Critique of the Video on Multinational Corporations

Critique of the Video on Multinational Corporations

What is a multinational corporation?

A multinational corporation (MNC) is a company that operates production facilities or delivers services all over the world.

This definition defines the scope of MNCs. An MNC could be a service or manufacturing concern, however, the condition is that, the firm should be operating in more than one country. Another similar name is given to MNCs which is Multinational Enterprises (MNE).

2- How did MNCs evolve to their current status of significance and dominance in the world of today?

The existence of Multinational Companies has been present for a long time now. However, their structure and nature of business has changed and evolved with time. Before the World War II and even before the great depression, the Multinational companies were mostly involved in the natural resource sector like, petroleum, mining, and agriculture. The most companies in those times were Exxon, Mobil, which were involved in petroleum business and aluminum companies like, Anaconda and Alcoa are worth mentioning. After the World War II multinational corporations have focused their attention to manufacturing concerns and more precisely to high tech manufacturing. This is the reason the companies like Philips and IBM have become the giants of the world in post war period.

Another change that has been visible in the nature and structure of these MNCs is that they have started shifting focus to horizontal integration from vertical integration. Vertical integration is the performance of all the different activities by a single firm but located in different countries. A typical example is of Exxon. Exxon is involved in extraction of oil from different countries like, Nigeria, Venezuela, and Saudi Arabia. However, its refineries are located in Texas. This means that different operations are performed under the umbrella of single parent firm; however, many nations become a part of it before completing the operations. Horizontal integration means the performance of same activities in each country. A typical example is of Coca Cola. Coca Cola establishes its entire bottling operations and distribution in each of the country like Nigeria, Venezuela, and Saudi Arabia. So the change that has taken place over the years is the shifting of companies operating in different nations form vertical integration to horizontal integration.

3-MNCs are regarded as the vehicles of globalization. What role do MNCs play in the expansion of international trade in a world increasingly becoming a global village?

MNCs play a major role in the international trade and account for many of the reasons why the world is becoming a global village. MNC being operational in different countries involve in international trade more often. An MNC in order to complete its products and services have to operate in different countries, Boeing Company, in order to complete a single airplane orders part from different countries specialized in particular aspect of operations. These MNCs in order to standardize their production facilities often involve certain components that are produced in a single place and then exported around the ...