MULTINATIONAL ENTERPRISES MULTINATIONAL ENTERPRISES



MULTINATIONAL ENTERPRISES

Introduction

Multinational companies are industrial companies, commercial or financial which are presented in different countries. The modern multinational enterprise emerged with U.S. direct investment in Europe in the sixties of the twentieth century. This phenomenon was taking place in the world when multinational enterprise joined European and Japanese companies. Today, in countries such as China, India, México, India, Mexico, Brazil and Southeast Asia, have emerged various multinationals.

Discussion

The emergence of multinational corporations has its origin in international trade. It began in the late nineteenth century, stagnated in the period of the two world wars, and rises steeply from the fifties. The period running from 1867 to 1914, multinational companies started, with the Glasgow installation of the first overseas factory of the Singer Company. The period from 1914 - 1950 is considered as a break period and partnership among existing companies, all as a result of the first and second world war(Mohsen & Sharmin 2003 PP 171).

There are many reasons for the emergence of multinational enterprises; one of these is the need for companies to constantly increase their production, not only with the ultimate aim of increasing profit, but with the intermediate goal of reducing unit costs.

For this and other reasons the company is forced to expand their markets, including creating them abroad. Such capacity is not only imposed by the necessity or advisability of producing and selling more, but for many other reasons such as following a major competitor, as well as for demographic reasons, as is the case in a U.S. company that is required to multinationalise as its domestic market is saturated and therefore tends to decrease in proportion to demographic others. It has been said that the need to invest abroad is offensive, when its motive is to seek more markets and profits, and defensive when it is due to the desire to retain certain markets, or at least a certain proportion of the total market(Hooker, Kolk & Madsen 2005).

Forms of Multinational Enterprises

In the beginning, it used three forms of organization to structure the business concentration:

The Trust met the same sector companies controlled by one or two big companies to monopolize the exploitation of a product and be able to regulate its price.

The cartel met to companies not merged, but which are associated to reach common agreements on supplies, processes and prices, and thus avoid competition between them.

The holding, however, was a holding company or bank that controlled most of the actions of various industrial and commercial enterprises.

The globalization of the economy and development of financial capitalism in recent years of the twentieth century led to fry the latter the most widely spread form. To avoid disturbing powers, control markets and dictate prices to its convenience, the majors all they can enhance the process of concentration and accumulation of various companies. Just a few firms, either directly or through its subsidiaries, have come to dominate global production in some sectors forming oligopolies authentic.

Example of Multinational Expansion

In 2003, Nike sold goods worth of 10,700 ...