An MNC is an organisation that engages in production or service activities, through its own affiliates, in several countries, maintains control over polices of those affiliates and manages from global perspective. A business enterprise operating in several countries, but managed from only one (home) country is considered a multinational corporation.
Multinational Corporation creates jobs and wealth and improves technology in countries that are in need of such development. Major multinationals are American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW etc. While the developed countries specifically the European Union – still host the largest number of MNCs, the developing countries are home to a little less than one quarter of MNCs and they host more than half of all foreign affiliates worldwide. Significantly, most of these affiliates are in Asia, followed by Latin America and Caribbean. Many developing countries like India from these regions seem to have achieved significant economic progress over the past four decades.
Author James C. Baker defines Multinational Corporation as a company:
1. Which has a direct investment based in several countries;
2. Which generally drives 20 to 50 % or more of its net profits from foreign operations; and
3. Whose management makes policy decisions based on the alternatives available anywhere in the world. Shaikh Saleem (2009).
More specifically, a multinational corporation passes through the following stages: George A. Steiner and John F. Steiner (2003).
1. Exports products to foreign countries.
2. Establishes sales organisations abroad.
3. Licenses use of patents and technology to foreign firms that make and sell the MNC’s products.
4. Establishes foreign manufacturing facilities, but important decisions about such matters as product design, marketing and finance are made at the home office.
5. Gives foreign production facilities substantial autonomy but still reserves some important decisions for home office.
6. Decentralizes authority throughout the company so that functions at home and aboard are done by executives from different countries.
MNCs are alternatively called TNCs (Transnational Corporations), MNEs (Multinational Enterprises) and global corporations. The Term multinational corporation is most commonly used in business and academic circles. We too follow the same trend.
Corporate social responsibility is about seriously considering the impact of the company’s decision and actions upon the environment and the society. The dependence of any business on its social and ecological environment is so comprehensive that the very existences, survival and growth of any enterprises depend upon its acceptance by the society and the environment. If any business enterprises outlive its utility to the society and the environment, it has no place and reason to exist. The socio- economic obligation of business refers to its responsibility in...