Multinational Companies, Conglomerates and Holding Companies

1. Multinational corporations are companies that operate production or service facilities outside their home country.

2. A holding company is a company that owns other companies' outstanding stocks.

3. Similarities and Differences between multinational companies and holding companies:

They both operate outside the home country. Holding companies buy shares of other companies while multinational corporations trade goods. Holding companies don't generally produce goods or provide services.

4. Google:

i)history:

Google began in January 1996, as a research project by Larry Page and Sergey Brin who were both PhD students at Stanford University in California. In August 1998, Andy Bechtolsheim, co-founder of Sun Microsystems, funded Google $100,000, which at the time was a corporation that did not exist.On June 7, 1999 a round of funding of $25 million was announced, with the major investors being rival venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital. In March 1999, the company moved into offices in Palo Alto, home to many other Silicon Valley technology startups. In 2000, Google began selling advertisements associated with search keywords.A patent describing part of the Google ranking mechanism (PageRank) was granted on 4 September 2001. The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor.

ii)core business:

Google is an advertising company. It started in search, but search, maps, blogs, and everything else it does is secondary to ads, which bring in over $10 billion a year. For most of the Internet, Google is advertising.

iii)have they diversified their business? how?

Yes. It has Google everything. It started out as a search engine. Now, it has google mail, a.k.a. gmail, google maps etc. It has also recently released a google phone.

iv)what advantages does this give them over other businesses?

It has several fields of strength. It is one of the leading search engines, and some of its diversified products are also leading in their fields like gmail, google chrome, which is a very popular and reliable email. It also makes the company known worldwide. It is successful, reliable, and recognized internationally. It also has a large customer base.

v)what stock exchange are they listed on?

The company is listed on the NASDAQ stock exchange under the ticker symbol GOOG and under the London Stock Exchange under the ticker symbol GGEA.

vi)how many do they have on their board of directors?

Since Google was established, the company has grown to more than 10,000 employees worldwide, with a management team that represents some of the most experienced technology professionals in the industry. Eric Schmidt joined Google as chairman and chief executive officer in 2001.

Board of Directors

- Eric Schmidt, Google Inc.
- Sergey Brin, Google Inc.
- Larry Page, Google Inc.
- John Doerr, Kleiner Perkins Caufield & Byers
- Ram Shriram, Sherpalo
- John Hennessy, Stanford University
- Paul Otellini, Intel
- Shirley M. Tilghman, Princeton University
- Ann Mather

Google's Board of Directors consists of 9 members.

5. Berkshire Hathaway

i)what influences do they have over their subsidiaries? Is it a management thing or are they asset strippers?

Berkshire Hathaway is where Warren Buffett, one of the world's richest men, spreads his risk by investing in a variety of industries, from insurance and utilities to apparel and food, and building materials to jewelry and furniture retailers. Its core insurance subsidiaries include National Indemnity, GEICO Corporation, and reinsurance giant General Re. The company also owns Dairy Queen, Fruit of the Loom, Johns Manville, Clayton Homes, Helzberg Diamonds, McLane Company, and MidAmerican Energy Holdings. Known as the Oracle of Omaha, Buffett holds more than a quarter of Berkshire Hathaway, which owns more than 70 firms and has stakes in more than a dozen others.
Insurance, conducted on both a primary and reinsurance basis, constitutes Berkshire Hathaway's most important business. GEICO Corporation and General Reinsurance are the company's principal insurance subsidiaries. The company's other subsidiaries are involved in a variety of businesses. MidAmerican Energy Holdings Company is an international energy holding company that controls a variety of companies involved in the generation, transmission, and distribution of energy. Shaw Industries is the world's largest manufacturer of tufted broadloom carpet. McLane Company is a wholesale distributor of groceries and nonfood items. Benjamin Moore is a manufacturer and retailer of paint. See's Candies is a manufacturer of boxed chocolates and confectionery products. Borsheim's, Helzberg Diamond Shops, and Ben Bridge Jeweler are retailers of fine jewelry. Numerous other subsidiaries give the company stakes in retail, service, and manufacturing businesses. Berkshire Hathaway operates in a distinctly decentralized manner, employing fewer than 20 people at its headquarters in Omaha, Nebraska, and exerts little influence over the day-to-day business activities of its operating subsidiaries.
Asset strippers are a form of corporate raiders that focus on a target company. The goal is to own and control the company over time. Once the company is in the control of an asset stripper, various assets of the company are sold off, often in order to handle the outstanding debt incurred when gaining control of the company. The strategy involves making sure there is a strong chance that once a portion of the company’s assets have been sold, the remaining assets will still be sufficient enough to operate the company at a profit or make the company attractive to potential buyers.
Berkshire Hathaway is an asset stripper.

ii)how have MNC's and Holding companies achieved the growth they have, what are they renowned for in their respective markets?

Since 2001, Google has acquired several companies, mainly focusing on small start-ups.

In 2004, Google acquired a company called Keyhole, Inc., which developed a product called Earth Viewer, renamed in 2005 to Google Earth.

In February 2006, software company Adaptive Path sold Measure Map, a weblog statistics application, to Google. Registration to the service has since been temporarily disabled. The last update regarding the future of Measure Map was made on 6 April 2006 and outlined many of the known issues of the service.

In late 2006, Google bought the online video site YouTube for $1.65 billion in stock.Shortly after, on 31 October 2006, Google announced that it had also acquired JotSpot, a developer of wiki technology for collaborative Web sites.

On 13 April 2007, Google reached an agreement to acquire DoubleClick. Google agreed to buy the company for $3.1 billion.

On 2 July 2007, Google purchased GrandCentral. Google agreed to buy the company for $50 million.

On 9 July 2007, Google announced that it had signed a definitive agreement to acquire enterprise messaging security and compliance company Postini.

On August 5 2009, Google announced the purchase of video software maker On2 Technologies for $106.5 million - its first acquisition of a public company.

On 24 November 2009, Google announced the purchase of Teracent, a California based start up company, for an undisclosed price. This is another acquisition on Google's behalf in a series of advertising related purchases- AdMob, Double Click.
Partnerships

In 2005, Google entered into partnerships with other companies and government agencies to improve production and services. Google announced a partnership with NASA Ames Research Center to build up 1,000,000 square feet (93,000 m2) of offices and work on research projects involving large-scale data management, nanotechnology, distributed computing, and the entrepreneurial space industry. Google also entered into a partnership with Sun Microsystems in October to help share and distribute each other's technologies.The company entered into a partnership with AOL of Time Warner, to enhance each other's video search services.

The same year, the company became a major financial investor of the new .mobi top-level domain for mobile devices, in conjunction with several other companies including Microsoft, Nokia, and Ericsson. In September 2007, Google launched, "Adsense for Mobile", a service for its publishing partners which provides the ability to monetize their mobile websites through the targeted placement of mobile text ads, and acquired the mobile social networking site, Zingku.mobi, to "provide people worldwide with direct access to Google applications, and ultimately the information they want and need, right from their mobile devices."

In 2006, Google and Fox Interactive Media of News Corp. entered into a $900 million agreement to provide search and advertising on the popular social networking site, MySpace.

Google has developed a partnership with GeoEye to launch a satellite providing Google with high-resolution (0.41 m monochrome, 1.65 m color) imagery for Google Earth. The satellite was launched from Vandenberg Air Force Base on 6 September 2008.

In 2008, Google announced that it was hosting an archive of Life magazine's photographs, as part of a joint effort. Some of the images in the archive were never published in the magazine.The photos are watermarked and originally had copyright notices posted on all photos, regardless of public domain status.

Google get 99% of its revenue from advertising.

Berkshire Hathaway bought shares in many companies as mentioned above.

6. Has Google encountered any problems in operating in overseas markets?

Google is finding that its overwhelming dominance in American search doesn't translate to easy success in some of the biggest foreign markets. Like China for example, where the government recently announced a crackdown on pornography on the Web and explicitly denounced Google for facilitating the market. At first, Google maintained that it only provided links to other Web sites and can't be held responsible for their content. But within days, the company posted an apology on its China blog and promised to do a better job policing the Internet. Since then, the government has shut down 91 sites that pollute the Web.

In Russia, Google has run into entirely different setbacks. Back in October, Google tried to buy the powerful search advertising platform Begun for $140 million, but the government's antitrust arm blocked the deal in what was widely seen as a protectionist move. Now, Mozilla, which makes the popular browser Firefox, has announced that Google will not be its default search engine in its Russian models. Instead, the company will go with the domestic search engine Yandex.

7. What are the ramifications for Google of the problems?

Google is so successful and internationally recognized that a few problems with operating overseas as mentioned above don't harm it. Its success outweighs its failures. It costs Google some money to police it and sensor the results, but this doesn't put too big of a dent in the business since it can afford this as it is so successful. Problems in operating overseas motivates Google to improve its search engine and make it better suited for different cultures and overseas markets.

8. A conglomerate is a combination of two or more companies engaged in entirely different businesses together into one overarching company. The term may also refer to a multi-industry company.

9. General Electric, General Motors, IBM, Sony, Panasonic, and Microsoft could be described as conglomerates

10. Advantages of conglomerates:

Diversification results in a reduction of investment risk. A downturn suffered by one subsidiary, for instance, can be counterbalanced by stability, or even expansion, in another division.This advantage is enhanced by the fact that the business cycle affects industries in different ways.A conglomerate can show earnings growth, by acquiring companies whose shares are more discounted than its own.

Disadvantages of conglomerates:

- Synergies are misleading.Corporate synergy occurs when corporations interact congruently. A corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation.
- The extra layers of management increases costs.
- Accounting disclosure is less useful information, many numbers are disclosed grouped, rather than separately for each business. The complexity of a conglomerates' accounts make them harder for investors and regulators to analyze, and makes it easier for management to hide things.
- Culture clashes can destroy value.
- Inactivity prevents development of innovation.
- Lack of focus, and inability to manage unrelated businesses equally well are the reasons to criticize conglomerates.