Question

introductions to global corporation and multination corporation, focus on their work practices.

Answer 1

A Multinational Corporations (MNCs) are basically large corporations which are based on one country but sells goods or services and has assets in multiple other countries. They usually have a Centralised Headquarters from where they coordinate their business activities and offices in the all the other countries.

As as result of globalization, it has become relatively easy for companies to start business in other countries where the market accedes norms have become significant easier in order to attract foreign investment. It started in the stage of colonialist principles where corporations such as Swedish Africa Company, East India Company,etc started to expand their area of business.

Features of MNCS

• They usually have a strong Board of Directors who carefully examine and project the market based on which market expansion takes place in whichever country they have interest in.
• In order to achieve maximum profit, they usually do fixed point production and sales in the market.
• Because of the strong fund support they have, they are able to invest in a targeted profit making domestic company (FPI,FDI) in any country thereby increasing the profitability.
• Governments tend to favor strong MNCs thereby encouraging them to invest more in their country.
• It creates large employment opportunities in the countries they invest.

Operations

• MNCs are those which makes atleast one quarter of their revenue from countries other than their home country.
• MNCs are usually based on developed countries from where they expand their business to developing countries. The reason behind this is the less capital expenditure compared to their home countries.
• They exercises direct control over their subsidiaries and implements transnational policies with less regard for their home country.
• They scrutinize the list of locations where they want to invest in and select a best option based on a lot of criterias ranging from : Ease of Doing Business Index, Less wages, Lower Taxes for corporations, Ease of Logistics, High market demand, Friendly Government policies ,etc.
• It plans and organize the Financing, Production, Marketing, Research and Development, Employment in the subsidiary countries.
• Using the means of Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI) and Joint Ventures (JVs) makes the MNCs more benefit as they have to less bother about setting up business in the foreign market.

There are also criticism to MNCs that says it hinder the growth of domestic industries and deplete more natural resources. They are also tagged with less ethical standards by influencing the host government to mould laws in favor of them. Their monopoly raises the price of goods to consumers and increases the competition. It often neglects the unemployment rates in their home country while searching for less wage opportunities in away countries.