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Essay / Research Paper Abstract
5 pages. The Gillette Corporation is a multinational Corporation operating in over one hundred countries in the world. This paper will explain how a company operates when each of the markets is as diverse as those in different countries all over the world. Bibliography lists 6 sources.
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5 pages (~225 words per page)
File: D0_JGAshave.rtf
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each of the markets is as diverse as those in different countries all over the world. MULTINATIONAL CORPORATIONS A wise businessman once said, "Diversify, diversify, diversify-that is the key
to financial security". But is this indeed the answer? Numerous studies have been conducted which point to the conclusion that financial diversification is not a cure-all for the
disease known as business risk. Burgman (1996) points out that because multinational corporations such as the Gillette Corporation operate in many different correlated economies simultaneously the capital structures in
these organizations should be able to support more debt than those of purely domestic corporations. Diversification such as this should therefore result in a less volatile earnings market and
probably less chance of bankruptcy. Multinational corporations in the case of Gillette would appear to have not only less expected bankruptcy costs, but also a higher leverage ratio because
of a trade-off between expected bankruptcy costs and the tax shelter of debt. However, Burgman (1996) goes on to explain that evidence exists that multinational corporations, in fact, have
less debt in their capital structure than do many purely domestic corporations. It has been said by Deputy Secretary of the Treasury Stuart E. Eizenstat that the countries of
the region, including Morocco, need to "do more to reduce economic barriers among themselves so that they can be more competitive globally" (Economy in Morocco PG, 2001). The Gillette
Company, while operating in Morocco and on a good basis with the company, agrees that there should be more sanctions lifted which would make doing business within the region a
little easier. DIFFERENT ANSWERS According to Geiger (1998) there have probably been more studies of diversification within the framework of corporate performance than in any other strategic management area.
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