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A MULTINATIONAL CORPORATION or WORLDWIDE ENTERPRISE is a corporate organization that owns or controls production of goods or services in two or more countries other than their home country.

CONTENTS

* 1 Names * 2 Overview * 3 Theoretical background * 4 Transnational corporations * 5 Multinational enterprise * 6 Multinational corporation and colonialism * 7 Criticism of multinationals * 8 See also * 9 References * 10 External links

NAMES

A multinational corporation can also be referred to as an MULTINATIONAL ENTERPRISE (MNE), a INTERNATIONAL CORPORATION, a TRANSNATIONAL CORPORATION, or a STATELESS CORPORATION. There are subtle but real differences between these three labels, as well as those labels of MULTINATIONAL CORPORATION and a WORLDWIDE ENTERPRISE.

OVERVIEW

Toyota is one of the world's largest multinational corporations with their headquarters in Toyota City , Japan .

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.

* Importing and exporting goods and services * Making significant investments in a foreign country * Buying and selling licenses in foreign markets * Engaging in contract manufacturing—permitting a local manufacturer in a foreign country to produce their products * Opening manufacturing facilities or assembly operations in foreign countries

MNCs may gain from their global presence in a variety of ways. First of all, MNCs can benefit from the economy of scale by spreading R&D expenditures and advertising costs over their global sales, pooling global purchasing power over suppliers, and utilizing their technological and managerial know-how globally with minimal additional costs. 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 * 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; * MNCs seek markets in worldwide and rational production layout, professional fixed-point production, fixed-point sales products, in order to achieve maximum profit; * 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; * Many large multinational companies have varying degrees of monopoly in some area, due to economic and technical strength or production advantages.

THEORETICAL BACKGROUND

The actions of multinational corporations are strongly supported by economic liberalism and free market system in a globalized international society. According to the economic realist view, individuals act in rational ways to maximize their self-interest and therefore, when individuals act rationally, markets are created and they function best in free market system where there is little government interference. As a result, international wealth is maximized with free exchange of goods and services.

To many economic liberals, multinational corporations are the vanguard of the liberal order. They are the embodiment par excellence of the liberal ideal of an interdependent world economy. They have taken the integration of national economies beyond trade and money to the internationalization of production. For the first time in history, production, marketing, and investment are being organized on a global scale rather than in terms of isolated national economies.

International business is also a specialist field of academic research. Economic theories of the multinational corporation include internalization theory and the eclectic paradigm . The latter is also known as the OLI framework.

The other theoretical dimension of the role of multinational corporations concerns the relationship between the globalization of economic engagement and the culture of national and local responses. This has a history of self-conscious cultural management going back at least to the 1960s. For example:

“ Ernest Dichter, architect, of Exxon’s international campaign, writing in the Harvard Business Review in 1962, was fully aware that the means to overcoming cultural resistance depended on an “understanding” of the countries in which a corporation operated. He observed that companies with “foresight to capitalize on international opportunities” must recognize that “cultural anthropology will be an important tool of competitive marketing”. However, the projected outcome of this was not the assimilation of international firms into national cultures, but the creation of a “world customer”. The idea of a global corporate village entailed the management and reconstitution of parochial attachments to one’s nation. It involved not a denial of the naturalness of national attachments, but an internationalization of the way a nation defines itself. ”

TRANSNATIONAL CORPORATIONS

A transnational corporation differs from a traditional multinational corporation in that it does not identify itself with one national home. While traditional multinational corporations are national companies with foreign subsidiaries, transnational corporations spread out their operations in many countries to sustain high levels of local responsiveness.

An example of a transnational corporation is Nestlé who employ senior executives from many countries and tries to make decisions from a global perspective rather than from one centralized headquarters.

Another example is Royal Dutch Shell , whose headquarters are in The Hague , Netherlands , but whose registered office and main executive body are headquartered in London , United Kingdom .

MULTINATIONAL ENTERPRISE

The multinational enterprise (MNE) is the term used by international economist and similarly defined with the multinational corporation (MNC) as an enterprise that controls and manages production establishments, known as plants located in at least two countries. The multinational enterprise (MNE) will engage in foreign direct investment (FDI) as the firm makes direct investments in host country plants for equity ownership and managerial control to avoid some transaction costs .

A few examples of MNEs are Apple Inc. and Nike Inc. who maximize economies of scale through foreign direct investments in international plants to manufacture value chain stages of production.

MULTINATIONAL CORPORATION AND COLONIALISM

See also: Charter company and Neocolonialism

The history of multinational corporations is closely intertwined the history of colonialism , with the first multinational corporations founded to undertake colonial expeditions at the behest of their European monarchical patrons. Prior to the era of New Imperialism , a majority European colonies not held by the Spanish and Portuguese crowns were administered by chartered multinational corporations. Examples of such corporations include the British East India Company , the Swedish Africa Company , and the Hudson’s Bay Company . These early corporations facilitated colonialism by engaging in international trade and exploration, and creating colonial trading posts . Many of these corporations, such as the South Australia Company and the Virginia Company , played a direct role in formal colonization by creating and maintaining settler colonies . Without exception these early corporations created differential economic outcomes between their home country and their colonies via a process of exploiting colonial resources and labour, and investing the resultant profits and net gain in the home country. The end result of this process was the enrichment of the colonizer and the impoverishment of the colonized. Some multinational corporations, such as the Royal African Company , were also responsible for the logistical component of the Atlantic slave trade , maintaining the ships and ports required for this vast enterprise. During the 19th century formal corporate rule over colonial holdings largely gave way to state-controlled colonies, however corporate control over colonial economic affairs persisted in a majority of colonies.

During the process of decolonization the European colonial charter companies were disbanded, with the final colonial corporation, the Mozambique Company , dissolving in 1972. However the economic impact of corporate colonial exploitation has proved to be lasting and far reaching, with some commentators asserting that this impact is among the chief causes of contemporary global income inequality .

Contemporary critics of multinational corporations have charged that some present day multinational corporations follow the pattern of exploitation and differential wealth distribution established by the now defunct colonial charter corporations, particularly with regards to corporations based in the developed world that operate resource extraction enterprises in the developing world, such as Royal Dutch Shell , and Barrick Gold . Some of these critics argue that the operations of multinational corporations in the developing world take place within the broader context of neocolonialism .

However, multinational corporations from emerging markets are playing an ever-greater role, increasingly impacting the global economy.

CRITICISM OF MULTINATIONALS

Main articles: Anti-globalization movement and Anti-corporate activism

Anti-corporate advocates criticize multinational corporations for entering countries that have low human rights or environmental standards. In the world economy facilitated by multinational corporations, capital will increasingly be able to play workers, communities, and nations off against one another as they demand tax, regulation and wage concessions while threatening to move. In other words, increased mobility of multinational corporations benefit capital while workers and communities lose. Some negative outcomes generated by multinational corporations include increased inequality, unemployment, and wage stagnation .

The aggressive use of tax avoidance schemes allows multinational corporations to gain competitive advantages over small and medium-sized enterprises . Organizations such as the Tax Justice Network criticize governments for allowing multinational organizations to escape tax since less money can be spent for public services.

The 5 Cons of Multinational Corporations

1. The Market Dominance of Multinational Corporations - The market dominance of multinational corporations makes it hard for the local small firms to succeed and thrive. For instance, there are arguments stating that the larger supermarkets squeeze out a notable margin of the local corner stores that lead to lesser diversity.

2. Consumer’s Expenses - Companies are usually interested at the consumer’s expense. The multinational companies commonly have the power of monopoly that gives them the chance of making excess profit.

3. Pushing Local Firms Out Of Business - In the developing economies, these giant multinationals use the economies of scale for pushing the local firms out of their businesses.

4. Criticized For Using "Slave Labor" - Multinational corporations are being criticized for using the so-called slave labor wherein the workers are paid with very small wages.

5. Environment Threat - For the sake of profit, these global companies commonly contribute to pollution as well as make use of the non-renewable resources that can be a threat to the environment.

SEE ALSO

* Corporation * Economic liberalism * Free market * Globalization * Global workforce * List of multinational corporations * World economy

REFERENCES

* ^ Pitelis, Christos; Roger Sugden (2000). _The nature of the transnational firm_. Routledge. p. H72. ISBN 0-415-16787-6 . * ^ "Multinational Corporations". * ^ Roy D. Voorhees, Emerson L. Seim, and John I. Coppett, "Global Logistics and Stateless Corporations," _Transportation Practitioners Journal_ 59, 2 (Winter 1992): 144-51. * ^ Doob, Christopher M. (2013). _Social Inequality and Social Stratification in US Society_. Pearson Education Inc. * ^ http://trcollege.net/study-material/24-economics/47-role-of-multinational-corporations. Missing or empty title= (help ) * ^ Eun, Cheol S.; Resnick, Bruce G. (2013). _International Financial Management,6th Edition_. Beijing Chengxin Weiye Printing Inc. * ^ Koenig-Archibugi, Mathias. "Transnational Corporations and Public Accountability" (PDF). _Gary 2004_: 106. Retrieved 2 February 2015. Krugman, Paul (20 March 1997). "In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All". Slate. Retrieved 2 February 2015. * ^ Holstein, William J. et al., "The Stateless Corporation," _Business Week_ (May 14, 1990), p. 98. Roy D. Voorhees, Emerson L. Seim, and John I. Coppett, "Global Logistics and Stateless Corporations", _Transportation Practitioners Journal_ 59, 2 (Winter 1992): 144-51. * ^ "GlobalInc. An Atlas of The Multinational Corporation" Medard Gabel & Henry Bruner, New York: The New Press , 2003. ISBN 1-56584-727-X". * ^ http://www.kb.nl/themas/geschiedenis-en-cultuur/koloniaal-verleden/voc-1602-1799 * ^ Mingst, Karen A. (2014). _Essentials of international relations_. W. W. Norton & Company. p. 310. ISBN 978-0-393-92195-3 . * ^ Mingst, Karen A. (2014). _Essentials of international relations_. W. W. Norton & Company. p. 311. ISBN 978-0-393-92195-3 . * ^ Gilpin, Robert (1975). _Three models of the future_. International Organization. p. 39. * ^ James, Paul (1983). "Australia in the Corporate Image: A New Nationalism". _Arena_ (no. 63): p. 68. CS1 maint: Extra text (link ) See also, Richard Barnet and Ronald Muller, Global Reach: The Power of Multinational Corporations, New York, Simon and Schuster, 1974, p. 30. On page 21 Barnet and Muller quote the Chairman of the Unilever Corporation as saying: “The Nation-State will not wither away. A positive role will have to be found for it.” * ^ Drucker, Peter F. (1997). _The Global Economy and the Nation State_ (PDF). Council on Foreign Relations. p. 167. * ^ _Case study: The Relationship between the Structure/Strategy of Multinational Corporations and Patterns of Knowledge Sharing within them_ (PDF). Oxford University Press. 2009. * ^ Schermerhorn, John R. (2009). _Exploring Management_. John Wiley and Sons. p. 387. ISBN 0-470-16964-8 . * ^ E., Caves, Richard (2007). _Multinational enterprise and economic analysis_. Cambridge University Press. p. 1. ISBN 9780521677530 . OCLC 272997700 . * ^ E., Caves, Richard (2007). _Multinational enterprise and economic analysis_. Cambridge University Press. p. 69. ISBN 9780521677530 . OCLC 272997700 . * ^ Jeffrey, Alex, and Joe Painter. "Imperialism and Post colonialism." Political Geography: An Introduction to Space and Power. London: SAGE, 2009. 174-75. Print. * ^ Robins, Nick. "This Imperious Company." The Corporation That Changed the World How the East India Company Shaped the Modern Multinational. London: Pluto, 2006. 24-25. Print. * ^ Robins, Nick. The Corporation That Changed the World How the East India Company Shaped the Modern Multinational. London: Pluto, 2006. Print. * ^ Royle, Stephen A. Company, Crown and Colony: The Hudson's Bay Company and Territorial Endeavor in Western Canada. London: I.B. Tauris, 2011. Print. * ^ _A_ _B_ _C_ _D_ Micklethwait, John, and Adrian Wooldridge. 2003. The company: A short history of a revolutionary idea. New York: Modern Library. * ^ Howe, Stephen. "Empire by Sea." Empire: A Very Short Introduction. Oxford: Oxford UP, 2002. 77-80. Print. * ^ _A_ _B_ Angeles, Luis. "Income Inequality and Colonialism" (PDF). European Economic Review 51.5 (2007): 1155-176. * ^ Howe, Stephen. "Empire by Sea." Empire: A Very Short Introduction. Oxford: Oxford UP, 2002. 67. Print. * ^ _A_ _B_ Jeffrey, Alex, and Joe Painter. "Imperialism and Postcolonialism." Political Geography: An Introduction to Space and Power. London: SAGE, 2009. 175. Print. * ^ Robins, Nick. The Corporation That Changed the World How the East India Company Shaped the Modern Multinational. London: Pluto, 2006. 145. Print. * ^ Howe, Stephen. "Empire by Sea." Empire: A Very Short Introduction. Oxford: Oxford UP, 2002. 78-83. Print. * ^ Bakan, Joel. The Corporation: The Pathological Pursuit of Profit and Power. New York: Free, 2004. Print. * ^ Azikiwe, Abayomi. "Burkina Faso: Masses Rise Up Against Neo-Colonial Rule." Global Research. Centre for Research on Globalization, 04 Nov. 2014. Web. 07 Feb. 2015. * ^ "Dossier about emerging-market multinationals". D+C, development and cooperation. December 2015. Retrieved 21 December 2015. * ^ Marc 'Globalization, Power, and Survival: an Anthropological Perspective', pg 484–486. _Anthropological Quarterly_ Vol.79, No. 3. Institute for Ethnographic Research, 2006 * ^ Crotty, Epstein & Kelly (1998). _Multinational corps in neo-liberal regime_. Cambridge University Press. p. 2. * ^ Library of the European Parliament Corporate tax avoidance by multinational firms * ^ Tax Justice Network Taxing corporations

EXTERNAL LINKS

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