Essay on Multinational Corporations: Definition and Examples is published for informational purposes only. The free papers are not written by our writers, they are contributed by users, so we are not responsible for the content of this free sample paper. If you want to buy a quality Essay on Essay on Multinational Corporations: Definition and Examples at affordable prices please use our essay writing services offered by EssayEmpire.

One of the most important phenomena of the latter half of the 20th century in international business was the emergence of the multinational corporation (MNC). The many different definitions of MNCs usually rest on one of the following common characteristics: (a) company headquarters far removed from the country where the activity occurs, (b) foreign sales representing a high proportion of total sales, and (c) stock ownership and management that are multinational in character. Perhaps the most common definition of a MNC, however, is that it is a company that manages and controls facilities in at least two countries.

MNCs diversify their operations along vertical, horizontal, and conglomerate lines within the host and home countries. Vertically integrated MNCs produce intermediate goods in a subsidiary that are later used for the production of final goods in other countries. For example, the General Motors plant in Tonawanda, New York, produces engines to supply GM auto plants worldwide. Horizontally integrated MNCs produce basically the same or similar goods in several countries. One example is the auto manufacturer Toyota, which produces automobiles in both Japan and the United States. Conglomerated MNCs produce different or even totally unrelated goods in various countries. For example, in the 1980s the U.S. oil company ExxonMobil acquired a foreign copper-mining subsidiary in Chile in response to anticipated declines of future investment opportunities in oil and gas.

The phenomenon of MNCs is not new, instead tracing back to the late 18th century when firms like the British, Dutch, and French East Indian companies sought raw materials overseas. The modern-day counterparts of these raw material-seeking firms are the multinational oil and mining companies, as recent advances in transportation and communications technology increased the feasibility of global production, enabling MNCs to grow rapidly over the past 60 years.

Direct foreign investment usually allows the formation of MNCs, although their existence does not necessarily reflect a net capital flow from one country to another. MNCs can raise money for the expansion of their subsidiaries in the host country rather than in the home country. Furthermore, a good deal of two-way foreign direct investment occurs among industrial countries: U.S. firms expand their European subsidiaries and at the same time European firms expand their U.S. subsidiaries.

Among the major factors that influence firms' decisions to go global are (a) appropriation of raw materials, (b) reduction in costs, mainly labor costs, (c) search for new markets and consequently for demand, (d) circumventing trade restrictions such as import tariff barriers, and (e) taking advantage of government policies offered by the host country, particularly relatively lower taxes.

The three largest MNCs worldwide in 2006 were ExxonMobil, with headquarters in the United States and revenue of $339.9 billion; Wal-Mart, with headquarters in the United States and revenue of $315.6 billion; and Royal Dutch Shell, with headquarters in the Netherlands and revenue of $306.7 billion.

References:

1) Brooks, Stephen G. 2007. Producing Security: Multinational Corporations, Globalization, and the Changing Calculus of Conflict. Princeton, NJ: Princeton University Press. 2) Chandler, Alfred D. and Bruce Mazlish, eds. 2005. Leviathans: Multinational Corporations and the New Global History. Cambridge, England: Cambridge University Press.

3) Feldstein, Martin, James R. Hines, Jr., and R. Glenn Hubbard. 1995. Taxing Multinational Corporations. Chicago: University of Chicago Press.

Free essays are not written to satisfy your specific instructions. You can order a term paper, research paper or custom TOPIC at our site which offers professional essay writing services. Get your high quality custom paper at relatively cheap prices. EssayEmpire is the best solution for those who seek help in essay writing related to TOPIC and other relevant topics.