MULTINATIONAL CORPORATIONS

        A company often becomes involved in Internasional trade by exchanging goods or services with another country, importing raw materials it may need for poduction or exporting finished products to a foreig market. Establishing these trade relationships is the first step in the development of a multinational business. At this stage, however, the corporation’s emphasis is still on the domestic market. As trade expands, the corporations dealings with companies or people outside the “home country”  of that corporation increase.

       The corporation then begins to view the whole world as a base for production and marketing operations. The next step in the development of a multinational business is focusing on the world market. The company may establish a foreign assembly plant, engage in contract manufacturing or build a foreign manufacturing company or subsidiary. Therefore, a multinational corporation is a company that is primarily based in one country and has production and marketing activities in foreign countries.

          A multinational corporation operates in a complex business environment. Cultural, social, economic, political and technological system vary from country to country. In order to operate successfully, a multinational company needs a basic undrestanding and appreciation of the foreign business environment.