There are usually two types of companies in any country, home-based and foreign investors, but one begins to wonder, why the foreign companies are in the country? The foreign companies come in to produce goods and services and/or to sell their products. Similarly indigenous companies are also extending their business operations across the boundaries of the country. This is called globalisation, which means extension of economic activities across the boundaries of a country in search of worldwide markets. In our day-to-day life, we use different goods and services of indigenous origin as well as foreign origin. The foreign goods are either imported in our country or produced in our country. Due to globalisation the entire world has become one big market. Big companies are coming out of their home countries in search of better markets for their products.
Multinational corporations have many dimensions and can be viewed from several perspectives (ownership, management, strategy and structural, etc.) Some argue that ownership is a key criterion. A firm becomes multinational only when the headquarters or parent company is effectively owned by nationals of two or more countries.
DEFINITION OF A MULTINATIONAL COMPANY
A multi-national company is one which is registered as a company in one country but carries on business in a number of other countries by setting up factories, branches or subsidiary units. Such a company may produce goods or arrange services in one or more countries and sell these in the same or other countries.
According to Franklin Root (1994), a Multinational company is a parent company that engages in foreign production through its affiliates located in several countries, exercises direct control over the policies of its affiliates, and implements business strategies in production, marketing, finance and staffing that transcend national boundaries. In other words, Multinationals exhibit no loyalty to the country in which they... [continues]
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