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Questions and Answers
What percentage of revenue must a company derive from operations outside its home country to be considered a multinational corporation?
What percentage of revenue must a company derive from operations outside its home country to be considered a multinational corporation?
Which category of multinational corporation focuses on decentralized operations while maintaining a strong presence in its home country?
Which category of multinational corporation focuses on decentralized operations while maintaining a strong presence in its home country?
Which type of multinational corporation combines attributes of the other three categories?
Which type of multinational corporation combines attributes of the other three categories?
What is one key factor that has led to the development of multinational companies?
What is one key factor that has led to the development of multinational companies?
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How many companies are noted to have direct investment in foreign countries according to UN data?
How many companies are noted to have direct investment in foreign countries according to UN data?
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What is a primary function of multinational companies in international trade?
What is a primary function of multinational companies in international trade?
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How is the equity capital for a subsidiary of a multinational company usually sourced?
How is the equity capital for a subsidiary of a multinational company usually sourced?
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What role does the United Nations play in relation to multinational corporations?
What role does the United Nations play in relation to multinational corporations?
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What is one of the main advantages of establishing a free market economy at the international level?
What is one of the main advantages of establishing a free market economy at the international level?
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What is a key characteristic of how multinational corporations manage their branches?
What is a key characteristic of how multinational corporations manage their branches?
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Study Notes
Multinational Corporations (MNCs)
- MNC is a business operating in multiple countries, but managed from one home country.
- A company is considered multinational if it derives at least 25% of its revenue from operations outside its home country.
- There are four categories of multinational corporations:
- Multinational, decentralized, with a strong home country presence.
- Global, centralized, acquiring cost advantages through centralized production in areas with cheaper resources.
- International companies building on the parent corporation's technology or R&D.
- Transnational enterprises combining the previous three approaches.
- UN data shows approximately 35,000 companies with foreign investments, and the top 100 control approximately 40% of global trade.
- MNCs are involved in mass production and distribution of specific goods at an international level.
- Equity capital for subsidiaries or branches is often contributed by both the host company and the parent company.
- Management and control of branches are based on the parent company's system.
- MNCs play a significant role in removing trade barriers between nations.
- The free market model allows for easier international market entry for manufacturing, especially for developing countries.
- The world body promotes global economic activity for multinational corporations.
- The UN recognizes around 650 multinational corporations based on transactions volume above a certain level.
Examples of Multinational Corporations
- IBM Corporation (USA)
- General Electric (USA)
- Mercedes Benz (Germany)
- Coca-Cola (USA)
- PepsiCo (USA)
- Nestle (Switzerland)
- Hitachi (Japan)
- Dunlop (UK)
- Ford Motor Corporation (USA)
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Description
This quiz covers the essential concepts of multinational corporations (MNCs), including their definitions, categories, and economic impact. You will explore the various types of MNCs and gain insight into their operations across different countries. Perfect for students studying international business or economics.
