Canadian Multinationals

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Canadian Multinationals Canadian Multinationals A multinational corporation (MNC) is a corporation/enterprise that manages production establishments or delivers services in at least two countries Also called multinational enterprise (MNE) Or transnational enterprise (TNC) Very large MNC have budgets that exceed that of some countries Are divided into three types: Horizontal Vertical Diversified Multinational Companies Powerful influence Individually Societal International Competition for spots Multinational Companies Emerging issues Transfer pricing Transparency Quick Facts 6 of the largest 15 Canadian MNEs are resource companies Two-thirds of the top Canadian financial enterprises have international operations Brief History Chartered Banks were the first Canadian MNEs and remain among the largest. Bank of Montreal: Created in 1817 by a group of Montreal merchants Used the best organizational and financial methods of the time 1818 – Opened a branch in New York 1870 – Established a branch in London After world war II, Canada become one of the largest exporters of direct investment First significant outflow to Canadian utility enterprises in Latin American and the Caribbean 1971: 6th largest capital exporter in the world Most successful: Brazilian Traction, Light & Power -Eventually nationalized by the Brazilian government Reasons Canadian firms had to reach outside for capital Canadian Pacific Railway - Financed itself by selling shares and bonds through the London financial market Canadian banks were pioneers in the combination of domestic retail operations & international branch banking One of the oldest, still Hudson Bay active companies in the Company world Pioneers of the fur trade Was almost 200 years old when Canada was created in 1867 Merged with rival North West Company in 1821 1912 - Diversified into retail operations Major investments in Hudson Bay oil & gas, Siebens, Roxy Petroleum Rapid expansion in the 1970’s added heavily to its debt Focused solely on retail – divested itself from their wholesale dept, northern stores and fur division 2006- acquired by Maple Leaf Heritage Investments of the US for about $957 million. The Numbers 2005 Sales: $5,703.9 m 1-Year Sales Growth: 2.6% 2005 Net Income (mil.): $48.2 Employees: 62,394 No. of Stores: Over 500 located in every province in the country Acquisitions Cairns (1921), Morgan's (1960), Freiman's (1972), Zellers (1978), Simpson's (1978), Fields (1978), Robinson's (1979), Towers/Bonimart (1990) Woodward's (1993), K-Mart Canada (1998) Massey Ferguson 1910: opened a factory in the U.S making it one of Canada earliest multinational Sales of over $1 billion in the late 1960s 1970’s: Started to struggle: increased competition & diminishing agricultural sector Conrad Black bought the company and less than 10 years later arranged a government bailout for the collapsing company 1995: Sold to the American AGCO corporation. Massey Ferguson 37 wholly owned factories in 9 countries Massey Ferguson products are made in 85 factories in 31 countries Products sold in 190 countries Canada’s Largest MNC Changes at the top Depending on what you use Based on sales in US dollars ~www.forbes.com Successes… …and a failure, a really big failure Telecommunications equipment Founded in 1895 Gone through a few names HQ used to be in Brampton, On In 2005 moved to Etobicoke West end of Toronto In the 1990’s acquiring Dot com bust Accounting “errors” Still around though, recovering Canada’s largest aluminum company In fact you probably have a roll at home Mines bauxite Sheets Wire Cable Parts for windows, cars, doors etc. 470 facilities in 55 countries HQ in Montreal In 1999 tried to merge with two other groups in Switzerland and France Blocked by European Commission But completed piece by piece in 2000 and 2003 anyways Research In Motion Founded in Waterloo, Ontario in 1984 University of Waterloo Grad, Mike Lazaridis President and Co-CEO University of Windsor Grad, Douglas Fregin Vice President of Operations Developer of Hardware and Software Technology Research In Motion Awards Won •KPMG/ Ipsos-Reid Top Technology Award •PC Magazine Editor’s Choice Award for the BlackBerry 7100t •RIM and BlackBerry receive the Product of the Year Award from InfoWorld Magazine •The Smithsonian Award Research In Motion •Started by Michael Leblanc on June 12, 2002 •Flew to 19 locations in Canada, 10 in the United States and had scheduled flights to Caribbean among others •Third largest with about 10% of the domestic market at the time •Marketing based on low-price, minimal perks Business Strategy Keep wages low Make pilots finance their own expensive training Lease old aircraft cheaply Stick to two plane models, to minimize the overhead of spare parts Push ticket sales to the internet March 11, 2005 Jetsgo announces, on one of the busiest air travel days in 8 provinces, that it has ceased operations with no warning and no alternate arrangements to fulfill its immediate obligations • Estimates of 17, 000 travelers stranded, some at there destinations with no way home •About 1,300 of Jetsgo’s workers abruptly left unemployed What Went Wrong? •Michael Leblanc, Founder, CEO •Previously started Intair and Royal Airlines, both failed •Associated with Canada 3000 and Nordair, both failed "We're operating a proper airline on a good financial basis. We're paying all our bills. We're paying our payroll. I'm not saying the market isn't difficult. That would be a lie. But we're holding our own in the market, and advanced booking sales are extremely strong." What Went Wrong? •Michael Leblanc, Founder, CEO •Previously started Intair and Royal Airlines, both failed •Associated with Canada 3000 and Nordair, both failed •Financial trouble •One of the worst managed brands in the country The Future of Canadian Multinational Companies NAFTA Organization for Economic Cooperation and Development (OECD) Export Development Branch The Scientific Research and Experimental Development Tax Incentive Program The Scientific Research and Experimental Development Tax Incentive Program experimental development to achieve technological advancement to create new materials, devices, products, or processes, or improve existing ones; applied research to advance scientific knowledge with a specific practical application in view; basic research to advance scientific knowledge without a specific practical application in view; and support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, but only if the work is commensurate with, and directly supports, the eligible experimental development, or applied or basic research. The Future of Canadian Multinational Companies NAFTA Organization for Economic Cooperation and Development (OECD) Export Development Branch The Scientific Research and Experimental Development Tax Incentive Program Globalization.
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