The world has now become a global village. Full bodies are now converting into single markets. The barriers of trade have been reduced to a greater extend. Factors of production are not confined to the single boundary of a nation. Most companies who have the vision to go globally are expanding their businesses across their national borders. The number of multinational companies in the global economy is increasing rapidly. Geographical barriers in most countries have reduced to achieve the economies upscale derived from transportation, labor and capital. Companies are moving across their boarders to gain strategically. These companies can as well be referred to as multinational enterprise, transitional enterprise or transitional corporation. They have however faced a lot of criticism over the lack of ethical standards. This means that they evade ethical law. In this paper, we are going to discuss the analysis of multinational companies.
Multinational companies are corporations that carry out their businesses in several nations. Their main aim is to maximize their profits by opening as many branches as they can globally. A company can become multinational by opening up production and retail facilities in another state. A company also can start a wholly owned company in another state. This is refered to as a subsidiary company.
Another way that a company can become multinational is by merging with another company that has production and retail facilities already but in a different state. Multinational companies have their headquarters located in a particular nation. In today’s world of Globalization, these cooperation have played a significant role in the development of home countries where they operate from. Foreign direct investment of these companies brings along with them production technologies, managerial services and many other business practices. The problem of unemployment has been solved by these companies with the many opportunities created. A company should be considered multinational if it gets 25 percent or more of its revenue from operations carried on away from the home country. A multinational corporation is one which is registered as a company in one country but carries business in various other countries. It does this by coming up with its factories, branches or subsidiary units in other different countries. Such a company may produce goods or arrange services in one or more countries and sell these in the same or other countries.
Examples of these companies include Microsoft which is a software company that has its headquarters in New Delhi, Nokia corporations, PepsiCo, Reebok international limited, Sony, Tata consultancy services, Hyundai Motor Company, Coca Cola, Sony Corporation, McDonald’s just to mention but a few. All these corporations have production, marketing and other facilities in several countries. Their volume of sales, profits and value of assets held are usually very large. They have set up their branches and subsidiary units in their countries as well as other countries. They are controlled from the headquarters of their companies in the home country.
To ensure the effective role of these organizations, the following measures must be taken in host countries; MNCs should be allowed to enter in high-tech industries only for example telecommunications and Petrochemicals. They must bring direct foreign investment so that there is an improvement in the balance of payment. These companies should as well not be allowed to kill small domestic enterprises but must offer a healthy competition to domestic firms.
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