MULTINATIONAL
CORPORATION
A
company often becomes involved in internasional trade by exchanging goods or
services with another counntry-importing raw materials it may need for
production or exporting finished products to a foreign market. Establishing
these trade relationships is the first step in the development of a
multinational business. At this stage, however, the corporation's emphasis is
still o the domestic market. As trade expands, the corporation's dealing with
companies or people outside the " home country " of that corporation
increase.
The
corporation then begins to view the whole world as a base for production and
marketing operations. The next step in the development of a multinational
business is focusing on the world market. The company may establish a foreign
assembly plant, engage in contract manufacturing, or build a foreign
manufacturing company or subsidiary. Therefore, a multiational corporation is a
company that is primarily based in one country and has production and marketing
activities in foreign countries.
Since
World War II, multinational corporations have grown rapidly. The names and
products of many of the multinationals have become well-known in the world
marketplace: International Business Machines (IBM), Royal Dutch Shell,
Panasonic, Coca-Cola, and Volkswagen. Coca-Cola, for example, now has
operations in more than 180 countries.
A
multinational corporation operates in a complex business environment. Cultural,
social, economic, political, and technological system vary from country to
country. in order to operate successfully, a multinational company needs a
basic understanding and appreciation of the foreign business environment.
