Loading the player...

What is a 'Multinational Corporation - MNC'

A multinational corporation (MNC) has facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they coordinate global management. Very large multinationals have budgets that exceed those of many small countries.

BREAKING DOWN 'Multinational Corporation - MNC'

Multinational corporations are sometimes referred to as transnational corporations.

Nearly all major multinationals are either American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of multinationals say they create high-paying jobs and technologically advanced goods in countries that otherwise would not have access to such opportunities or goods. On the other hand, critics say multinationals have undue political influence over governments, exploit developing nations and create job losses in their own home countries.

Largest Multinationals

The 10 largest multinational corporations in the world, as of 2015 revenue, are Wal-Mart ($485.65 billion), Sinopec ($433.31 billion), Royal Dutch Shell ($385.63 billion), PetroChina ($367.85 billion), Exxon Mobil ($364.76 billion), BP ($334.61 billion), Toyota Motors ($248.95 billion), Volkswagen ($244.81 billion), Glencore ($209.22 billion) and Total ($194.16 billion).

Wal-Mart has operations in 28 countries, including over 11,500 retail stores that employ over 2.3 million people internationally. There are a number of advantages to establishing international operations. Having a presence in a foreign country such as India allows a corporation to meet Indian demand for its product without the transaction costs associated with long-distance shipping. Corporations tend to establish operations in markets where their capital is most efficient or wages are lowest. By producing the same quality of goods at lower costs, multinationals reduce prices and increase the purchasing power of consumers worldwide.

A trade-off of globalization, or the price of lower prices, is that domestic jobs are susceptible to moving overseas. Data from the Bureau of Labor Statistics (BLS) shows that between 2001 and 2010, the United States lost roughly 33% of its manufacturing jobs (5.8 million jobs). This data underscores how important it is for an economy to have a mobile or flexible labor force, so that fluctuations in economic temperament aren't the cause of long-term unemployment. In this respect, education and the cultivation of new skills that correspond to emerging technologies are integral to maintaining a flexible, adaptable workforce. A few of the fastest-growing industries in the United States are peer-to-peer lending platforms, medical marijuana stores, telehealth services and motion capture software development; together, these industries are replacing many of the American jobs that were displaced by overseas manufacturing.

  1. Look Thru

    A complex provision defined in section 954(c)(6) of the U.S. ...
  2. Institutional Investor Index

    A measure of sovereign debt risk that is published biannually ...
  3. Earnings Stripping

    Earnings Stripping is a commonly-used tactic by multinationals ...
  4. Jobs Growth

    Jobs growth is a figure measured by the Bureau of Labor Statistics ...
  5. Foreign Investment

    Flows of capital from one nation to another in exchange for significant ...
  6. Closed Corporation

    A closed corporation is a company whose shares are held by a ...
Related Articles
  1. Trading

    How U.S. Firms Benefit When The Dollar Falls

    When the greenback is weak, smart investors will invest in multinational companies to benefit.
  2. Managing Wealth

    You'd Be Rich If You Were Taxed Like a Multinational

    Oh, the money you'd save. Something to think about as you fill out your own taxes, which aren't getting a tax holiday from Uncle Sam anytime soon....
  3. Tech

    The Trump Effect on Large Tech Multinationals (MSFT)

    While Mr. Trump's "America first" philosophy resonated with his voters, the exclusionary implication may pressure multinational firms.
  4. Managing Wealth

    Evaluating country risk for international investing

    Investing overseas begins with determining the risk of the country's investment climate.
  5. Investing

    Countries With The Lowest Unemployment Rates

    A high U.S. unemployment rate may not be as restrictive as you think. Find out where the jobs really are.
  6. Investing

    Diageo First Victim of UK's New Overseas Tax Bill

    Piles of overseas cash puts the issue of multinational tax avoidance to the forefront.
  7. Trading

    Is the Strong Dollar Hurting U.S. Retail?

    The value of the U.S. dollar has strengthened considerably through 2015.
  8. Investing

    Global Energy: 3 Key Industry Players (SNP, XOM)

    Examine the stocks of some of the most important publicly traded companies in the critically important market sector of energy.
  9. Financial Advisor

    These Are the Benefits of Investing in Wal-Mart (WMT)

    Understand how Wal-Mart operates and what makes it a good company despite current stock performance. Learn the top four benefits of investing in Wal-Mart.
  10. Insights

    A Look Into Foreign Direct Investment Trends

    Foreign direct investments play an important role as an indicator of a healthy economy in terms of economic growth and long-term capital movement.
  1. How many nations must a company trade in to be considered a multinational corporation?

    Learn about the conditions a company has to meet to be considered multinational, and find out when investing in multinational ... Read Answer >>
  2. Are all multinational corporations also large cap companies?

    Learn about the differences between multinational corporations and large-cap companies, and discover the most important features ... Read Answer >>
  3. What multinational corporations operate in the former Soviet Union?

    Learn about the sectors in which multinationals operate in the former Soviet Union, and find out which features attract them ... Read Answer >>
  4. What is the purpose of a repatriated tax break, and why is it so controversial?

    The repatriated tax break gives U.S. multinational corporations a one-time tax break on money earned in foreign countries. ... Read Answer >>
  5. What can a multinational company do to minimize exposure to political risk?

    Political risk is the risk that a country will make political decisions that have adverse effects on corporate profits. Learn ... Read Answer >>
  6. How does globalization impact comparative advantage?

    Learn how comparative advantage is becoming increasingly relevant due to globalization and how this has affected both advanced ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center