A multinational corporation may also be referred to as an international, stateless or transnational corporation organization or enterprise. Some countries’ budgets may exceed that of small countries.
What is a multinational company?
A multinational corporation (MNC) is a company that has operations in at least one country other than its home country. By some definitions, at least 25% of your revenue is generated outside your home country.
Multinational corporations generally have offices, factories, or other facilities in different countries around the world and a central headquarters that coordinates global management.
A multinational corporation is an enterprise whose business activities take place in at least two countries. Some people may think that any company with foreign branches is a multinational corporation. Others might limit the definition to those companies that derive at least a quarter of their revenue from outside their home country.
How a Multinational Corporation Works?
A multinational corporation is an enterprise whose business activities occur in at least two countries. Some may consider any company with a foreign branch to be a multinational corporation. Others may limit the definition to only those companies that derive at least a quarter of their revenue outside of their home country.
How multinational companies work
A multinational company is a company whose business activities are carried out in at least two countries. Some people consider companies that have branches in foreign countries to be multinational corporations. Some companies limit the definition to only companies that derive at least one-fourth of their revenues outside their home country.
Multinational companies can invest directly in foreign countries. Many are based in developed countries. Proponents say it will create high-paying jobs and technologically advanced goods in countries that otherwise do not have access to such opportunities and goods.
Critics of these companies, however, believe that multinationals wield unwarranted political influence over governments, exploit developing countries, and lose jobs in their own countries.
Characteristics of multinational companies:
Common characteristics of different types of multinational corporations include-
- worldwide offices
- Usually large and powerful organizations
- Work in multiple languages
- Complex business model and structure
- foreign direct investment
- Jobs created abroad may offer higher wages than at home
- Pursuing higher efficiency, lower manufacturing costs, and greater market share
- Considerable costs to navigate foreign rules and regulations
- Pay taxes in the countries where you do business
Four types of multinational corporations:
- A centralized global enterprise
- decentralized enterprise
- International department within a company
- multinational enterprise
Advantages and Disadvantages of Multinational Corporations:
Advantage:
- Establishing an international presence may open up new markets and sales opportunities not available or feasible domestically alone. For example, a company located in a foreign country such as India can satisfy widespread Indian demand for a particular product without the transaction costs associated with long-distance transportation.
- Companies can establish operations in markets where capital can be used most efficiently and where wages have less of an impact on earnings than in their home country.
Cons:
- The trade-off of globalization (the cost of falling prices) is that domestic jobs move abroad. This could lead to increased unemployment in the home country and make it difficult for longtime employees of the outsourced industry to find new jobs.
- Opponents of multinational corporations point out that they may have to develop monopolies (for certain products). This can lead to higher prices for consumers, stifling competition and stifling innovation.
- Multinational corporations are also said to have a detrimental impact on the environment, as their operations can encourage land development and deplete local and natural resources.
