Multinational corporation

A multinational corporation or worldwide Enterprise is a corporate organization that owns or controls production of goods or services in one or more countries other than their home country. It can also be referred as an international corporation, a transnational corporation, or a stateless corporation.

A multinational corporation (MNC) is usually a large corporation incorporated in one country which produces or sells goods or services in various countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies.

MNCs may gain from their global presence in a variety of ways. First of all, MNCs can benefit from the economy of scale by (1) spreading R&D expenditures and advertising costs over their global sales,(2) pooling global purchasing power over suppliers,(3) utilizing their technological and managerial know-how globally with minimum additional costs, and so forth. Furthermore, MNCs can use their global presence to take advantage of underpriced labor services available in certain developing countries, and gain access to special R&D capabilities residing in advanced foreign countries.

The problem of moral and legal constraints upon the behavior of multinational corporations, given that they are effectively "stateless" actors, is one of several urgent global socioeconomic problems that emerged during the late twentieth century.

One of the first multinational business organizations, the East India Company, arose in 1600. After East India Company, came the Dutch East India Company, founded March 20, 1602, which would become the largest company in the world for nearly 200 years.

The main characteristics of multinational companies are:

1.In generally, there is a national strength of large companies as the main body, through the way of foreign direct investment or acquire local enterprises, established subsidiaries or branches in many countries;

2. It usually has a complete decision-making system and the highest decision-making center, each subsidiary or branch has its own decision-making body, according to their different features and operating to make decisions, but its decision must be subordinated to the highest decision-making center;

3. MNCs seeks markets in worldwide and rational production layout, professional fixed-point production, fixed-point sales products, in order to seek maximum profit;

4. Due to strong economic and technical strength, with fast information transmission, as well as funding rapid cross-border transfer, multinational companies have, so it has stronger competitiveness in the world;

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