Multinational Corporation

Abstract

The following paper analyses the impact of foreign direct investment (capital) in the economy through the means of multinational companies. The MNC's are those companies who have their business expanded into various regions of the world. The economic effects of FDI's which comes as an investment in a country, creates job opportunities and makes the economy of that country at a better level. As business firms began exploiting the new global opportunities offered through technological advancement, they reorganized and restructured in response to the challenges faced by their internationalization strategies. Organizational structures are forced to change as traditional models are unable to respond effectively, or quickly, enough to the demands of operating not only in more locations but with greater links between each location.

Table of Contents

Introduction4

Multinational corporations and foreign direct investment (FDI)5

Background6

Evolution of MNCs6

Discussion8

Foreign Direct Investment8

Theories of Foreign Direct Investment9

Economic impact of foreign investment11

Foreign Direct Investment in Emerging Economies13

Impact of Multinationals on World16

Conclusion18

Introduction

Multinational company is most often a large corporation that has established several overseas subsidiaries in several countries with a dominant strategy and is expanded around the world. After the creation of multinationals has been controversy over the various definitions we have of it, some define it as any company that keeps economic transactions on more than one country, others say this should not be limited only to holding operations outside the borders, but must also have capital and personnel from different countries. We find different types of corporations that exist that are ethnocentric firm: they target your nation and its subsidiaries are controlled by the matrix , the system is according to accounting practices used in the country of origin, there is a domain permanent parent; polycentric company: We present a decentralization in which it allows the development of the accounting practices of each of its subsidiaries which the parent expected economic returns; company geocentric: the design systems of accounting that are affordable to systems of all countries involved in it and place in search of the benefit of all, your design is done based on the systems of most developed countries and the standards international (Graham, 2006).

A multinational corporation is a company that produces economic effects in several countries. Internationalization of a company addresses five key determinants:

1.In order to seek direct access to raw materials, particularly during the colonization

2.The need to bypass certain barriers to trade; such as, production in the market where the product will be consumed in order not to be affected by tariffs on imports.

3.The search for potentials markets due to increased competition in the existing market. Moreover, once a firm adopts this strategy is likely to be imitated by competing firms.

4.The loss of a technological advantage in the domestic market may force firms to produce abroad at lower cost, in order to continue to produce profitably.

5.The search for lower labor costs

Multinational corporations and foreign direct investment (FDI)

The IM is different from a simple company engaged in international trade (exporting or importing) as part of its production process produces, including the marketing function ...