A so-called Multinational Corporation (MNC) is one that has facilities and other assets in at least one country that’s not its home country. Most of the time, these companies have offices and facilities in different countries, while still sporting a central office wherein they coordinate global management.
As for money, these multinational companies usually have bigger budgets than those of many small countries. Multinational corporations are also known as transnational, international, or stateless corporations.
Examples of multinational corporations
A huge portion of all multinationals are American, Japanese, or western European. Some examples of these are Coca-Cola, AOL, Honda, BMW, Toshiba, Wal-Mart, and Nike.
For those who support multinational corporations, these entities help in creating high-paying jobs and high quality goods in countries that otherwise would not have access to such services and goods. On the flip side, there are critics who argue that MNCs have undue political influence over countries’ government.
These critics also say that multinationals exploit developing countries while also spurring job losses in their home countries. In general, multinational corporations get at least a fourth of their income from outside their home country.
Historical Roots
The rise of colonialism has a lot to do with the rise of multinational corporations. Most of the first multinationals are commissioned by European kings and queens, ordering them to conduct expeditions. And those colonies that did not fall in the hands of Portugal or Spain fell under the administration of some of the world’s earliest multinationals.
Among the firsts was The East India Company, which was established by the British in 1660. Its headquarters was in London. This company took part in international trade and exploration and maintained various trading posts in India.
Among other examples are Swedish Africa Company (1649) and the Hudson’s Bay Company (incorporated in Canada in the 17th century).
Categories
Among the categories of MNCs are:
- A decentralized corporation with a strong presence in its home country
- A global, centralized corporation that obtains cost advantage where less expensive resources and materials are available
- A global company that builds on the parent company’s R&D
- A transnational enterprise that utilizes all three aforementioned categories
The differences among the categories of multinationals are quite subtle. For example, a transnational may have its home in at least two countries and spreads out its operations. Other multinational enterprises controls and manages plants in at least two countries.
Benefits and Dangers of Multinational Corporations
For many, one advantage of having a presence in a foreign country enables the company to meet the demand in that foreign country without the added transportation costs linked with long-distance shipping.
Corporations also seek to find foreign countries where costs are cheaper, such as less expensive raw materials and cheaper labor costs. Aside from that, multinationals may also be able to take advantage of tax variations.
On the other hand, critics argue that domestic jobs are vulnerable to moving abroad. For instance, in the US, the country lost around 33 percent of its manufacturing jobs between 2001 and 2010, according to the Bureau of Statistics.
