Chapter 1: The Multinational Enterprise (MNE)

• The October–December 2014 quarter was a challenging one with unprecedented currency devaluations. Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way. While we continue to make steady progress on the strategic transformation of the company—which focuses P&G on about a dozen core categories and 70 to 80 brands, on leading brand growth, on accelerating meaningful product innovation and increasing productivity savings—the considerable business portfolio, product innovation, and productivity progress was not enough to overcome foreign exchange. —Chairman, President and Chief Executive Officer A.G. Lafley, January 27, 2015

• A multinational enterprise (MNE) has operating branches, subsidiaries, or affiliates located in foreign countries.

• Today’s MNEs are dependent on emerging markets.

Financial Globalization and Risk

• Financial globalization has resulted in:

• continuing imbalances of balance of payments.

• an increase in quantity and speed in the flow of capital across the world.

• capital markets less open and a decrease in the availability of capital for many organizations.