Lawrence J. Gitman; Carl McDaniel; Amit Shah; Monique Reece; Linda Koffel; Bethann Talsma; James C. Hyatt

3.8 The Impact of Multinational Corporations

What are the advantages of multinational corporations?

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located are multinational corporations. Some rival small countries in terms of size and income. For example, the market value of Home Depot is equivalent to the GDP of Malaysia, and UnitedHealth Group is approximately five times the GPD of Luxembourg. Multinational companies are heavily engaged in international trade. The successful ones take political and cultural differences into account.

Many global brands sell much more outside the United States than at home. Coca-Cola, Philip Morris’s Marlboro brand, Pepsi, Kellogg, Pampers, Nescafe, and Gillette, are examples.

The Fortune 500 made over $2.3 trillion in profit in 2025. In slow-growing, developed economies like Germany and the Netherlands, a weaker dollar helps, because it means cheaper products to sell into those markets, and profits earned in those markets translate into more dollars back home. Meanwhile, emerging markets such as Bangladesh, India, and Brazil are growing steadily. General Electric generated about one-third of its revenue from Asia, the Middle East, and Africa in 2025. Brown-Forman, the spirits company, is targeting emerging markets to grow its distribution of Jack Daniels. Nearly 20 percent of IBM's 2025 revenues came from Asia with another 30 percent from Europe, the Middle East, and Africa.³⁶

The largest multinational corporations in the world are shown in Table 3.3.

In some markets such as India and Brazil, research indicates that consumers are losing trust in American brands and those brands are seeing double drops in intent to purchase compared to non-American brands.

Cleveland Cavaliers' Kyrie Irving (No. 2) dribbles past two Milwaukee Bucks defenders, including Giannis Antetokounmpo (No. 34), on the basketball court during a game. — Exhibit 3.7 As overseas investment grows, so does the need for global branding. NBA star Giannis Antetokounmpo has several endorsement deals for major brands because of his broad international appeal. Recognizable to NBA fans the world over, Antetokounmpo personifies a youthful, dynamic spirit that transcends cultural and geographic boundaries. *Why is it increasingly important that multinational advertisers identify and sign celebrity spokespersons capable of bridging different cultures?* (Credit: Erik Drost/ Flickr/ Attribution-ShareAlike 2.0 Generic (CC BY 2.0))

The Multinational Advantage

Large multinationals have several advantages over other companies. Taiwan and South Korea, for example, had long-standing embargoes against Japanese cars for political reasons and to help their domestic automakers. As the economic and political climates have shifted, along with pressure from the World Trade Organization and increasing consumer demand for Japanese vehicles, these restrictions have largely been lifted. In another example, BASF, a major chemical drug manufacturer in Germany, moved its cancer and immune-system research to Cambridge, Massachusetts, in response to concerns about biotechnology research processes.

Another advantage for multinationals is their ability to sidestep regulatory problems. For example, global pharmaceutical firms often deal with different and sometimes conflicting environmental and safety regulations. To manage these differing regulatory issues, companies often choose to move manufacturing to countries with fewer and less stringent regulations. They then keep their research and development activities in countries that have more protections for intellectual property.

Photo shows a large-screen Samsung QLED television. — Exhibit 3.8 Samsung produces high-tech Neo QLED (quantum dot light-emitting diode) back-lit LED TVs for the home theater market. Samsung's large 98-inch screen is among the largest. Unfortunately, giant-sized Samsung TVs, with a price point of nearly $35,000, can be too costly for most of the world's consumers. *How does being a multinational corporation enable Samsung to succeed in the high-end electronics market?* (Credit: Kārlis Dambrāns/ Flickr/ Attribution 2.0 Generic (CC BY 2.0))

Multinationals can also shift production from one plant to another as market conditions change. For example, when European demand shifted for a solvent, Dow Chemical then shifted its German plant's manufacturing to a chemical that had been imported from the United States. Computer models help Dow make decisions like these so it can run its plants more efficiently and keep costs down.

World’s Largest Corporations
Rank	Company	Revenue	Home Country
1	Walmart	$703.06 B	USA
2	Amazon	$691.33 B	USA
3	Saudi Aramco	$461.56 B	S. Arabia
4	Sinopec	$444.74 B	China
5	Apple	$435.61 B	USA
6	UnitedHealth	$435.15 B	USA
7	McKesson	$397.95 B	USA
8	Berkshire Hathaway	$397.14 B	USA
9	PetroChina	$394.62 B	China
10	CVS Health	$394.08 B	USA

Table 3.3 Source: "Companies Ranked by Revenue," https://companiesmarketcap.com, accessed March 10, 2026.

Expanding Around the Globe

U.S. Brands Face Global Competition

America is the cradle of the consumer goods brand. Here, a free-spending and marketing-saturated public nurtured Costco, Dell, Ford, Microsoft, and countless others to maturity. Many of those brands grew to break into other markets as well.

Although still strong, American brands show some evidence of losing popularity in the global marketplace. Firms such as Samsung and Toyota—as well as product lines in the food, clothing, and personal wellness sectors—are gaining on American brands as they turn out top-quality goods and sell them at that price point rather than trying to compete on price alone. “There are longer-term trends toward greater competition. The United States was the only global brand country [but] that’s no longer the case,” says Earl L. Taylor, chief knowledge officer of the Marketing Science Institute. “Consumers prefer brands that they take to be of higher quality” regardless of the country of origin, he notes. “Increasingly, there will be other successful global brands in the U.S. [market].”

Of the brands at the top of Interbrand’s 2025 list of the world’s most valuable, four of the top five still originate in the United States; the five most valuable are Apple, Google, Coca-Cola, Amazon, and Microsoft. American companies have lost ground because countries have been replacing U.S. products with those originating from other countries. This is in part due to lack of cultural adaptation of products and a loss of trust in American brands.

One area from which U.S. brands are feeling the pressure is the Asia-Pacific region, which harbors the fastest-growing emerging markets today. In the appliance category, Chinese company Haier is a major player in the industry and is a top competitor for well-known U.S. brands like Whirlpool. In fact, Haier bought GE’s appliance division in 2016. The Chinese branding trend is not confined only to hard goods. Sporting goods and sportswear brand Li Ning, well known within China, is building its international profile. While the Chinese basketball team wore Nike uniforms at the Athens Olympic Games, the Spanish team wore Li Ning apparel. The threat to U.S. brands is not confined to China, however. South Korean brands, such as Samsung, LG, and Hyundai, have emerged on the global stage in specific categories, such as smartphones, household appliances, and automobiles.

Perceptions toward the United States have translated into a preference for European or Asian brands. These competing brands have garnered some of the U.S. market share in many categories, and their products are viewed as higher quality than some U.S. brands.

Meanwhile, European brands are gaining momentum in the areas of household and consumer goods, putting the pressure on such well-known U.S. brands as Bissell and Hoover, experts say. For instance, Gaggenau is a popular, high-end European kitchen appliance brand, along with Bosch, AEG, and Bertazzoni. Other European brands recognizable in the U.S. market as well include Absolut, Virgin, Mini (as in Cooper), Red Bull, and Ikea.

Critical Thinking Questions

What can U.S. multinational firms do to grow their leadership in global branding? In which sectors and product areas are U.S. brands gaining share?
Why do you think there is a perception that the quality of American products is declining? Give an example of a product as you explain your position.

Sources: “Interbrand: Best Global Brands 2016 Rankings,” https://interbrand.com, accessed June 30, 2017; Vasileios Davvetas and Adamantios Diamantopoulos (2016), “How Product Category Shapes Preferences toward Global and Local Brands: A Schema Theory Perspective,” Journal of International Marketing, 24 (4), 61–81; Alaen, "Why American Brands are Being Replaced," Substack, https://alaen.substack.com, August 8, 2025; "Ipsos’ Brand America Report Explains the International Impact of an American Brand Image," Ipsos, https://www.ipsos.com, September 18, 2025; "Best Global Brands 2025," https://interbrand.com, accessed March 10, 2026; "Asia–Pacific: Why the World’s Fastest-Growing Region Is Becoming a Prime Destination for FDI," AIM Congress, https://www.aimcongress.com, December 4, 2025.

Multinationals can also tap new technology from around the world. Volvo and the Chinese car brand Geely joined and created Lynk & Co. Through the sharing of technologies across borders, their new venture launched a hybrid SUV called the 01 that became available in 2021 in Europe. Versions of the super-concentrated detergent that Procter & Gamble first formulated in Japan in response to a rival’s product are now being sold under the Gain and Tide labels in the United States. Also, consider Otis Elevator’s development of the Elevonic 411, an elevator that is programmed to send more cars to floors where demand is high. It was developed by six research centers in five countries. Otis’s group in Farmington, Connecticut, handled the systems integration, a Japanese group designed the special motor drives that make the elevators ride smoothly, a French group perfected the door systems, a German group handled the electronics, and a Spanish group took care of the small-geared components. The elevator was in production until the mid 2010s when it was replaced with newer technologies. Nonetheless, this example shows how multinational corporations can leverage joint ventures and partnerships to bring products to the marketplace more efficiently and more quickly while saving money.

Multinationals can often save a good deal in costs, even labor costs. For example, when Volvo and Geely joined forces, they leveraged their purchasing power by jointly procuring items such as batteries and motors. They worked together to develop the autonomous driving technology used in their vehicles. Finally, they shared electrified components to manage costs and to facilitate quicker development times, all the while maintaining independent corporate structures.

Concept Check

What is a multinational corporation?
What are the advantages of multinationals?