What is Multinational Companies?
A multinational company is the one whose area of operation is not limited to only the home country but, it performs the business activities in different countries across the globe.
In simple words, it can be said that these companies perform business on a global and international level. The head office of the Company is situated in the home country. Which controls the operations of all the branches and offices across the globe. The directions and orders are given from the central office to all the different branches and there is complete coordination among all the branches.
Features of Multinational companies
- Large Scale Operations: The basic feature of multinational companies is that their area of operations is vast. They have a big production plant installed producing a large number of products at cheaper rates. They have a large number of resources in terms of people, information, technology, and capital. Their efficiency is pretty high as they produce in bulk.
- Large Number of Branches: Another important feature of multinational companies is that they operate at a global level and have branches in different countries. Those are controlled through their centralized office situated in the home country of the company. There is full coordination between all these branches and the head office and these branches work fully at the directions of the head office.
- Huge Turnover: The amount of turnover of multinational companies is very high as it operates its business in different parts of the world. The amount of profit earned by these companies is very high due to which they are able to pay a good amount of salary to their employees. These also contribute an adequate amount in CSR activities which aims at the overall development of the country.
- Continuously Growth: Multinational companies always aim at adopting the latest and the best techniques available in the market. Their main mission is to continuously grow at high speed and always upgrade themselves. Multinational companies also doing various acquisitions and mergers from time to time for increasing their size.
- High Products Quality: The products that are produced by the multinational companies are of high quality as they are produced using the modern and best technology available in the market. Also, these companies aim at providing these high-quality products at a cheaper rate by achieving highest efficiency which is achieved through mass production.
- Large Scale Advertising: Another essential feature of multinational companies is that they invest huge amount of money in their advertisement and publicity activities. They perform the advertisement activities all over the world as per there number of branches available to keep the public informed of their products and latest offers.
- Control from Home Country: The multinational company’s control their all branches available in different countries across the globe form their central head office which is located in the home country of the MNC’s. All the directions regarding the performance and various activities for the branches in different countries are given from the central office.
Characteristics of Multinational Companies
- Large Capital Resources: Multinational Companies have a large amount of capital being invested in their business. It is because they have huge financial resources available. These companies have good image & high credibility in the market. There are a large number of investors who are always willing to invest in these businesses. These companies can easily issue equity shares, bonds & debentures in the market. Financial institutions & international banks also easily provide funds to these companies.
- Advanced Technology: These companies focus on advanced & best level of technology. Multinational Companies always focus on the quality of their products & try to meet all international standards. They aim to adopt the latest technology as soon as possible available. This will help in achieving the highest efficiency in their operations.
- Centralized location: Multinational Companies have their branches located in different countries around the globe. These have their head branch in their home country. The Head office influences the functioning of all branches. It issues rules & policies to be followed by different branches across the globe. The whole power is centralized with head offices & controls all functioning of the company.
- Product Innovation: Multinational Companies works on their R&D centers doing research & development work. These companies invest huge amount & time at their research & development centers. The main task of these centers is to develop & design new products as per market demand. It also redesigns the existing products into the new design to provide a new look. All these products are designed according to customer needs & provide better satisfaction.
- Provides Employment: There are a large number of people working in Multinational Companies all over the world. These companies provide employment opportunities to a large number of people. Global enterprises pay good remuneration to their employees. It works for the overall welfare of its employees. It helps in improving the economic conditions of the country by providing employment.
- Improves Standards of Living: These companies aim at providing better quality products at better prices. Multinational Companies have advanced technologies with which they are able to produce high-quality products. People are able to use high-quality products at cheaper prices & are easily available. This helps in raising their standard of living of peoples.
- Promotes International Brotherhood: Multinational Companies in different countries around the world. In different countries, they adopt that country’s culture & tradition. This helps in promoting cooperation among those countries. It integrates the economies of various nations with the world economy. This way it promotes international brotherhood & world prosperity and peace.
- Improves Balances of payment: These companies enable different countries in improving their balance of payments. It enables the host countries to increase their amount of exports. This way they are able to earn large foreign currencies of different countries. It helps in making the balance of payments favorable.
Conclusion of Multinational Companies
Multinational Companies have very high advertisement expenditure. Their turnover and eventually the profit is very high. These aims at providing high-quality products at appropriate prices to the customers. These companies also invest an appropriate amount of funds for the overall development of the society through their CSR activities.
Multinational Companies have a very effective role in economic development. They provide employment to a large number of peoples Worldwide. Providing them with the appropriate amount of income. Multinational companies also focus on a higher rate of efficiency. Because of their world-class and modern technologies available with them.
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