1.6

• Multinational company (MNC)


  A company that operates in two or more countries
• Most multinationals are huge corporations, but a company doesn't have to be huge to become an MNC
• Reasons for companies to go multinational

  • Increased customer base
  • Cheaper production costs in less developed/developing economies
  • Global economies of scale
  • Avoidance of protectionism
  • Spread of risks
• Globalization


  The integration of local economies into one global economy where all companies have to think globally but act locally
• Relationship between multinational companies and globalization

  Multinational companies are closely related to globalization
• Impacts of globalization and multinational companies

  • Cultural diversity
  • Level of competition
  • Ability to meet customer expectations
  • Number of customers
  • Economies of scale
  • External growth opportunities
  • Sources of finance
• Impacts of multinational companies on host countries

  • Opportunities: Increased tax revenue and GDP, increased product choices, employment opportunities, integration into global economy

  Threats: Repatriation of profits, increased barriers to entry for local businesses, unemployment, reliance on global supply chain
• Some companies are wealthier than some countries based on market capitalization vs GDP