The characteristics of a multinational corporation include its engagement in exporting, joint ventures, global strategic partnerships and the use of license agreements. It combines cheap labor and high-skill staffing strategies to create and maintain foreign affiliates with the goal of globalizing its business endeavors.Continue Reading
Multinational corporations employ multiple approaches as they venture into the international marketplace. Through exporting, multinational corporations penetrate foreign markets by selling their products to foreign brokers or agents. Once the products are sold, the corporation loses control over the way the product is marketed and utilized. Although this approach is considered low risk on account of its low investment costs, the way that the product is handled can hurt a corporation's image and potential for further business in foreign regions.
Through license agreements, a multinational corporation allows foreign companies to manufacture and sell its products. Additionally, the agreement allows for the use of brand names and symbols, which allows the corporation more control over the product and its manufacturing process. By completely committing to a multinational approach, a corporation can establish joint ventures or global partnerships to exert full control over the manufacturing process and exchange access to local markets with its business partners.
When a multinational corporation vertically integrates a subsidiary it fully owns, it gains complete control over the manufacturing, distribution and retail elements. This requires a significant investment and entails high levels of risk, but it creates an opportunity to deliver a global product and establish global market domination.Learn more about Corporations