Multinational Corporations,MNCs, Multinational Companies

Wed, 09/14/2011 - 10:11 -- Umar Farooq

In the World’s 100 largest economic entities twenty nine 29 are Multinational Corporations (MNCs). Among these entities, Exxon Mobile is on 45th which is sandwiched between the economies of Pakistan and Chile.

Multinational Corporations MNCs have grown faster than national economies in recent years in 1990 they accounted for only 3.5 percent of the world’s GDP, but by 2000 this figure had risen to 4.3 percent. The scope of Multinational Corporation activity has increased over the past two decades as states have deregulated their economies by removing barriers to foreign investment, and functions traditionally performed by state have been devolved to corporations through privatization, for example in the telecommunications and energy sectors.

In the natural resource sector, oil companies such as BP, Shell and Exxon Mobil operate wherever oil and gas are to be found, BP alone operates in more than 100, countries. Mining companies such as Anglo American and Rio Tinto extract gold, copper and other minerals in Namibia, South Africa, Zimbabwe, India, Russia, Brazil, Chile, Peru and many other countries. Supermarkets such as Asda, Tesco and Sainsbury's, clothing retailers including Marks & Spencer and Next, and electronics manufacturers such as IBM, Hewlett Packard and Dell source their products from around the world T-shirts and prawns come from Bangladesh, shirts and laptop computers from China, flowers from Kenya, wine from South Africa and trousers from Turkey Marks & Spencer alone sources its goods from over 70 countries.

Multinational Corporations were present before the Second World War but especially after World War II its activities increased. They have now important role in political and development of the third world countries. They are source of transferring modern technology to the developing nations. Without their active cooperation the pace of the development in the Least Developed Countries (LDCs) would be unbearably slow.

What are Multinational Corporations (MNCs)?

These are the corporations that has its head quarters in one state and operates in other countries; these corporation are called subsidiary MNCs, works independently and do not alloy the participation of host country.

Definitions of Multinational Corporations (MNCs)?

  • “The combination of companies of different nationalities connected by means for share holding”.
  • “To a remarkable extent, the ownership and control of both productions and distributions outside the communist countries.” (C.S BURCHILL)
  • “MNCs are those companies that control facilities in two or more countries” (MENIS).
  • “These are transnational corporation takes the advantage of the policy making of another country" (SERANTH)

Definitions of MNCs with Regards to its Contributions

  • “The key institution in the world economy facilitating the transfer of prosperity from the industrial countries to the developing countries” (Melvyn)
  • “MNCs are those corporation that transfer technology from the developed countries to the less developed countries” (PERVAIZ)
  • If a company works in so many countries with the help of two or more countries it is called MNCs.”

Advantages of Multinational Corporations (MNCs)

  1. Globalization
  2. Increase world dependency
  3. No war
  4. Integration of world mind
  5. Mixture of whole world culture
  6. Transfer of technology
  7. Economic growth
  8. Job opportunities
  9. Multinational Corporations MNCs produce more and better products
  10. World modernization
  11. Multinational Corporations MNCs brings foreign exchange
  12. Multinational Corporations MNCs take economic risk

Disadvantages of Multinational Corporations (MNCs)

  1. Threat to host-state interests
  2. Integration is impossible
  3. Exploit host countries
  4. Changed necessities into luxuries
  5. Destruction of cultural values and social values
  6. Participation in host country politics
  7. Changed People Minds
  8. Population
  9. Destroyed natural resources
  10. Effected local business
  11. Creating Gap
  12. To demolished the culture and traditions of the host countries
  13. Transfer of over price technology