Role of Multinational Corporations

MULTINATIONAL CORPORATION

What is a Multinational Corporation (MNC)?

∂ is a corporation or an enterprise that manages production or delivers services in more than one country

∂ also known as international corporation, multinational enterprise (MNE) or transnational corporation (TNC)

Multinational Corporation

∂ …a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries. (International Labour Organization)

2 Main Characteristics of MNCs

∂ Large size

∂ Their world wide activities are centrally controlled by the parent companies

Roles of Multinational Corporation

∂ Filling Savings Gap filling the resource gap between targeted or

desired investment and domestically mobilized savings.

∂ Filling Trade Gap relates to filling the foreign exchange or

trade gap.

Roles of Multinational Corporation (cont.)

∂ Filling Revenue Gap filling the gap between targeted

governmental tax revenues and locally raised taxes

∂ Filling Management/Technological Gap MNCs not only provide financial resources

but they also supply a “package” of needed resources including management experience, entrepreneurial abilities, and technological skills.

Roles of Multinational Corporation (cont.)

∂ Other Beneficial Roles The domestic labor may benefit in the

form of higher wages. The consumers benefit by way of lower

prices and better quality products. Investments by MNCs will also include

more domestic investment. MNCs expenditures on research and

development (R&D), although limited is bound to benefit the host country.

Factors Influencing Organizations

Internal and External Forces

∂ Macro Environmental Factors External factors which are beyond the

control of the organization∂ Micro Environmental Factors

Internal factors that can be controlled to an extent

Factors close to the company that have a direct impact on the organizations strategy

Macro Environmental Factors

SOCIOCULTURAL FACTORS- Population changes- Rising educational levels- Norms and values- Social responsibility

TECHNOLOGICAL FACTORS-Demand-Production processes-Evaluating technological changes

Macro Environmental Factors (cont.)

POLITICAL AND LEGAL FACTORS-Attitudes toward business-Legislation-Levels of government influence

ECONOMIC FACTORS-Balance of payments-Business cycle-Income distribution-Transfer payments-Monetary and fiscal policies

Macro Environmental Factors (cont.)

INTERNATIONAL FACTORS-Economic associations-Intergovernmental relations-Cultural differences

Micro Environmental Factors

CUSTOMERS EMPLOYEES SUPPLIERS SHAREHOLDERS MEDIA COMPETITORS

Thank You very much!