The Role Of Multinational Companies

“A multinational enterprise is a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collison, 2012). A firm on the other side operates within the national borders of a country. Some firms want to expand, not only in sizes but also in value and market share, by becoming MNEs. This is due to the fact that it can bring remarkable advantages even though is very risky. MNEs perform international business operations named as: Exports and Imports, Foreign Direct Investment (FDI). The first branch includes the goods and services that are produced in a country and sold in another one and vice versa, the second branch consists in equity funds invested in foreign countries. It is when firms begin to use FDI that they become MNEs.

A multinational company is often defined as a corporation whose operations and investments are broaden across a number of countries. They are also referred to as transnational companies. Therefore given this definition it would be expected that if a company operates over such a large territory that it would indeed have many effects and impacts, locally and globally, and its role would also be quite significant as it can have a direct influence on an economy, the environment and general effects on society. However, changing the way they run things in order to accomidate society could break there business down and they could eventually have no impact on society so looking

By definition, an FDI is an “investment that involves some ownership and/or operating control. The foreign residents are usually multinational corporations (MNCs)” (Cohn 412).

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business.

“Researchers and theorists suggest that the skills and techniques of a MNC are very different than those of an organization without a global presence.”

In modern society, we are constantly bombarded with decisions of what retailer or brand to buy supplies from. We no longer have just a supermarket; we have a wide variety of merchandise retailers to choose from. Debating where to go depending on the price of products, or perhaps the quality, is a decision we battle with constantly. Yet, without thinking twice about where the product came from, or its environmental impact, many of us go right ahead pick up the item, toss it in the trolley and rush to pay for because we don’t have time to care about stuff like this. There are other important things, like when to get the car oil changed, right?

When a multinational invests in a host country, the scale of the investment (given the size of the firms) is likely to be significant. Indeed governments will often offer incentives to firms in the form of grants, subsidies and tax breaks to attract investment into their countries. This foreign direct investment (FDI) will have advantages and disadvantages for the host country.

Over the years, Multinational corporations (MNCs) have been a source of controversy ever since the East India Company developed the British taste for tea and a Chinese taste for opium (Stopford, 1998). A typical multinational corporation (MNC) normally functions with a headquarters that is based in one country, while other facilities are based in locations in other countries. In some circles, a multinational corporation is referred to as a multinational enterprise (MNE) or a transnational corporation (TNC) (Tatum, 2010). They enter host countries in different ways and different strategies. Some enter by exporting their products to test the market and to find whether their existing products can gain sizeable market share. For such firms,

Multinational corporations are companies that that has at least one facility in another country than its home country. A good example of a multinational corporation is Nestle, Bacardi, Proctor & Gamble and Intel. These companies have offices and/or factories in other countries where they coordinate global management. While having facilities in other countries is a great way to cut costs and to create jobs in other countries, there are some disadvantages that should be taken into account regarding this practice as well.

Multinational corporations are becoming more significant in the worlds business markets. With an abundance of worldwide firms with foreign affiliation, multinational corporations employ managers who must work with others that have a wide variety of backgrounds and cultures. When multinational corporations require international business contacts to interact, it is critical for managers to demonstrate cultural sensitivity in order to meet business goals. In a world where crossing boundaries is routine, cultural intelligence becomes a vital ability and skill for managers, managers must adjust their managing styles between cultural and emotional intelligence.

The multinational enterprise is a company that have headquartered in one country but has operations in more than one countries (me, year). Also, it controls and manages production establishments with operations (IB book, year). Moreover, according to me (year), the MNE’s are the large corporations which both produces and sells goods and services in various countries. Consequently, the multinational enterprises seek to gain access to overseas markets, establishes the distribution network and increases global sales. For example, the largest global 500 MNE’s account for over 90% of the world’s stock of foreign direct investment and nearly half of the global trade (Rugman and Verbeke, 2013). Therefore, the international tax systems give opportunities to shift their profits between countries and subsidiaries, reduce tax bills and decrease liabilities using the legal tax avoidance and tax minimisation strategies (me, year). In addition, it enables enterprises to decrease business costs and increase overall business profitability. However, it damages the state economy and undermines trust in the tax system.

Generally, MNEs have operations all over the world but sometimes there is a specific focus on some geographic areas due to growth opportunities, production costs or the convenience of locations. This global presence requires constant innovation in order to maintain a local competitive advantage, at the same time, some partnerships are established with small medium enterprises SMEs that help the companies to compete in niche markets but most importantly, to understand better the market, its needs, and the business culture around it.

The theories and study on the multinational corporations (MNCs) internationalisation has been prominent in the international business (IB) studies for many decades. Though earlier studies were dominated by firms’ from the advanced economy in Europe, USA, and Japan. Therefore, is not surprising that theories of MNCs internationalisation or foreign direct investment (FDI) would reflect on the behaviour and perspectives of advanced economies firms. Such theories, for example,

The increasing significance of MNCs in 1950s transformed them to the dominant phenomenon in the international economic relations since then. It has triggered a strong interest among the scholars, media, and society. The surrounding controversy around MNCs has triggered the need and necessity for the analysis due to the fact, that it is described by some scholars and economists as the principal instrument for maximizing world welfare, and by others as the imperialistic agents (United Nations Publication 1973, p.1).

Moving to new country is never easy for any organization and lot of brainstorming and research needs to be done before offering the product in completely new arena. A fundamental shift has been occurring in the world economy. There has been a move away from a world in which national economies were relatively isolated from each other by barriers to