Chapter 4

The Multinational
Enterprise

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Strategies for Doing Business Globally

Exporting and Importing

Branches and Subsidiaries

• Branch is usually considered to be just an extension of the

corporation, which is generally liable for any debts of the branch

Licensing Intellectual Property and Franchising

• Increasingly common way to create business opportunities in foreign

markets
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 The Business Form
• Separate legal identity has several important consequences:
• Liability of the owners is limited to their investment in their
company
• Rights and benefits accruing to the company belong to the
company, not to its owners

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The Multinational Organization

The Parent Company

The Subordinate Structure

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 International Regulation of
Multinational Enterprises
• Main exception to the rule that international guidelines for
ethical behavior should be voluntary is the OECD-sponsored
Convention on Combating Bribery of Foreign Public Officials
• The convention requires states parties to outlaw the “active
bribery” of foreign officials
• The U.S. Foreign Corrupt Practices Act is typical of the
legislation currently being enacted in other countries to
implement the convention

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Home State Regulation of Multinational
Enterprises

Unfair Competition Laws

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Home State Regulation of Multinational
Enterprises

Tort and Products Liability Laws

• Intentional tort liability

• Products liability theories

Sharp Practices

• Dishonest business dealings meant to obtain a benefit for an

individual or firm regardless of the means used
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Host State Regulation of Multinational
Enterprises
Consent to the Jurisdiction of the Host State

• A person or company must give its consent before either will be

subject to the jurisdiction of a local state

Common Enterprise Liability

• When individuals or companies function as part of a common

enterprise, courts will treat them as if they were members of a joint
venture or partnership, with each of them having joint

Piercing the Company Veil

• When a company is used by its owners to perpetrate a fraud, the

court will expose the shareholders to personal liability
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