Multi National Corporation

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Multi National Corporation

By | November 2010
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Multi National Corporation (MNC)

Definition:

A Multi National Corporation (MNC) or Trans National Corporation (TNC), also called multinational enterprise (MNE), is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries.

The first modern multinational corporation is generally thought to be the East India Company. Many corporations have offices, branches or manufacturing plants in different countries from where their original and main headquarters is located.

Some multinational corporations are very big, with budgets that exceed some nations' GDPs. Multinational corporations can have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalization.

What Are Multinational Enterprises (MNEs)?

1. MNEs have a number of characteristics, including:

(a) Responsiveness to environmental forces such as competitors, customers, suppliers, financial institutions, and government;

(b) Drawing on a common pool of resources, including assets, patents, trademarks, information, and human resources; and

(c) Affiliates that are linked by a common strategic vision.

2. Under the premise that foreign markets are risky, companies expand their operations abroad incrementally and cautiously. Setting up a wholly-owned subsidiary is usually the last stage of doing business abroad. A typical internationalization process for a firm producing a standardized product might begin with a licensing agreement: a contractual arrangement in which one firm provides access to some of its patents, trademarks, or technology to another firm in exchange for a fee or royalty. Apart...

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