Multinational company

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A multinational company ( MNU ; English m ulti n ational e nterprises , MNE ), also known as a transnational company (English TNC), is a company that operates across borders on a direct investment basis . The term is often used synonymously with the term international company (INU), which, however, is broader because it does not cover direct investment internationalization. The organizational form of the multinational company has existed since the 19th century. The concept of the MNE is not to be confused with theHomonym from the classification of Bartlett and Ghoshal, who use the term in their classification to designate one of four characterized subtypes MNU.

term

general definition

A multinational company is generally referred to as any legally independent company ( parent company ) that has its headquarters in Germany and at least one subsidiary abroad and therefore has more than one production site.

Multinational companies are to be distinguished from companies that produce in one country and export from there. However, such companies can still be international companies . By contrast, multinational companies have subsidiaries in several countries. Direct investment is required to establish one . Hence, there is a close relationship between direct investment and multinational corporations. From this point of view, it represents a further development of the national company or a special case of the international company, whereby the further development or specialty consists in an international transfer of real capital.

Alternative definitions

In the United States, a company is considered multinational if 10% of the shares in it are already held by a foreign company.

History and development

Multinational companies have existed since the end of the 19th century (but sometimes under different names), which is primarily related to industrialization and imperialism . The importance of multinational corporations was rather minor until the middle of the twentieth century. They initially emerged in a few sectors such as the automotive industry (example General Motors , founded in 1908). The development of multinational companies was also negatively affected by the First and especially the Second World War.

However, the multinational companies became important after the end of the Second World War as a result of the ever increasing global trade . The multinational companies experienced a strong upswing, especially in the 1980s, primarily as a result of the increasing direct investment that followed.

Since then, the importance of multinational companies has continued to increase significantly due to increasing globalization. This is also proven by the following figures: At the beginning of the 1990s there were around 7,000 multinational companies, now there are around 65,000 parent companies and 850,000 associated foreign subsidiaries in all countries of the world. Furthermore, about two thirds of the flow of goods are caused by multinational companies. This shows the dominant position of multinational corporations in the world economy today .

Types

The activity of multinational companies can be divided into four main types, although in practice there are usually several types occurring at the same time:

  • Finding resources (physical resources: labor factor, human capital factor )
  • Searching for markets (reasons: market volume and growth, activity of existing customers or suppliers in new markets, adapting products to local preferences , transaction and production costs, dynamic interaction with competitors, reaction to government market intervention)
  • Search for efficiency ( economies of scale and scope , risk diversification)
  • Find strategic assets

other forms: flight investments (before regulations), support investments

Furthermore, a distinction is made between different types of multinational companies:

Classic multinational companies
These have their headquarters in the country of origin, but also work in many countries. Examples of this are Apple and McDonalds. Although these companies are achieving international success and sales, they are nonetheless strongly related to their national identity.

With regard to production, procurement and sales policies, the local subsidiaries are largely independent.

Modern multinational companies
These have become so-called transnational companies (Engl. With the growth of global competition transnational corporation , TNC ) developed. At present, many multinational corporations are such transnational, cross-border corporations.

Transnational companies tend towards global integration and identification. Your fundamental openness towards different cultures is shown by the establishment of a corporate identity . This is no longer oriented nationally, but on a globally regulated corporate culture . On the one hand, this is intended to reduce cultural intolerances in order to support pluralism . Another aspect is the development of a uniform corporate culture to ensure communication and information processing between the locations.

Ideally, the transnational company takes the form of a network organization which can no longer be specifically located geographically. Rather, these transnational corporations are becoming global corporations whose services are less and less attributable to one country. Customers should no longer identify the product with a location, but with the company itself. With this consistency, Daimler-Benz no longer focused on made in Germany since 1994 , but instead labels its world products with made by Mercedes .

In contrast to traditional multinational companies, the management commits the semi-autonomous subsidiaries to strategic corporate goals and the subsidiaries take on functional tasks. The products are adapted as far as possible to the respective local requirements (customer requests, distribution channels, availability of resources, etc.) in order to achieve advantages, which, however, are based on joint research and development of the entire company.

Theories of multinational corporations

The emergence of multinational companies basically comprises two theories, which are briefly discussed below. Detailed explanations can be found in the respective articles Motive for location of multinational companies and Motive for internalization of multinational companies .

Horizontal integration

This theory deals with the locational motives of multinational companies . Why do MNEs produce the same good in several countries?

Here are just a few examples:

  • companies want to produce goods and services of the same kind in all of their active markets, but different sales markets require differently adapted goods
  • the choice of the production location is based on the resource availability
  • the local production facilities are cheaper than in the home country due to trade barriers such as customs duties etc.
  • Reduction of transport costs: in the case of sales-oriented companies, shorter transport routes result from the production of the goods at the place of consumption; In the case of procurement-oriented companies, the number of raw material transports or the quantities of raw materials to be transported are reduced

Vertical integration

This theory deals with the internalization motives of multinational corporations . Why does one and the same company produce goods at different locations?

Here are just a few examples:

  • international transactions are cheaper to conduct in-house rather than between multiple companies
  • the technology transfer is thereby simplified
  • if produced goods and services are used as preliminary products in the production process of foreign companies, there are fewer risks within a company in terms of coordination problems and price fluctuations than between different companies (example: division of labor between parent and subsidiary)

The aim of vertical integration is primarily to use the comparative advantage of the different international production locations and to achieve efficiency advantages.

rating

advantages

The advantages of multinational companies include improved technical efficiency and faster technology transfer , especially in developing countries . The improved technologies will create new production facilities and thus jobs. This gives the developing countries the opportunity to adapt (to a limited extent) to the prosperity of the large nations.

Furthermore, a multinational company has the opportunity to use its company-specific competitive advantages in international competition. Locational advantages abroad also have positive effects, which companies without international activity cannot use. Finally, these companies have the opportunity to trade internationally directly through their organization and do not have to use the market for this.

disadvantage

What is particularly negative about multinational companies is that the host countries usually do not like their presence. They feel threatened by them and have the impression that the multinationals are exploiting the workforce because of their low pay and are destroying nature.

In addition, multinational companies are often at risk of economic crisis or political unrest in some countries. Furthermore, it is often very expensive to open up new markets in foreign countries. And there is always the risk that a market that initially appeared to be a good choice will turn out to be a bad choice in retrospect.

See also

literature

  • Paul Krugman , M. Obstfeld: International Economy. Pearson Verlag (7th edition. 2006) 9th act. Edition 2011, ISBN 978-3868941340 .
  • Klaus Werner-Lobo : The world belongs to us !: Power and machinations of the multinationals . dtv, 2010, ISBN 978-3423624527 .
  • Claus-Heinrich Daub: Global economy - global responsibility: The integration of multinational companies in the process of sustainable development. Basel 2005.
  • Christof Römer: Multinational Companies - A Theoretical and Empirical Inventory. Deutscher Institut-Verlag, Cologne 2008.
  • Klaus Werner: The new black book for brands. The machinations of the global corporations. Ullstein Verlag, new edition 2006, ISBN 3-548-36847-6 .
  • Peter Dicken: Global Shift: Transforming the World Economy. 2003.
  • Elmar Altvater , Birgit Mahnkopf: Limits of Globalization. 2002.
  • Helmut Hesse, Peter Welzel: Economic policy between social demands and economic limits. 1st edition, 1998.
  • Richard E. Caves, John Pencavel: Multinational Enterprise and Economic Analysis. 1996.
  • Udo Broll, Bernhard Gilroy: Foreign trade theory: Introduction and newer approaches. 2nd Edition. Oldenbourg, Munich 1994.
  • Hartmut Kreikebaum, Dirk Gilbert and others: organizational management of international companies. 2nd edition, 2002.
  • John H. Dunning: Multinational Enterprises and the Global Economy. 1992.
  • Eckart Koch: Globalization of the economy: About global corporations and global politics. Vahlen, Munich 2000.
  • Benedikt Köhler: Structures and strategies of transnational corporations. 2004.
  • Axel Sell: Introduction to International Business Relations. 2nd Edition. Oldenbourg, Munich 2003.

Web links

Individual evidence

  1. ↑ Transnational Corporations (TNC): What is it about? Information platform humanrights.ch , accessed on October 26, 2016.
  2. ^ A b J. H. Dunning: Multinational Enterprises and the Global Economy . 2nd Edition. Wokingham et al. 1993, p. 3.
  3. ↑ Axel Sell: Introduction to International Business Relations. 2nd edition, Oldenbourg, Munich 2003
  4. ↑ Udo Broll, Bernhard Gilroy: Außenwirtschaftstheorie: Introduction and newer approaches. 2nd edition, Oldenbourg, Munich 1994, p. 37.
  5. ^ P. Krugman, M. Obstfeld: Internationale Wirtschaft. 7th edition, Pearson, Munich 2006, p. 219.
  6. ↑ World economy and international division of labor , Federal Agency for Civic Education, Information on Civic Education, Issue 280, November 18, 2005
  7. ↑ a b see John R. Schermerhorn: Management. 8th Edition, John Wiley & Sons, USA 2005, p. 121
  8. ↑ see Eckart Koch: Globalization of the economy: About global corporations and world politics. Vahlen, Munich 2000, p. 62
  9. ↑ a b c d e f P. Krugman, M. Obstfeld: Internationale Wirtschaft. 7th edition, Pearson, Munich 2006, p. 220
  10. ↑ H. Adebahr, W. Maenning; Foreign trade and world economy, Duncker & Humblot, Berlin, 1987, p. 305
  11. ^ A b P. Krugman, M. Obstfeld: Internationale Wirtschaft. 7th edition, Pearson, Munich 2006, p. 221
  12. ↑ Hartmut Kreikebaum, Dirk Gilbert et al .: organizational management of international companies. 2nd edition, 2002, p. 54
  13. ↑ Helmut Hesse, Peter Welzel: Economic Policy Between Social Claims and Economic Limits. 1st edition. 1998, p. 251
  14. ↑ Elmar Lukas: Multinational Enterprises and Sequential Direct Investments 1st Edition, 2004, pp. 81–82