Multinational Corporation - MNC

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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.