Multinational Company
A multinational company is a large corporation, created and registered in a main country , but with subsidiaries spread throughout the world , which allow it to trade internationally and globally. This implies that they can buy the raw material in one country, industrially process it in another and sell their final products in a third location, as they see fit.
Although multinational companies are typical of the globalization of the second half of the 20th century and the first half of the 21st , their direct antecedents come from the 16th and 17th centuries, when European mercantilism prompted imperial powers to compete for world resources and install regimes. colonies on other continents.
Thus, the Muscovy Trading Company (“Muscovy Company”) founded in London in 1555 to trade between Russia and England can be considered an important precedent . However, multinational corporations proper appeared in the 19th century, and they were the first to set up their factories in foreign countries where labor was cheaper.
Multinational companies proliferated after World War II , especially those from the United States, and since then they have become a major global economic player.
Characteristics of a multinational company
Multinational companies are characterized by the following:
- They are global economic players, that is, they have a presence in different regions of the world , and trade their goods in international markets, having a global vision of their businesses at all times.
- They produce merchandise in large quantities and the place where they are made is not usually the same place where they are sold.
- They are important investors in research, technology , advertising and marketing , and industrial organization, and their activities often have an impact on the development of the populations where they settle.
- They handle enormous capital , even higher than the GDP of certain countries , which makes them very influential financial institutions.
- Their headquarters are often located in the country of origin or in highly industrialized nations. From them the entire company is controlled.
According to their productive structure, they can be classified into three types:
- Horizontally integrated multinational companies . When their production facilities are located in different countries, but they produce the same goods or very similar goods.
- Vertically integrated multinational companies . When they focus on the production of intermediate goods that later serve as supplies for final production in other countries.
- Diversified multinational companies . When they have international production centers in which very dissimilar elements are produced.
Importance of multinational companies
Multinational companies represent an important sector of the world economy and have become in many cases an unstoppable industrial force. Many of them manage huge investment capital that allows them to control international markets and even influence local or regional politics , but at the same time sponsor large social, ecological and cultural campaigns. So they embody to a great extent many of the virtues and great dangers of the globalized economy .
Examples of multinational companies
Some examples of multinational companies are:
- McDonald’s . It is one of the largest and most successful fast food companies in the world. Of American origin, it is present in 118 countries, under the franchisee model.
- Google . It is one of the great corporate giants born in the United States at the end of the 20th century. Google provides through multiple computer products a diverse series of digital services and technological gadgets, with thousands of servers and data centers on the planet.
- Samsung . It is the largest conglomerate of South Korean multinational companies in the technological, financial, construction and biotechnology sectors . Founded in 1938 as an import-export company, its global success in the 1990s was fueled by cell phone and telematics technologies.
- Microsoft Corporation . It is one of the great American computer companies of the 20th century. Microsoft is headquartered in Redmond, Washington, but has a large presence and impact in the global marketplace, thanks to its many divisions dedicated to creating and marketing computing products and services.
- Walmart . It is an American chain of discount stores and warehouse clubs started in 1962, which currently has 11,000 stores under 65 brands in 28 different countries, and more than 2 million total employees.
- Nike . It is an American company dedicated to the manufacture and sale of sportswear, which has more than 70,000 employees in different countries. It is among the main sports sponsors in the world.
- adidas . It is a German company founded in 1949 that is dedicated to the manufacture and sale of textiles, specifically footwear and sportswear. It has offices all over the world (and more than 57 million employees) and its products are among the most consumed on the planet.
- Toyota . It is a Japanese automobile manufacturing company that was founded in 1993 and is headquartered in Japan, but has branches and factories in different countries. It is one of the most famous automobile brands in the world, considered in 2019 as the second largest existing automobile manufacturer.
- The Coca-cola Company . It is a company based in Atlanta, Georgia, which is dedicated to the production and sale of sugary soft drinks, and its most important product is Coca-Cola. Founded in 1886, it is a sponsor of the Olympic Games, the FIFA World Cup and has subsidiaries in numerous countries on all continents.
Criticisms and arguments in favor of multinational companies
Multinational companies are the subject of numerous criticisms and also arguments in favor. The main of them are:
| critics | Arguments in favor |
|---|---|
| They are exploiters of cheap labor from the poorest countries, where often there are not even decent labor laws. | They generate large amounts of employment for the locals of the country where they settle. |
| They promote the concentration of world wealth, by competing unfairly with local companies and producers, and directing the profits towards their country of origin. | They invest large amounts of resources in research and international advertising, which in turn fosters development and competitiveness. |
| Often they are responsible for catastrophic damage to the ecosystem, without taking responsibility. | They are important sponsors of sporting, cultural or social events on an international and global scale. |
| They promote global inequality, by marketing their products in the first world and not in the country where they are manufactured. | They promote the transfer of technology and industrial knowledge to the poorest countries. |
Difference between multinational and transnational company
There is no universal academic consensus regarding the difference between a multinational company and a transnational company . Some sources state that both terms refer to the same thing, but that “multinational” is used as a friendlier term and that it suggests that the company belongs to the entire planet, when the only truly multinational is the market in which the company markets its products.
However, other sources state that the difference between one and the other has to do with the international expansion model: transnational companies appeal to the franchisee and the creation of local and autonomous “copies” of itself, while the multinational company it consists of an orchestra of productive elements distributed throughout the world.
