“Global Corporation”

A global corporation, also known as a global company, is coined from the base term
‘global’, which means all around the world. It makes sense to assume that a global
company is a company that does business all over the world.
How do multinational corporations work?
 The structure and operations of multinational corporations may vary depending on the
industry they’re in, the size of their organization and the goods or services they
produce.
 Some authorities define a multinational corporation as any organization that has at
least one foreign branch, others think companies need to generate at least one-
quarter of their revenue from foreign countries to earn this title.
Here are some characteristics of typical Multinational Corporation:
 Large number of assets: To become a successful MNC, a company needs a high
number of assets
 Broad networks: Many MNCs have a broad network that stretches to many places on
the globe. A company operates each branch to manage manufacturing, production
and sales operations.
 Constant growth: A successful MNC may experience constant growth. These
corporations might try to expand their impact by placing one or more branches in the
same location, or by placing several branches in various countries.

Four Types of Multinational Corporation

1. Decentralized Corporation
 Decentralized corporations may have multiple offices, facilities and assets in foreign
countries, but they still maintain a powerful presence in their home country. Typically,
decentralized corporations don't have a central headquarters. Each country they
operate in may have its own management structure. This helps the corporation scale
quickly while ensuring it adheres to the regulations in each geographic area.
2. Global Centralized Corporation
 A centralized global corporation may have a head office in its home country, where
the chief executive officer and other senior leaders reside. These corporations often
look for opportunities to increase revenue by purchasing cheap resources and
materials from foreign countries. The same management team typically handles both
domestic and international decisions. They also oversee all global operations.
3. International Division
 Corporations may keep their domestic operations separate from their international
operations by creating an international division. This new division oversees all the
corporation’s operations in foreign countries. While this structure can help companies
reach a wider audience and make decisions that appeal to different cultures, it can
also be challenging to maintain a cohesive brand image.
4. Transnational Enterprise
 A transnational enterprise may exist within a parent -subsidiary relationship. This allows
them to access many of the parent corporation's resources, such as their research and
development (R&D) team, even though they may operate in separate countries.
Typically, the parent company oversees the transnational enterprise and makes
decisions on its behalf. While they typically follow a centralized leadership structure,
this can vary from one corporation to the next.

Advantages of becoming a Multinational Corporation

 Organizations that become multinational corporations may experience several
benefits, including a faster growth rate. They can also have a positive effect on the
international economies they conduct business in by creating more jobs. Becoming a
multinational corporation may also benefit your organization by:
 Meeting consumer demand in foreign countries
 Reducing shipping and transaction
costs
 Increasing your market share abroad
 Lowering production and labor costs
 Decreasing taxes
 Expanding product variety
 Increasing revenue margins
 Growing your customer base
 Competing within international
markets
 Improving efficiency

Disadvantages of becoming a Multinational Corporation

 Decreased innovation: Often, the most innovative developments come from small,
nimble companies rather than large multinational corporations that have secured a
significant share of the market. To prevent your organization from becoming too
comfortable with the status quo, invest in R&D.
 Depleted environmental resources: Expanding operations to foreign countries often
requires land development, which can deplete natural resources. Be mindful of your
organization's impact on the environment and look for more sustainable alternatives,
such as repurposing preexisting buildings.
 Complicated regulations: Operating in multiple countries can make it more
complicated to comply with the regulations in each area. Make sure you invest in a
skilled legal team and experienced accountants who are familiar with the
requirements of each country you operate in to mitigate legal risks.

Tips for deciding whether to become a Multinational Corporation

 Research other countries. Before you expand your business, research other countries
thoroughly. Learn about their tax structure, regulations, cost of living and political
environment.
 Consider your competitors. Make a list of competitors who operate in the same region.
Then analyze opportunities to increase your market share by expanding your
operations.
 Network with business leaders. Reach out to other business leaders in your network
who oversee multinational corporations to see if they have any advice. Ask questions
about their experience to help you prepare.
 Review your finances. Analyze your profit margins and forecasted revenue to
determine whether you have the resources necessary to open another location in
another country. You can also research the costs of opening a new branch or facility
to create a budget.
Develop a strategic plan. Collaborate with other executive leaders and key
stakeholders in your company to develop a strategic business plan. Outline what
resources you would need to expand your operations, what your revenue streams are,
how you can market your services and what the potential risks are to help you visualize
what steps your company needs to take to become an MNC.