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What is Multinational Company?


Last Updated:   Category: Education    
Author: Member Level: Gold    Points: 10


This resource gives information on multinational company and features of multinational company.



Meaning:

Multinational company is the company which is registered in one country but conduct its business operations in multiple countries. Multinational companies evolved during the 19th century. First multinational company was formed in 1860 in U.S.A. At present these companies are operating worldwide.

Multinational company are not only found in USA, but also in many other countries like China, England, France, Germany, Japan, South Korea etc. These companies are doing well in India also. Multinational companies are also known as Trans-National Corporations or the International Corporations or the Global Giants. Hindustan Lever Limited, Hero Honda, Reliance Infosys, etc. are some examples of multinational companies operating in India.

Definition:


(1) According to N.H. Jacob, "A multinational corporation owns & manages its business in two or more countries."

(2) According to UNO, multinational companies means, "those enterprises which own or control production or service facilities outside the country in which they are based."

Features of Multinational Company:


(1) Formation: A multinational company is like a joint company, an incorporated association & is formed & registered under the Companies Act of respective country.

(2) Huge Capital: These companies can easily raise huge capital by way of issuing shares to general public, within & outside the country.

(3) Huge Size: Multinational company because of huge capital can easily operate its business activities massively. They run their business in billions of rupees not only in one country but in different countries.

(4) Separate Legal Status: These companies being an incorporated artificial person registered under Companies Act, enjoys separate legal status different from its shareholders.

(5) Expert Management: These multinational company are managed by high qualified & experienced professionals. These experts are appointed purely on the basis of merit, irrespective of their caste, creed, race & religion.

(6) Multiple Operations: The companies carry out multiple operations such as manufacturing, marketing, advertising, financing, research & development, technical, etc.

(7) Employment: It provides with employment opportunities to a large number of unemployed individuals in the respective countries of their operation.

(8) Promotes Standard of Living: Multinational company helps in promoting standard of living in two ways (a) by providing employment & (b) by supplying superior quality goods because these companies follow strict quality control.

(9) Centralized Control: These multinational companies have their branches worldwide. They control all its branches through head office which is situated in "Home Country" of those companies.

(10) Transfer of Resources: These multinational company transfer different resources such as advanced technology, skilled staff, professionals, raw material, etc. from advanced countries to other countries where they have other operating branches.


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