam. Its strategy has focused on leveraging low-cost manufacturing in these regions while using its strong brand reputation to gain market share.

Recently, TechNova has faced criticism in Brazil for its working conditions in local factories. Reports suggest that workers are paid below the living wage, and safety standards are not being enforced. Local businesses in South Africa have also expressed concerns that TechNova’s aggressive pricing strategies are driving smaller competitors out of business. Despite these challenges, TechNova remains committed to its expansion strategy, citing the benefits of economies of scale, increased market reach, and stronger global brand recognition

AquaPure Water Solutions, a multinational corporation headquartered in Switzerland, produces eco-friendly water purification systems. The company has established manufacturing facilities and sales operations in over 30 countries, including high-growth markets like India, Nigeria, and Brazil. AquaPure’s mission is to provide affordable, clean water solutions while reducing its environmental footprint. It has benefitted from tax incentives offered by governments in developing countries, which have helped it reduce costs and expand production.

Despite its success, AquaPure faces challenges. Local communities in Nigeria have raised concerns about the environmental impact of its manufacturing plants, accusing the company of overusing water resources. In Brazil, domestic competitors argue that AquaPure’s presence has hurt smaller businesses, leading to job losses. Meanwhile, critics in India question whether AquaPure prioritises profit over its corporate social responsibility (CSR) goals, as some of its products are still priced beyond the reach of low-income households.

AquaPure Water Solutions, a multinational corporation headquartered in Switzerland, produces eco-friendly water purification systems. The company has established manufacturing facilities and sales operations in over 30 countries, including high-growth markets like India, Nigeria, and Brazil. AquaPure’s mission is to provide affordable, clean water solutions while reducing its environmental footprint. It has benefitted from tax incentives offered by governments in developing countries, which have helped it reduce costs and expand production.

Despite its success, AquaPure faces challenges. Local communities in Nigeria have raised concerns about the environmental impact of its manufacturing plants, accusing the company of overusing water resources. In Brazil, domestic competitors argue that AquaPure’s presence has hurt smaller businesses, leading to job losses. Meanwhile, critics in India question whether AquaPure prioritises profit over its corporate social responsibility (CSR) goals, as some of its products are still priced beyond the reach of low-income households.

TechNova Electronics is a multinational corporation (MNC) based in Germany. The company makes popular consumer electronics such as smartphones, wearable devices, and smart home products. Founded 20 years ago, TechNova has become a global leader in its industry, known for its innovative designs and reliable products. In the last 10 years, the company has expanded quickly into developing markets like Brazil, South Africa, and Vietnam, where it has opened factories and shops.

TechNova’s strategy is to produce its products in countries where costs are lower and sell them at competitive prices. This approach has helped the company grow its market share in developing markets significantly. In 2020, TechNova held 15% of the market share in these regions, which increased steadily to 30% by 2023. However, some people have criticised TechNova for its practices. In Brazil, workers at TechNova factories say they are paid low wages and that working conditions are not always safe. In South Africa, small businesses say they cannot compete with TechNova’s low prices, which is harming local industries.

Despite these challenges, TechNova believes it has brought benefits to the countries where it operates. The company has created thousands of jobs, introduced new technology, and invested in local infrastructure. However, a recent employee survey revealed differences in motivation levels between regions. In Germany, 80% of employees feel motivated and supported, but this drops to 55% in Brazil and 60% in South Africa. Workers in these regions have cited low pay, unclear career paths, and limited training as barriers to engagement.

TechNova’s management is also thinking about how to keep its strong organisational culture as it grows. The company values innovation and teamwork, but these principles are harder to maintain across international operations. To address this, the company is looking at improving its training and support programmes for workers in developing countries.

TechNova’s expansion and new projects are funded through profits, loans, and corporate bonds. Now, the company is considering raising money by selling shares. This would help fund a new range of budget smartphones designed for customers in developing countries. The management is also discussing how to balance its rapid growth with maintaining good relationships with its employees and communities.

Table 1: Financial Overview (2023)

Table 2: Employee Survey Results (2023)

AquaPure Water Solutions is a large company based in Europe. It makes eco-friendly water purification systems that help people get clean drinking water. The company operates in more than 30 countries, including fast-growing markets like India, Nigeria, and Brazil. AquaPure’s goal is to provide affordable, clean water solutions while protecting the environment.

AquaPure has grown quickly by working with local partners, setting up joint ventures, and receiving tax benefits from governments in developing countries. These tax benefits have helped the company lower its costs by 15%. AquaPure uses a batch production system, which helps them make products efficiently and keep high quality. The company has also created about 10,000 jobs in its operating countries and partnered with charities to bring clean water to over 2 million people.

Even though AquaPure has been successful, it has some problems. Communities near AquaPure’s factories in Nigeria say the company uses too much water, which leaves less for farming and household needs. AquaPure has promised to spend $1 million each year on projects to save water. In Brazil, local businesses say they are struggling because AquaPure’s large size makes it hard for smaller companies to compete. This has led to job losses in the area. In India, some people say AquaPure’s products are too expensive for low-income families. For example, a water purifier from AquaPure can cost $150, which is much higher than the local average of $80. AquaPure says its products last longer and work better, making them a good value over time.

AquaPure is thinking about new ways to handle these challenges. The company may use outsourcing to make its products cheaper. It is also planning to introduce a tiered pricing system to offer products at different prices for different customer groups.

Table 1: Key Facts by Region

Table 2: Batch Production vs Outsourcing