An Enterprise, which allocates company resources without regards to national frontiers, but is nationally based in terms of ownership and top management. It comprise of three words multi, national and corporations. These words together means that corporations which have established their offices to increase the interaction either by their own efforts or by collaborations with other companies. Thus Multinational represents highest level of overseas involvement and is characterized by global strategy of investment, production and distribution. MNCs are enterprise which owns or controls production or service facilities outside their home country.
Classification of MNC by behavior
1.Ethnocentric: These are the type of MNCs which have strong orientation towards home country. This means that home country people are considered as superior and allocated all key posts.
2.Polycentric: Just opposite to Ethnocentric polycentric type of MNCs has strong orientation towards host country where few key people are nationals and remaining are from the host country.
3.Regiocentric and Geocentric: These MNCs have their concentration in whole world and they make selection for best employees whether they are from host country or home country it does not matter.
Characteristics of MNCs
1.Single Managerial Authority control
2.Worldwide Integration, better profitability
4.Close Coordination in parents & affiliates
Benefits of MNCs
1.Training of domestic manpower
2.Increase pace of economic development
3.Promote better products at lower costs
4.Employment to labour
5.Increase in production, GDP, exports
6.Increase in Governments revenues
Criticism of MNCs
1.Increase gap between rich & poor countries
2.Misallocate & misuse scarce natural resources
3.Home country loses jobs when MNC overseas
4.Employ transfer pricing
5.Aggravate Unemployment in developing countries
6.Competition from MNCs local Industry
Entry Strategies used by MNCs