Many US companies have become global players. The technology giant IBM employs o

Question

Many US companies have become global players. The technology giant IBM employs over 465,000 people and has revenues of roughly $100 billion. Although IBM’s headquarters is in Armonk, New York, the vast majority of its employees (more than 70 percent) actually work outside the United States. IBM, like many other US-based multinationals, now earns the majority of its revenues (roughly two-thirds) outside the United States[1]. IBM’s revenues in the BRIC countries have been growing at between 20 and 40 percent per year, while they have grown by only about 1 to 3 percent in developed markets such as the United States. IBM’s goal is to obtain 35 percent of its total revenue from fast-growing emerging economies such as the BRIC countries by 2015. To capture these opportunities, IBM (along with many other multinational companies) has been reducing the US headcount while increasing employment in emerging economies such as India.

Given that traditional US firms such as IBM have over 70 percent of their employees outside the U.S. and earn almost two-thirds of their revenues from outside the US, what is an appropriate definition of a “US firm”?

Explanation / Answer

Answer:

A US firm in line with the above summary can be defined as any entity that has an overlay within the regulations of the constitution of the United States of America assuring a regular place of business within the United States and shall be owned by a citizen of United States of America who should at least own 51% of stakes of the firms ownership.

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