Multi National Corporation

Topics: Multinational corporation, Corporation, Globalization Pages: 9 (3083 words) Published: April 23, 2013
“On balance, multinational corporations provide more positive outcomes for society than negative ones”.

Multinational corporations are practically in every sphere of modern life, from policy making to the environment and international security; from problems of identity and community to the future of work and nation state. (Gabel and Bruner, 2003, VI) A multi-national corporation (MNC) is a business organisation which has its headquarters in one country but conducts and controls productive activities in a range of different countries. There are numerous examples of such organisations, car manufacturers like Ford, Toyota, Honda , Volkswagen; oil companies like Shell, BP, Exxon Mobil ; technology companies like Dell, Microsoft, Hewlett Packard ,Canon ; food and drink companies such as Coca Cola, Interbrew, McDonalds, FMCG companies like P&G and banking companies like Yes bank, Hsbs, etc. According to Bartlett and Ghoshal (1998), the multinational organisation is defined by the following characteristics: ‘A decentralized federation of asset and responsibilities, a management process defined by simple financial control systems overlaid on informal personal coordination, and a dominant strategic mentality that viewed the company’s worldwide operations as a portfolio of national business. In a multinational organisation, the decisions, obviously, are decentralised.’ Generally speaking multinational corporations are a boon to this world. They have made this world a better place to live in. There are numerous positive outcomes of a MNC. These corporations have brought this world together and have connected the whole mankind. They have developed the underdeveloped countries through their investments and improving their economy. MNC, by their very nature, are large organisations. Their size means they often have considerable power and influence and as a result have come in for some criticism of their actions. It is also assumed that MNCs tend to locate operations in poor countries only. This, of course, is not the case. Honda and Nissan have both invested heavily in production facilities in the UK but are Japanese companies. (Bized, 2007) Multinational Corporations are believed to play a major role in improving the economy and lifestyle of the developing country. MNC have made this world a global village and connected people from all parts of the world and made them work together in a state of harmony. Due to these transnational corporations, the working of people from different origin, caste, and race is possible. These corporations are the reason that we can now live together with any type of human. They have made it possible for us to think globally and live globally.

It is believed among many economists that MNCs fill various gaps within a host country's economy. The first and most often cited one is that, when domestic investment and savings doesn't meet the required rate of growth in the economy, the gap in investment is filled by the MNCs' investment because these corporations have large funds and so can help in building an economy benefitting the whole world. Secondly when the targeted foreign exchange is not met by the net foreign exchange derived from imports and exports together with net public debt, the gap is constituted by MNCs' net exports and capital inflow. These giant enterprises also fill the gap between targeted government tax revenues and locally raised taxes. Lastly the gap of management skills, entrepreneurship and technological skills are believed to be filled by the MNCs. They bind all sorts of people together because these are huge agencies and so require works of all type. Engineers use technological skills to make a product which is sold by entrepreneurs using management skills and lastly the whole all account is managed by managers. So everyone works together filling up the gap between them. (Financial times, 2001) According to A.K. Cairn Cross,

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