Overview

A multinational corporation (MNC) is usually a large corporation incorporated in one country which produces or sells goods or services in various countries.^[4] The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies.^[5]

• Importing and exporting goods and services
• Making significant investments in a foreign country
• Buying and selling licenses in foreign markets
• Engaging in contract manufacturing—permitting a local manufacturer in a foreign country to produce their products
• Opening manufacturing facilities or assembly operations in foreign countries

MNCs may gain from their global presence in a variety of ways. First of all, MNCs can benefit from the economy of scale by spreading R&D expenditures and advertising costs over their global sales, pooling global purchasing power over suppliers, and utilizing their technological and managerial know-how globally with minimal additional costs. Furthermore, MNCs can use their global presence to take advantage of underpriced labor services available in certain developing countries, and gain access to special R&D capabilities residing in advanced foreign countries.^[6]
The problem of moral and legal constraints upon the behavior of multinational corporations, given that they are effectively "stateless" actors, is one of several urgent global socioeconomic problems that emerged during the late twentieth century.^[7]
Potentially the best concept for analyzing society's governance limitations over modern corporations is the concept of "stateless corporations". Coined at least as early as 1990 in Business Week, the conception was theoretically clarified in 1992: that an empirical strategy for defining a stateless corporation is with analytical tools at the intersection between demographic analysis and transportation research. This intersection is known as logistics management, and it describes the importance of rapidly increasing global mobility of resources. In a long history of analysis of multinational corporations we are some quarter century into an era of stateless corporations - corporations which meet the realities of the needs to source materials on a worldwide basis and to produce and customize products for individual countries.^[8]
One of the first multinational business organizations, the East India Company, arose in 1600.^[9] After the East India Company, came the Dutch East India Company, founded March 20, 1602, which would become the largest company in the world for nearly 200 years.^[10]
The main characteristics of multinational companies are:

• In general, there is a national strength of large companies as the main body, through the way of foreign direct investment or acquire local enterprises, established subsidiaries or branches in many countries;
• It usually has a complete decision-making system and the highest decision-making center, each subsidiary or branch has its own decision-making body, according to their different features and operating to make decisions, but its decision must be subordinated to the highest decision-making center;
• MNCs seek markets in worldwide and rational production layout, professional fixed-point production, fixed-point sales products, in order to achieve maximum profit;
• Due to strong economic and technical strength, with fast information transmission, as well as funding rapid cross-border transfer, multinational companies have, so it has stronger competitiveness in the world;
• Many large multinational companies have varying degrees of monopoly in some area, due to economic and technical strength or production advantages.