Thursday, September 30, 2010


The word Multinational is the combined word of Multi and national which gives meaning of
many countries.Hence multinational companies are those business organization which have head
office in one country and their operation are spread over several other countries.There are
two classes of companies under multinational companies.The head office is regarded as the parent
company and branches as subsidiary company. The parent company manages and control the activities
of subsidiary company. The subsidiary companies  are affiliated with parent companies through
investment, trade-mark, patent and technology. The multinational companies are operated with
huge investment and wide range of product or services. They cover large area of market.
Standard Chartered Bank,Coco-cola, SONY Electronics,etc are some examples of multinational companies.Computer is must in any multinational companies which can be clear through this link:
Education and technology is also necessary which can be clear through this link.
Or life is beautiful through this link:
Economists are not in agreement as to how multinational or transnational corporations should be defined. Multinational corporations have many dimensions and can be viewed from several perspectives (ownership, management, strategy and structural, etc.) The following is an excerpt from Franklin Root (International Trade and Investment, 1994) Ownership criterion: some argue that ownership is a key criterion. A firm becomes multinational only when the headquarter or parent company is effectively owned by nationals of two or more countries. For example, Shell and Unilever, controlled by British and Dutch interests, are good examples. However, by ownership test, very few multinationals are multinational. The ownership of most MNCs are uninational. (see videotape concerning the Smith-Corona versus Brothers case) Depending on the case, each is considered an American multinational company in one case, and each is considered a foreign multinational in another case. Thus, ownership does not really matter. Nationality mix of headquarter managers: An international company is multinational if the managers of the parent company are nationals of several countries. Usually, managers of the headquarters are nationals of the home country. This may be a transitional phenomenon. Very few companies pass this test currently. Business Strategy: global profit maximization
According to Howard Perlmutter (1969):
Multinational companies may pursue policies that are home country-oriented. or host country-oriented or world-oriented. Perlmutter uses such terms as ethnocentric, polycentric and geocentric.However, "ethnocentric" is misleading because it focuses on race or ethnicity, especially when the home country itself is populated by many different races, whereas "polycentric" loses its meaning when the MNCs operate only in one or two foreign countries. According to Franklin Root (1994), an MNC is a parent company that
  1. engages in foreign production through its affiliates located in several countries,
  2. exercises direct control over the policies of its affiliates,
  3. implements business strategies in production, marketing, finance and staffing that transcend national boundaries.
In other words, MNCs exhibit no loyalty to the country in which they are incorporated.


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