Structure and the basic of activity of the multinational corporation

The process transnationalisation is characteristic for modern economy. In it the main characters are multinational corporations.

The organizational structure of multinational corporations, as a rule, is represented by the head company and its foreign branches.

The head parent company is an administrative center of the system of enterprises of the multinational corporation. Its functions usually include decision-making on merging with other companies, purchasing new firms; forming long-term industrial, investment and financial politics of branches and corporations as a whole; controlling the finance and research and development of foreign branches, at the same time the head company should enable managers of foreign branches to make decisions independently to satisfactory the demands of consumers of the local market and according to the legislation of the host country.

The basic organizational forms of foreign branches are:

- affiliated company (subsidiary) -a company which is controlled by another one. The controlling company owns over 50% - and sometimes 100% - of the ordinary shares of the subsidiary;

- associated company (associate) - a company of which at least 20% and not more than 50% the ordinary shares is held by another company;

- the branch (branch) - a part of a large organization that deals with one particular type of work.

The management of the multinational corporation solves problems of perfection of structure of management depending on assortment of goods and services, which they offer on the world market.

The example of an ideal structure of the multinational corporation is “General Electric”, whose market capitalization in 2000 exceeded 300 billion dollars (the highest figure in the history of USA companies). It is one of the most versatile companies in the world; it offers a wide assortment of goods, including aviation engines, industrial plastic, lighting devices, power installations and many other things in different regions.

Another example of American multinational corporations is “Ford” which began its enterprise activity in Europe in the 60s on the basis of its branch in Great Britain. In the 90s this corporation carried out the development of new models, manufacture of components and assembly of machines in five European countries, having united technological chains of factories of each of these countries in.

When trying to expend, the multinational corporation uses various forms of the world market. These forms are based on contract relations and are not connected with participation in the share capital of other firms.

Thus, the modern multinational corporations are based on the theory of a firm in the organization of manufacture and selling of goods and services and they have become the largest characters in the modern world economy.

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Date: 2015-01-12; view: 1227