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Multinational Companies

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Multinational Companies

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  • September 2008
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2. What is meant by a multinational corporation (MNC)? Give 2 examples of MNCs that are U.S. based, and 2 that are based elsewhere but operate in the U.S. Multinational Corporation is the corporation of having operations, subsidiaries, or investments in more than one countries. According to Franklin Root (1994), an MNC 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, -implements business strategies in production, marketing, finance and staffing that transcend national boundaries (geocentric). Very large multinationals have budgets that exceed those of entire countries. Multinational corporations can have a powerful influence in international relations and local economies. Multinational corporations play an important role in globalization; some argue that a new form of MNC is evolving in response to globalization: the 'globally integrated enterprise'. MNCs have existed since 1602, in which year the first MNC, the Dutch East India Company, was established. Multinational corporations can be divided into three broad groups according to the configuration of their production facilities: Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (example: Wall-Mart; McDonald's) Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas) Diversified multinational corporations manage production establishments located in different countries that are neither horizontally nor vertically nor straight, nor non-straight integrated. (example: Microsoft or Siemens A.G.) Examples for U.S. Based Multinational Companies

- McDonald’s is an U.S based MNC and established in 1955. McDonald’s is...

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