The rise of MNCs

MNCs stands for multinational corporation, the definition for a MNCs is a corporation or a business entity that has operations in more than one country, the usual model for this type of corporations is that they have an headquarter in one country and several branch offices in other countries, it can also be called as a Multinational Enterprise (MBE) or transnational corporation (TNC). The main reason for this model, its having the main office in the mother country and having the production company in other country where there are lower cost production to increase the companies profits and reduce the production costs.

One of the benefits of being a multinational corporation is that it has more access to other marker around the world, but there are also some problems for a multinational corporation, if the company want to enter another market, they have to take into account the cultural aspects of the country and how they are organizing the offices in that country, if they want to have a local or a foreigner managing that branch of the corporation, they also have to take into account the laws and regulation in the host country.

The company has no loyalty to the host country, they are more centered around profits and marketing of the company.

Franklin Root says that 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 some poor developed country there is a lot of opportunities for a multinational to open a branch company for the productions of their products, some governments are happy because they can create a lot of jobs in their factories for they can invest in the country, but there is no way to know what amount of labor they are going to produce and how much is the investment going to be and how much it can create changes in the host country, and it can also course corruption depending on the size and the power of the multinational corporation



http://www2.econ.iastate.edu/classes/econ355/choi/mul.htm
http://www.wisegeek.com/what-is-a-multinational-corporation.htm
http://www.bized.co.uk/learn/economics/notes/multi.htm