Large companies that are dedicated to the production of goods or services and that have branches in several countries are known as multinational companies. This type of company is characterized by its international expansion and its global dimension. Multinational Company
What is the fundamental requirement for a company to be a multinational?
For a company to be considered transnational or multinational, 10% of its parent company’s capital must be invested in a foreign subsidiary. According to international criteria, a multinational company is constituted by a parent company located in a certain country and governed by its own legislation, but which can be implemented in other countries through direct investments , without the creation of local companies. Multinational Company
These companies are private in nature and are economically supported by investors and shareholders.
They are multifaceted and versatile companies that usually operate economically in several lines: financial speculation, production of goods, international trade , services, etc.
They have a business strategy based on displacement, that is, the search for territories where labor is the cheapest possible and where labor legislation is more beneficial to their interests. Multinational Company
The most common economic sectors are: energy, new technologies and communication
These companies are associated with large oligopolies and monopolies. That’s why some of them are a threat to the free market. Because they have a high level of production, they have a lower cost for each product; this means that its potential competitors (small and medium-sized companies) cannot offer the same prices and thus disappear. Multinational Company
Multinational companies use state-of-the-art technology and thus can create high quality products at a good price compared to smaller companies.
They have great financial capacity, that is, their access to credit is higher than that of an average company.
The characteristics of these companies make their power not only economic, but also have a political and social influence .
From a historical point of view, the first multinational companies took their first steps with the Second Industrial Revolution , in the 19th century, and after the Second World War they began to consolidate themselves in the scenario of the global economy.