Question

Explain what has led to the era of the multinational corporation.

Please answer in own word and between 300-500 words.

Answer 1

• According to the survey conducted by Bureau of Economic Analysis,it was found that,$9,843 billion is the revenue of US multinational Corporations. It is seen that small businesses can also be multinational ,if they have the asset and facilities in their own country,and if at least one country is ready to integrate with them.
• Reasons for Multinational Corporations:
  • The transformation of small businesses to multinationals,will give an opportunity to increase the production efficiency,as the quantity of products increase. This is because,each product shares a common cost,which is irrespective to the quantity of goods that are produced.
  • The transformation of small businesses to multinationals,will help them to expand their reach.That is,this will help them to compete with new growing markets,in which Mexican economy is an example.This is only successful,if the domestic demand for their products are stable.
  • High transportation costs can increase the price of product,which is sold by small business. But ,if it is working as multinational company,it can reduce the cost of the product by finding a manufacturer who is closer to the company's market.