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Transnational corporations
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CONTENTS
Introduction
Chapter I. Theoretical aspects of the multinational corporation functioning
1.1 Maintenance, structure and the basic types of activity of the multinational corporation
1.2 Advantages and disadvantages of politics of the multinational corporation
Chapter II. The role of the multinational corporation of the USA in the world economy
2.1 The operation of multinational corporations of the USA in Russian
Conclusion
Bibliography
Appendix
Introduction
The modern economy is moving towards the creation of uniform economic space where the basic subjects of economic relations are no longer countries, but multinational companies and their alliances. Thus, the obvious trend to their integration, to what the wave of the international mergers and absorption testifies is observed.
The basis of all multinational firms is made up of American companies. The number of workers and employees who are engaged in overseas branches is enough to tell that, is equal to half of American employees engaged in the manufacturing industry.
The international giants have deeply taken root into economic structure of developing states and it is, certainly, reflected in the strategy of multinational corporations. Owing to similar changes American multinational corporations bring certain corrective amendments to the strategy, but, nevertheless, constantly and purposefully export the working capital. So, this practice deserves the closest attention with the purpose to work out effective recommendations to form domestic multinational corporations for further functioning in the world economy.
Chapter I. THEORETICAL ASPECTS OF FUNCTIONING AND DEVELOPMENT OF THE MULTIONATIOL CORPORATION
1.1 Maintenance, 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.
1.2 Advantages and disadvantages of politics of the multinational corporation
Actively participating in the processes of international manufacture on the basis of the traditional international division of labor, the multinational corporation has created its own intrafirm international manufacture on the basis of modernized international division of labor, taking into account developing markets. This intrafirm variant of the international manufacture has become the core of modern international corporations.
The organization of the intrafirm international manufacture gives the multinational corporation a number of advantages:
1) to use benefits of the international specialization of manufacture in different countries separately;
2) to use tax, investment and other the privileges, given by countries to foreign investors as much as possible;
3) to maneuver loading of capacities, adapting the production programs according to the world market;
4) to use affiliated companies as a jumping-off place for further expansion on developing markets.
Marking the advantages of functioning of the multinational corporation in the system of the world economy, it is necessary to tell about their negative influence on the economies of those countries in which they function. Experts specify:
- counteraction to economic policy of those countries, where the multinational corporation carries out its activity;
- infringement of the state laws.
- multinational corporations really remain a source of some the negative social consequences connected with egoistic motives of their activity.
Political and economic value of transnational corporations is so great, that in historically foreseeable time they will remain one of the important factors of influence strengthening of industrially developed countries in many regions of the world.
Chapter II. The role of the multinational corporation of the USA in the world economy
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