Modern multinational international corporations

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

A large role in the modern economy is assigned to large international corporations. The largest of them have finances that exceed the national income of a number of states. The largest modern international corporation is Exxon Mobile. She owns $336 billion.

Basic information

For quite a long time, according to the point of view of UN specialists, formations with an annual turnover of more than $100,000,000 were recognized as international economic corporations. They had to have at least 6 branches in different states. At the moment, the percentage of sales that are not held in the territory of the country of residence is taken into account. If this indicator is taken into account, Nestle will be recognized as the largest international transnational corporation. After all, 98% of its sales are carried out outside the residence.

Special Features

In order for a firm to be recognized as a modern international transnational corporation, it must have a number of special features. Thus, it must necessarily have a direct impact on the development of the division of labor throughout the world. It is necessary thatbranches were located in different countries, and the subjects were represented by citizens of different states.

Historical digression

According to a rather paradoxical version, the predecessor of international companies, corporations was the Knights Templar. He appeared in 1118. This opinion appeared because the Templars performed the functions of a bank, engaged in the implementation of international payments. It was indeed the largest organization.

Later there was a classic example of international national corporations - the "East India Company". It is noteworthy that there were two of them - one English and one Dutch. Later, representative offices appeared in other countries. The emergence of international corporations of this kind dates back to the 17th and 18th centuries.

From the very beginning, these giant firms differed in that the capital in them moved regardless of the situation in the resident country. That is, their activity was independent.

They also produced all over the world with branches everywhere. Foreign operations accounted for at least 25% of their total number. The staff was represented by many nations.

Varieties

Companies of this kind are usually divided into four varieties. First, they are transnational firms. Secondly, multinational. There is also an international variety and a global one.

Transnational firms are a whole complex of enterprises of different directions with a centraloffice in the resident country and branches around the world. The owner is considered to be a representative in the resident country. The leadership in this case is centralized, but there is also a certain amount of independence and representation, albeit provided in a limited manner.

A prominent representative of such enterprises is the American Singer & Co. It was founded in 1851. At the same time, sewing machines of this company began to be sold most actively abroad. As a result, the share of foreign sales exceeded the national one. The owner began building factories in other countries, starting in Scotland. It is foreign operations that are the main factor determining the activities of a multinational company.

A multinational is an international corporation that brings together national enterprises of some countries. A classic example of this is Royal Dutch/Shell. The firm was opened in 1907. At the same time, it is important to take into account that in the course of its activities, an international corporation may well change, and it can be attributed to different types in different periods of time.

An international company is a monopoly that has overseas assets. As a rule, trading takes place outside the founding country.

With the development of international corporations, one more type of them began to be distinguished, the most modern - global ones. They appeared only at the end of the 20th century. As a rule, the largest car manufacturers are global, information, representatives of the banking and oil industries meet here. The term "global corporations" was first used in 2006. Socharacterized enterprises that aimed at producing on a global scale.

This variety includes firms that distribute their operations among branches located in different states. As a rule, these are network enterprises, they are connected with each other by many agreements. Such giants have their own domestic market, their own corporate ethics. The global corporation includes enterprises from almost all countries of the world.

Benefits

Due to the special structure, international corporations save on costs. They have qualified professionals all over the world. If before the growth of enterprises could be hindered by state borders, then there are no such barriers for the development of international corporations. The founders stepped over them. The arena of activity of such giants is the world.

Production structure

As a rule, international corporations employ foreign workers. But most often this is done on a short-term basis. Foreigners are often brought in for a specific project.

Integration in such firms can be horizontal. In this case, organizations in many countries produce the same product line or provide the same services. For example, McDonald's took this path.

If the integration is vertical, the international corporation concentrates production in a limited number of states. However, the product is used during production in other institutions that are part of the giant. This is what Adidas does.

If a firm is diversified, it means that it includes national institutions that are both vertically and horizontally integrated. They are located in different states. This is the device of the world famous Microsoft company.

Reasons for appearance

The main reason that provokes the emergence of such formations is the internationalization of production, its development to such an extent that it is necessary to expand interstate borders. The expansion of production is carried out very actively, and it becomes necessary to turn national enterprises into transnational ones. The outflow of capital is the main factor in the emergence of international financial corporations.

The first such firms appeared in the most developed countries, when production began to cover neighboring, less successful countries. It was about finding cheap labor, access to new resources and expansion.

The emergence of international financial corporations was also due to the fact that the owners, when they open, have many advantages in trade. For example, barriers between states cease to be a hindrance, politics affects the activities of giants to a much lesser extent. For multinational companies, branches are an external springboard, from which the internal markets of new states are captured.

The next most important reason for the formation of such formations is the receipt of excess profits by the owners. The presence of competition has led tofirms began to concentrate production along with capital throughout the world.

Initially, as a rule, companies leave the borders of one state, wanting to develop a new market. Thanks to the opening of branches, an important issue is being resolved: tariff and non-tariff restrictions are being removed.

It would hardly be possible to form transnational corporations without the participation and assistance of the state. It is he who, as a rule, encourages the actions of those who are on the verge of opening such a company. The formation of an international corporation is preceded by the conclusion of many agreements between different countries. Many states have special support programs for companies that are going to enter the foreign market.

As transport infrastructure develops around the world, new global enterprises are being created. The communication system is getting better, the outflow of capital is growing, and these factors influence the emergence of new international corporations.

By country

Remarkable is the fact that one fifth of all global enterprises in the world are in the United States. 91 out of 100 international corporations are Western European, Japanese and American. Thus, most of the capital is in the hands of these countries.

At the beginning of the 21st century, a new trend has emerged - an increase in the number of largest enterprises in developing countries. Thus, the list of the world's largest international corporations was supplemented by a Mexican company. In total, in the list of 100 largest formations of this genus, there are 6 Asianenterprises. The first international company from developing countries was on the list of the largest in 1995. It was the Korean company Daewoo.

Structure by industry

About 65% of all multinational companies are engaged in manufacturing, 26% provide services, and 9% belong to the extractive industries and agriculture. Statistics show that the share of enterprises operating in the service sector is steadily growing. At the same time, the share of the extractive industry is decreasing. The same trend is typical for firms engaged in agriculture.

Positive Impact

It should be borne in mind that transnational corporations have a very significant impact on the world order. And in their presence there are both disadvantages and advantages for the development of the world economy. For example, these giants help distribute resources more efficiently among different states. They also help spread the latest services and goods across various countries, increase competition, which leads to new innovations and, consequently, faster development of mankind.

Sometimes international corporations are involved in the fight against the corruption component of society. This makes competition even more effective. However, regarding this point, experts express several points of view. For example, the Royal Dutch/Shell code says that a company will never take part in cases related to corruption.

Negative influence

At the same time, such a massivethe phenomenon could not but have a negative impact on the situation in the world. Since global organizations have the strongest impact on the world around them, both their positive and negative effects are manifested quite clearly.

For example, international corporations intervene in industries that were originally considered state-owned. This is considered a disadvantage, since large organizations of this kind are able, for the sake of their interests, to oppose the effective policy of the state in the field of the economy. Also, transnational corporations are able to quickly suppress novice competitors, having leverage on the country's policy. And the presence of global firms sometimes leads to the fact that the host country suffers serious losses.

Multinational corporations are largely free and independent, capable of breaking official laws. It is usually easy for affiliates to circumvent legal regulations and hide real income in order to get rid of the burden of taxation. And then the host state suffers a budget shortage, because less and less money goes to the treasury. At the same time, an international corporation can be a monopoly, setting excessively high prices, it has a strong influence, often such a formation infringes on the interests of states.

As a rule, large enterprises of this kind do not seek to take care of the environment, labor resources of the country in which they open a branch. Often they harm the environment in the host state, create conditions for the deterioration of working conditions. Some use forbidden in civilizedcountries, child and female labor in the course of their production.

List of world giants

It is noteworthy that at the moment, almost everything from the basket of a typical consumer is produced by only a dozen international corporations. Whatever a person buys - Mars chocolate, Bounty, Sprite and dozens of other varieties of drinks, coffee, the profit goes to the same largest formation.

Established in 1903, Kraft Foods accounts for approximately 35% of the global processed cheese market. It is the second largest packaged food company in the world. It is represented in 155 states. In the Russian Federation, the company's products are represented by the brands Vozdushny, Jacobs, Alpen Gold, Estrella and a dozen other well-known brands.

The biggest scandal of recent years is connected with the name of this international corporation. So, in China in 2008, approximately 54,000 children were seriously ill, some of them died due to the use of products of this brand. Melamine was found in many batches. After this incident, a number of stamps from this company were discontinued.

Founded in 1866, Nestle has also become a market leader in food and pharmaceuticals. Annual turnover as of 2011 was approximately 68 billion euros. In Russia, the company is represented by the following brands: Bon Pari, Russia is a Generous Soul, Purina ONE, Nesquik and many other well-known brands.

The scandal associated with this transnational corporation broke out in the 80s of the 20th century. Then the company launched the sale of baby food in developing countries.countries. These were formulas that, when breastfeeding was stopped and consumed, resulted in mothers losing milk.

Thanks to this, the purchase of mixtures has become a necessary necessity for many mothers. Since nutritional instructions were given exclusively in English, in third world countries where there was no quality water, mothers diluted mixtures in dirty water. And this quickly led to the death of the baby. As a result, protests broke out.

Another undoubted leader in the world market is Procter & Gamble, founded in 1837. At the moment, all products of Myth, Tide, Naturella, Head and Shoulders, Max Factor, Duracell batteries and dozens of other brands belong to this giant, which was once a small firm opened by soap makers. It is believed that this corporation is guilty of draining vast swamp areas and burning many forests due to the creation of palm plantations. After all, it is from palm oil that many of the company's products are created. In the feed from this company in 2007, melamine was discovered, because of which thousands of dogs and cats in the United States died. It would also be a huge scandal. It should be noted that the company conducted a serious investigation, publishing the results of the examination. An active campaign is being waged against the firm because of its experiments on animals.