Accounting

Multinational Corporations (MNCs): an Overview

Multinational corporations (MNCs) are defined as companies engaged in some form of international business. Their managers do international financial management, which involves international investment and funding decisions intended to maximize the value of MNC. The goal of these managers is to maximize the value of their company, which is the same goal pursued by managers employed by strict domestic companies.

Initially, the company may only try to export products to a specific country or import supplies from foreign manufacturers. Over time, however, many of these companies recognized additional foreign opportunities and eventually established overseas subsidiaries. DowDuPont, IBM, Nike, and many other U.S. companies own more than half of their assets overseas. Many tech companies, such as Apple, Facebook, and Twitter, are expanding overseas in an effort to capitalize on their technological advantages.

Some businesses, such as ExxonMobil, Fortune Brands, and Colgate-Palmolive, typically generate more than half of their sales abroad. Many smaller U.S. companies like Ferro (Ohio) generate more than 20 percent of their sales in overseas markets. Likewise, some smaller U.S. private companies such as Republic of Tea (California) and Magic Seasoning Blends (Louisiana) generate a substantial percentage of sales in nondomestic markets. In fact, 75 percent of U.S. companies that export products or services have fewer than 100 employees.

International financial management is important even for companies that do not have an international business. These companies must recognize how their foreign competitors will be affected by exchange rate movements, foreign interest rates, labor costs, and inflation. Such an economy.  Characteristics can affect the cost of production and the price policy of foreign competitors.

Sources:

  • Madura, J. (2020).¬†International financial management. Cengage Learning.
  • Madura, J., & McCarty, D. E. (1989). Research trends and gaps in international financial management: a note.¬†Management International Review, 75-79.
Silvia Dewiyanti, S.E., M.Si., Ak., CA., CSRA, Cert.DA.