What is a Multinational Company (MNC)?
Daily Biz Tips
Published at : 20 Oct 2020
What is a multinational company?
Unlike any local business that operates only in a specific part of a country, a
multinational operates in more than one country, although it has its headquarters in a specific country.
How does it work?
Setting up and running a multinational is not an easy task. Besides the already known diseconomies of scale that tend to constantly knock at your door, as a multinational you are also being faced with the challenges that occur as a result of different language, legal and cultural barriers. These companies have benefited greatly from the process of globalization and the support offered by local governments. Some of the most popular multinationals generate revenue that is larger than many countries` entire economies.
Why would a business aim to operate in more than one country?
Some of the top reasons why a company would aim to become a multinational are:
- closer to the markets they are interested in
- lower costs
- government support
- avoid protectionism policies
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