Common characteristics of Multinational Company

Common characteristics of Multinational Company

Common characteristics of Multinational Company

A multinational company is one which is incorporated in one country (called the home country); but whose operations extend beyond the home country and which carries on business in other countries (called the host countries) in addition to the home country. It must be emphasized that the headquarters of a multinational company is located in the home country.

Neil H. Jacoby defines a multinational company as follows: “A multinational corporation owns and manages a business in two or more countries.”

  1. World Wide Operation

The multinational companies extend their operation to two or more countries. They establish parent office in one country and extend branches, subsidiary, and affiliation to other countries.

  1. Advanced Technology

Multinational companies invest a huge amount of money on research and development of the latest technology. Therefore transfer advanced technology to developing countries through subsidiaries and branches.

  1. High Efficiency

Advanced techniques are used are for multinational companies. So, manpower can give well training which increases the efficiency of manpower. Due to this cause, multinational companies can provide a large volume of quality products at a cheaper price.

  1. Ownership and control

The ownership of such company is shared by both parent company and branch companies as per their capital investment. However, parent company manages and controls the operation of its branches and subsidiary through trademark, technology, and patent right.

  1. Marketing superiority

It is a large organization which has an international name and fame. It has a good network worldwide for the distribution of goods.

  1. Professional Management

An MNC employs professionally trained managers to handle huge funds, advanced technology, and international business operations.

  1. Aggressive Advertising and Marketing

MNCs spend huge sums of money on advertising and marketing to secure international business. This `is, perhaps, the biggest strategy of the success of MNCs. Because of this strategy, they are able to sell whatever products/services, they produce/generate.

  1. Oligopoly Powers

Oligopoly means power in the hand of some few companies only. Due to their giant size, the MNC dominate position in the market. They join hands with big business houses and give rise to a monopoly. They also take over other firms to acquire huge power and improve market share.