Point out some characteristics of Multinational Corporations (MNCs).

Characteristics of Multinational Corporations (MNCs):

Giant Colossal Size: The business (sales volume) and asset holdings of multinational corporations runs in multiple billions. To exemplify, General Electric (GE) and General Motors globally known US giants. Similarly, Royal Dutch Shell and Mitsui are respectively UK/Netherlands and Japan based organizations. In fact, the asset holdings of some of the multinational corporations exceeds the GDP of certain countries.

International Presence/Operations: A multinational corporation has wide (global) presence in various host countries, which operate via parent corporation based in the home country. The host country may have a branch or subsidiary in the parent country and is called ‘affiliate’. The parent company control over the affiliate may range from 20 to up to 100 percent.

Oligopolistic Structure: Due to large size and widespread presence, these companies are unable to control the market completely through merger or takeover. Thus these companies become oligopolistic in nature.

Shared or Transfer of Resources: In a multinational corporations, various resources are collectively transferred, in form of so called package. These include raw material, machinery, equipment, technical know-how, manpower to enlist a few.

Growth: Multinational corporations are marked by rapid expansion and growth, due to presence of business opportunities in host countries and wage differences between parent and host country.

Some of the other features of MNCs are:

  • Economic dominance.
  • Investment in developed countries
  • Increase in global trade-volume.

Tags: B.Com

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