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Multinational Corporation

A multinational or transnational corporation is one which extends the area of operations beyond the country in which it is incorporated. Its headquarters are ocated in one country and it carries on operations in its home country and also in a number of foreign countries known as host countries. For instance, Coca Cola is a company registered in the U.S.A. and it has production and marketing facilities in many countries of the world. Some other popular multinational corporations include (U.S.A.), Ponds (U.S.A.), Brooks Bond (U.K.), Sony (Japan), Suzuki (Japan), Cadbury (U.K.) Proctor and Gamble (U.S.A.), GEC (U.K.), Gillette (U.S.A.).

According to Leonard Gomes, “A multinational corporation controls production facilities in more than one country, such facilities having been acquired thorough the process of foreign investment”. Thus, an MNC operates in many countries simultaneously and the production and marketing facilities are acquired through direct foreign investment in host countries. However, a company that is engaged only in exporting its products to so many countries can’t be called a multinational. Firms that participate internal business, however large they may be solely by exporting or by licensing technology are not multinational enterprises.”

Terms such as ‘international corporation’, ‘multinational corporation’, translational corporation’ and ‘global multination’ are so commonly used that it is necessary to draw some distinct between these terms. A company with manufacturing operations (or service operations) in at least one foreign country may be regarded as an international corporation. However, multinational implies maturational operations of more significance than this, as indicated in the definitions of MNC given above, such as direct investment in other countries and a considerable share of the total business being in foreign countries.

“Multinational companies are usually organized around national headquarters, from which international control is exercised – they still have a national identify, even through their subsidiaries may not always care to allow that identity to obtrude in the markets they serve. “A transnational corporation is a multinational in which both ownership and control r dispersed internationally. There is no principal domicile and no one central source of power. Examples of transnational corporations include Royal Duch, Shell and Unilever.

The term global corporation is often used to mean more or less the same thing as the transnational corporation. But according to some marketing experts, a global corporation is one which views the entire world as a single, homogeneous market which should be catered to by globally standardized products. However, this definition has not got universal acceptance.

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