A multinational corporation (MNC) is a company that operates in its home country as well as in other countries around the world. It is usually a large corporation incorporated in one country that produces or sells goods or services in various countries. The following are some common characteristics of multinational corporations:
- They maintain a central office located in one country, which coordinates the management of all its other offices, such as administrative branches or factories.
- They conduct business in two or more countries.
- They make significant investments in a foreign country, such as buying and selling licenses in foreign markets.
- They import and export goods and services.
- They maintain production and marketing operations in different countries.
Multinational corporations can have a positive economic effect on the countries in which they operate. However, some believe outsourcing U.S. manufacturing to a foreign country has a negative effect on the U.S. economy. Investing in a multinational corporation is a way to add international exposure to a portfolio. It is important to note that a multinational corporation is different from a global business, which has facilities in many countries and regions worldwide.
