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Business Environment and Law-Global Trends In Business And Management

Multinational Corporations (MNC)- Global Trends In Business And Management

   Posted On :  06.05.2018 09:37 pm

The dynamics of the business environment fostered by the drastic political changes in the erstwhile communist and socialist countries and the economic liberalization across the world have enormously expanded the opportunities for the multinational corporations, also known by such names as international corporation, transnational corporation, global corporation (or firm, company or enterprise) etc.

Multinational Corporations
 
 
The dynamics of the business environment fostered by the drastic political changes in the erstwhile communist and socialist countries and the economic liberalization across the world have enormously expanded the opportunities for the multinational corporations, also known by such names as international corporation, transnational corporation, global corporation (or firm, company or enterprise) etc.

 The rapidity with which the MNC’s are growing is indicated by the fact that while according to the world investment report 1997, there were about 45000 mnc’s with some 280000 affiliates. According to the world investment report 2001, there were over 63,000 of them with about 822,000 affiliates.
 
Only less than 12 % of these affiliates were in the developed countries. China was host to about 3.64 Lakh of the affiliates (i.E., More than 44% of the total) compared to more than 1400 in india. The MNC’s accounts for a significant share of the world’s industrial investment, production, employment and trade.
 

Definition And Meaning

 
 
“A corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment, firms that participate in international business, however large they may be, solely by exporting or by licensing technology are not multinational enterprises.”
 
The various benchmarks sometimes used to define “multi nationality” are that the company must:

  •             Produce (rather than just distribute) abroad as well as in the headquarters country
  •             Operate in a certain minimum number of nations (six for example)
  •             Derive some minimum percentage of its income from foreign operations (e.G., 25%)
  •             Have a certain minimum ratio of foreign to total number of employees, or of foreign total value of assets
  •             Possess a management team with geo-centric orientations.
  •             Directly control foreign investments (as opposed simply to holding shares in foreign companies).
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