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Multinational corporation



Multinational Corporation is defined by Leonard Gomes, as, “a corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment. Firms that participate in international business, however large they may be, solely by exporting or by licensing technology are not multinational enterprises”.

MNC is explained by ILO in its report (Multinational Enterprises and Societal Policy as ”the essential nature of the multinational enterprises lies in the fact that its managerial headquarters are located in one country (home country) while the enterprises carries out operations in a number of other countries (host countries) as well.

MNC is defined by Jacques Maisonrogue, President of IBM World Trade Corporation as, “an MNC as a company that meets five criteria (i) it operates in many countries at different levels of economic development, (ii) its local subsidiaries are managed by nationals, (iii) it maintains complete industrial organisations, including R & D and manufacturing facilities in several countries, (iv) it has multinational central management and (v) it has multinational stock ownership.


Alan C. Shapiro, in his book Multinational Financial Management has defined MNC as, “a company engaged in producing and selling goods or services in more than one country. It ordinarily consists of a parent company located in the home country and at least five or six foreign subsidiaries, typically with a high degree strategic interaction among the units”. 


James C. Baker has defined MNC as. “a company (i) Which has a direct investment base in several countries, (ii) which generally derives from 20 percent to 30 percent or more of its net profits from foreign operations and (ill) whose management makes policy decision based on the alternatives available anywhere in the world”.


Different scholars have used different attributes to characterize the MNE Such attributes include the geographic scope of the firm’s value chain (that is, the sequence of value-adding activities or functions within the firm), management styles, ownership of productive assets, communality of strategy formulation and implementation worldwide, and organizational structure:

-:- A distinction is made between “global” and “multi domestic” MNEs based on coordination and geographic configuration of the firm’s value chain. MNEs with high coordination among and concentrated configuration of the different parts of the value chain are called “global”, while those with low coordination among and dispersed configuration of the different parts of the value chain are called “multi domestic”.

-:- A distinction is made on the basis of management styles in the MNE ­geocentric (world oriented), polycentric (host-country oriented), or ethnocentric (home-country oriented). A firm’s true degree of multi nationality is measured by the extent to which its top executives think geometrically.


-:- The MNE is defined as an organisation that owns productive assets in “­different countries, and has common strategy formulation and implementation across borders.

-:-The MNE is defined as any firm that “owns” outputs of goods and services originating in more than one country.

-:- A distinction is made based on organisational structure: “global” (tightly controlled with a centralized hub structure), “multinational” (decentralized federations), and “transnational” (structures that permit retaining local flexibility while simultaneously achieving global integration).

MNE is defined as “any enterprise that carries out transactions in or between two sovereign entities, operating under a system of decision making permitting influence over resources and capabilities, where the transactions are subject to influence by factors exogenous to the home country environment of the enterprise. “ 


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