Multinationals

• Multi-national enterprises (MNEs)

  • A multinational operates in more than one country.
  • Multinational companies will have a distinct home base country and then have branches in their host countries.
  • They are a global brand.
  • They can dominate markets across many countries.
  • They greatly influence local economies.
  • They will have to deal with language barriers and cultural variations when operating in other countries.
• Benefits of Multinationals

  • To secure cheaper premises and labour, giving greater profitability.
  • To avoid or minimise the amount of tax which has to be paid.
  • They can be given grants to encourage location in a specific country.
  • Becoming larger may help minimise the risk of takeover.
  • Achieve economies of scale so reducing unit costs.
  • Avoid restrictions on imports into a country.
• Problems of operating as a multinational

  • Legislation may be different in other countries which may mean the product/service has to be altered.
  • Cultural differences will mean the organisations have to be sensitive to this when conducting their business.
  • Different languages mean that organisations have to employ specialist linguists to work with the organisation.