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8. (continued)
Geographic Areas
The company provides disclosures for three countries, each of which has 13% or more of total
external revenues. Russia has 11% of total revenues, but is not disclosed separately, which
suggests that the company is using 12% or 13% as its cutoff point for determining materiality.
9. IBM, Johnson & Johnson, and Ford Motor Company
a. A commonly used measure of multinationality is the percentage of total sales that are
generated in countries other than the United States: Foreign Sales/Total Sales. This
b. International diversification refers to the extent to which a company’s operations are
spread across different countries and regions of the world. Ford Motor Company
appears to be concentrated in a relatively small number of countries, and is therefore not
very diversified internationally. 82% of Ford’s sales are generated from operations in
only eight countries (U.S., Canada, U.K., Germany, Italy, France, Spain, and Belgium).
10. BMW and Volkswagen
a. A commonly used measure of multinationality is the percentage of total sales that are
generated in countries other than the home country: Foreign Sales/Total Sales. This
ratio can be calculated for each company by subtracting sales in Germany from total
b. One way to measure international diversification is the extent to which sales are spread
out over different regions of the world. Column B in the table below shows that BMW’s
sales are more evenly spread over its segments than are VW’s. For example, whereas
External Revenues Col. A Col. B Col. C Col. D Col. E
BMW 2012 % 2011 %
Year-to-
year %
change
Germany 12,186 15.9% 22,954 49.1% -46.9%
Volkswagen 20129 % 2011 %
Year-to-
year %
change
Germany 37,734 19.6% 34,600 21.7% +9.1%
c. For the group as a whole, BMW experienced a 64.4% positive revenue growth in 2012
(Col. E in table above). The greatest percentage increase in revenues incurred in China
(+96,220%), and the smallest in USA (+20.1%). Only Germany experienced negative
sales growth (-46.9%).
