Multinational Corporations or Multinational Companies are corporate organizations that operate in more than one country other than home country. Multinational Companies (MNCs) have their central head office in the home country and secondary offices, facilities, factories, industries, and other such assets in other countries.
These companies operate worldwide and hence also known as global enterprises. The activities are controlled and operated by the parent company worldwide. Products and services of MNCs are sold around various countries which require global management.
Features of a Multinational Company
- High Turnover and Many Assets
MNCs operate on a global scale. Which means they have huge assets in almost all countries in which they operate. Their turnovers can also be incomprehensibly large.
MNCs have unity of control. So while they have many branches in many countries, the main control will remain with the head office in its country of origin. The business operations in the host country have their own management and offices, but the ultimate control will still remain at the head office.
- Technological Advantages
As we saw earlier, an MNC has at its disposal huge amounts of wealth and investments. This allows them to use the best technology available to boost their products and their company. Most companies also invest huge money in their Research & Development Department to invent and discover new technological marvels.
- Management by Professionals
An MNC is run by very competent and capable individuals. They have suitable managers to take care of their business operations, technology, finances, expansion etc. And they are also able to attract the top talent to their corporations due to their resources and their reputations.
- Aggressive Marketing
MNCs can spend a lot of their money on marketing, advertising, and promotional activities. They target an international audience, so effective marketing becomes necessary. Aggressive marketing allows them to capture the market and sell their products globally.
Merits of a Multinational Companies in a Host Country
- One of the main advantages to the host country is that MNCs boost theireconomic growth. They bring with them huge investments and capital. And then through subsidiaries, joint ventures, branches, factories they promote rapid industrial growth. In fact, MNCs are known as the messengers of progress.
- A multinational corporation helps the technological growth of the country as well. They bring new innovationsand technological advancements to the host country. They help modernize the industry in developing countries.
- MNCs also reduce the host countries dependence on imports. Imports reduce while exports from the country see a rise.
- All MNCs have enormous capitaland resources at their disposal. A good portion of such resources is invested in R&D. This can be very beneficial to the host countries where they set up their R&D facilities.
- Multinational corporations also promote maximum utilization of the country’s resources. This, in turn, leads to economic development.
Merits of Multinational Companies in the Home Country
- MNCs make their home countries (country of origin) very rich by their revenues. The corporation will collect fees, royalties, profits, charges from all their host countries and bring them back to the home country. This huge inflow of foreign exchange is very beneficial to the home country.
- MNCs provide a means of co-operation between developed countries and developing or underdeveloped countries. This allows both to benefit from the partnership.
- And these multinational corporations also help promote bilateral trade relations between countries. This is beneficial to both the countries and the global market and economy.