Multinational Corporations (Mncs) In The Global Economy

I. Introduction

Multinational Corporations (MNCs) in the global economy in these recent years has become the most important actors in doing international businesses, foreign investments, and world trades. MNCs plays an important role in determining the diplomatic relations between states. How the MNCs entering the host countries are also being considered to expand their market base. Commercial diplomacy and the diplomatic assistance as a part of MNCs activities also considered as one of the most important factors in determining the successful of the MNCs. In this paper, I would like to discuss and explain more about what MNCs is, its activities, its commercial diplomacy activities, and its diplomatic assistance.

II. Content

Multinational Corporations

Equity Mode means the mode that can be done through a Foreign Direct Investment and allows the organizations to be closer to the customers. In Equity Mode, the MNCs are protecting their specific assets and looking for a more permanent and larger commitment to a foreign market. Equity Mode’s types are (1) Joint Venture: allows the parties to share the cost, risks, partner’s assets and profit; and (2) Wholly Owned Subsidiaries: a company with local operations owned which is fully controlled by foreign companies. Foreign subsidiaries may be formed through direct investment in operations or through the purchase of shares of the company concerned. By the direct investment, it allows the investors to have more direct control over the operations. The second mode that can be chosen by the MNCs to enter the foreign market is Non-Equity Mode. Non-Equity Mode means it is collaborative because it is necessarily for them to involve a local partner and it allows investors to enter overseas markets with minimal investment and reduced risk. Non-Equity mode are especially popular among consumer-services organizations such as hotels and restaurants. Non-Equity Mode’s types are (1) Exporting: the process of selling goods and services produced in one country to other countries - can be direct and indirect exporting; (2) Licensing: when the organizations charge a fee or royalty for the use of their

On its placements and operations in the other countries, the MNCs will implement various innovative and complex business operations, especially on their profits distribution. The MNCs’ interest in the host country can be defined through the domestic subsidiary’s share of the company’s operation. Some MNCs such as IBM, Coca-Cola, Nestle, Ford, and the others have access to several production and markets so that they can easily expand their market base.

III. Conclusion

IV. References

"Equity Modes." Entry Strategies into Foreign Markets. Accessed October 24, 2016. http://entrystrategies.weebly.com/equity-modes.html.

Hanks, Gerald. "Compare & Contrast Equity & Non Equity Modes for International Business." EHow. Accessed October 24, 2016. http://www.ehow.com/how_6747391_compare-equity-modes-international-business.html.

"Non Equity Modes." Entry Strategies into Foreign Markets. Accessed October 24, 2016. http://entrystrategies.weebly.com/non-equity-modes.html.

"What is a Multinational Corporation (MNC)? Definition and Meaning." BusinessDictionary.com. Accessed October 24, 2016.