I. What is a Multinational Corporation (MNC)?

A multinational corporation (MNC) is a company that operates in its home country, as well as
in other countries around the world. It maintains a central office located in one country,
which coordinates the management of all its other offices, such as administrative branches or
factories.

It isn’t enough to call a company that exports its products to more than one country a
multinational company. They need to maintain actual business operations in other countries
and must make a foreign direct investment there.

Perusahaan multinasional atau PMN adalah perusahaan yang berusaha di banyak negara;
perusahaan ini biasanya sangat besar. Perusahaan seperti ini memiliki kantor-kantor, pabrik
atau kantor cabang di banyak negara. Mereka biasanya memiliki sebuah kantor pusat di mana
mereka mengkoordinasi manajemen global.
Perusahaan multinasional yang sangat besar memiliki dana yang melewati dana banyak
negara. Mereka dapat memiliki pengaruh kuat dalam politik global, karena pengaruh
ekonomi mereka yang sangat besar bagai para politisi, dan juga sumber finansial yang sangat
berkecukupan untuk relasi masyarakat dan melobi politik.

Karena jangkauan internasional dan mobilitas PMN, wilayah dalam negara, dan negara
sendiri, harus berkompetisi agar perusahaan ini dapat menempatkan fasilitas mereka (dengan
begitu juga pajak pendapatan, lapangan kerja, dan aktivitas eknomi lainnya) di wilayah
tersebut. Untuk dapat berkompetisi, negara-negara dan distrik politik regional seringkali
menawarkan insentif kepada PMN, seperti potongan pajak, bantuan pemerintah atau
infrastruktur yang lebih baik atau standar pekerja dan lingkungan yang memadai.

PMN seringkali memanfaatkan subkontraktor untuk memproduksi barang tertentu yang

mereka butuhkan.
Perusahaan multinasional pertama muncul pada 1602 yaitu Perusahaan Hindia Timur
Belanda yang merupakan saingan berat dari Perusahaan Hindia Timur Britania.

II. Characteristics of a Multinational Corporation

The following are the common characteristics of multinational corporations:

1. Very high assets and turnover

To become a multinational corporation, the business must be large and must own a huge
amount of assets, both physical and financial. The company’s targets are high, and they are
able to generate substantial profits.
2. Network of branches

Multinational companies maintain production and marketing operations in different countries.

In each country, the business may oversee multiple offices that function through several
branches and subsidiaries.

3. Control

In relation to the previous point, the management of offices in other countries is controlled by
one head office located in the home country. Therefore, the source of command is found in
the home country.

4. Continued growth

Multinational corporations keep growing. Even as they operate in other countries, they strive
to grow their economic size by constantly upgrading and by conducting mergers and
acquisitions.

5. Sophisticated technology

When a company goes global, they need to make sure that their investment will grow
substantially. In order to achieve substantial growth, they need to make use of capital-
intensive technology, especially in their production and marketing activities.

6. Right skills

Multinational companies aim to employ only the best managers, those who are capable of
handling large amounts of funds, using advanced technology, managing workers, and running
a huge business entity.

7. Forceful marketing and advertising

One of the most effective survival strategies of multinational corporations is spending a great
deal of money on marketing and advertising. This is how they are able to sell every product
or brand they make.

8. Good quality products

Because they use capital-intensive technology, they are able to produce top-of-the-line
products.

III. From Ethnocentric to Geocentric Orientation:

In the 1950s and 1960s, MNCs adopted an ethnocentric outlook; that is, the orientation of the
foreign operation was based on that of the parent company. The modern MNC has a
geocentric orientation.

This simply means that the whole organized is treated as an interdependent system operating
in many countries. In other words, the orientation of the MNC is truly international and goes
beyond a narrow nationalistic view point.

IV. A company goes international for various reasons:

(1) Firstly, the MNC can sell its products in the vast global market.

(2) Secondly, it can raise money for its operations throughout the world.

(3) Thirdly, they are able to establish production facilities in countries where labour cost is
low and raw materials are abundant in supply. In fact, global firms have greater access to
various natural resources and raw materials than domestic firms. This enables them to carry
on production most effectively and efficiently.

(4) Finally, MNCs can employ efficient managers by being able to recruit the most
technically qualified and managerially efficient people from the whole world.

V. Reasons for Being a Multinational Corporation

There are various reasons why companies want to become multinational
corporations. Here are some of the most common motivations:

1. Access to lower production costs

Setting up production in other countries, especially in developing economies,

usually translates to spending significantly less on production costs. Though
outsourcing is a way of achieving the objective, setting up manufacturing plants in
other countries may be even more cost-efficient.
Due to their large size, MNCs can take advantage of economies of scale and grow
their global brand. The growth is done through strategic manufacturing/service
placement, which allows the corporation to take advantage of undervalued services
across the globe, more efficient and inexpensive supply chains, and advanced
technological/R&D capacity.

2. Proximity to target international markets

It is beneficial to set up business in countries where the target consumer market of

a company is located. Doing so helps reduce transport costs and gives
multinational corporations easier access to consumer feedback and information, as
well as to consumer intelligence.

International brand recognition makes the transition from different countries and
their respective markets easier and decreases per capita marketing costs as the
same brand vision can be applied worldwide.

3. Access to a larger talent pool

Multinational corporations are also known to hire only the best talent from around
the world, which allows management to provide the best technical knowledge and
innovative thinking to their product or service.

4. Avoidance of tariffs

When a company produces or manufactures its products in another country where

they also sell their products, they are exempt from import quotas and tariffs.

VI. Growth of MNCs:

As the world economy is opening up with a fall in regulatory barriers to foreign investment,
better transport and communications, freer capital movements, etc., international companies
are finding it easier to invest where they choose to cheaply, and with less risk.

Moreover, the developing countries no longer consider the presence of MNCs to be

synonymous with a loss of their sovereignty. It is now realized that MNCs are merely a part
of a much wider force that is integrating the world economy.
 Over the years, foreign direct investment by MNCs in the developing countries has been
steadily on the rise, from as low as 19% of total flows in 1990, to 30% in 1994.

Whether this trend will last or not will depend chiefly on the liberalization policies of the
governments of the developing countries, who are responsible for allowing entry to the
MNC’s into their home economies, and who can re-impose the barriers if they so wish.
Liberalization as regards foreign investment would last as long as the governments of these
developing countries believe that it is beneficial for them.

However, the biggest danger lies in the excessive expectations of the liberalizing
governments, as many of them see foreign investment as a short-cut to prosperity, capital and
technology transfer, and skill enhancement. MNCs do bring in these assets to an extent, but
these alone cannot make up for all the short-comings of the host economy.

VII. Models of MNCs

The following are the different models of multinational corporations:
1. Centralized

In the centralized model, companies put up an executive headquarters in their

home country and then build various manufacturing plants and production facilities
in other countries. Its most important advantage is being able to avoid tariffs and
import quotas and take advantage of lower production costs.

2. Regional

The regionalized model states that a company keeps its headquarters in one
country that supervises a collection of offices that are located in other countries.
Unlike the centralized model, the regionalized model includes subsidiaries and
affiliates that all report to the headquarters.

3. Multinational
 In the multinational model, a parent company operates in the home country and
puts up subsidiaries in different countries. The difference is that the subsidiaries
and affiliates are more independent in their operations.

VIII. Advantages of Being a Multinational Corporation

There are many benefits of being a multinational corporation including:

1. Efficiency

In terms of efficiency, multinational companies are able to reach their target

markets more easily because they manufacture in the countries where the target
markets are. Also, they can easily access raw materials and cheaper labor costs.

2. Development

In terms of development, multinational corporations pay better than domestic

companies, making them more attractive to the local labor force. They are usually
favored by the local government because of the substantial amount of local taxes
they pay, which helps boost the country’s economy.
3. Employment

In terms of employment, multinational corporations hire local workers who know

the culture of their place and are thus able to give helpful insider feedback on what
the locals want.

4. Innovation

As multinational corporations employ both locals and foreign workers, they are
able to come up with products that are more creative and innovative.

IX. Effects of MNCs:

Multinationals are often accused by their critics of shifting competition in the countries in
which they locate, creating balance of payments problems, and leading to undue
concentration of economic and political power at home and abroad. Advocates argue that
they often increase competition, accelerate the transfer of financial capital and modern
technology and help promote free multi-lateral trade.

X. Foreign Direct Investment

Foreign direct investments are prevalent within multinational corporations. The investments
occur when an investor or company from one country makes an investment outside the
country of operation.

Foreign investments most often occur when a foreign business is established or bought
outright. It can be distinguished from the purchase of an international portfolio that only
contains equities of the company, rather than purchasing more direct control.

XI. Contoh perusahaan multinational corporation yang ada di

Indonesia

1. McDonald’s

McDonald's Corporation is an American fast food company, founded in 1940 as

a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United
States. They rechristened their business as a hamburger stand, and later turned the company into
a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix,
Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and
proceeded to purchase the chain from the McDonald brothers. McDonald's had its previous
headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June
2018.[6][7][8][9]
McDonald's is the world's largest restaurant chain by revenue,[10] serving over 69 million
customers daily in over 100 countries[11] across 37,855 outlets as of 2018.[12][13] Although
McDonald's is best known for its hamburgers, cheeseburgers and french fries, they feature
chicken products, breakfast items, soft drinks, milkshakes, wraps, and desserts. In response to
changing consumer tastes and a negative backlash because of the unhealthiness of their
food,[14] the company has added to its menu salads, fish, smoothies, and fruit. The McDonald's
Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as
sales in company-operated restaurants. According to two reports published in 2018, McDonald's
is the world's second-largest private employer with 1.7 million employees (behind Walmart with
2.3 million employees).[15][16] As of 2020, McDonald's has the ninth-highest global brand
valuation.[17]

Saudara kandung Richard dan Maurice McDonaldmembuka McDonald's pertama di 1398

North E Street di West 14th Street di San Bernardino, California (di 34.1255°N
117.2946°W) Maskot asli McDonald's adalah topi koki di atas hamburger yang disebut
"Speedee". Pada tahun 1962, Golden Arches menggantikan Speedee sebagai maskot
universal. Maskot, badut Ronald McDonald, diperkenalkan pada tahun 1965. Dia muncul
dalam iklan untuk menargetkan audiens anak-anak mereka.

Restoran McDonald's pertama di Indonesia terletak di gedung Sarinah, Jalan M. H.

Thamrin, Jakarta dan dibuka pada tanggal 23 Februari 1991. Berbeda dari kebanyakan restoran
McDonald's di luar negeri, McDonald's juga menjual ayam goreng dan nasi di restoran-
restorannya di Indonesia. Pada awalnya, pemegang hak waralaba McDonald's di Indonesia
adalah PT Bina Nusa Ramamilik Bambang Rachmadi. Pada tanggal 3 Juni 2009, hak waralaba
McDonald's di Indonesia diambil alih oleh PT Rekso Nasional Food, yang merupakan anak
perusahaan Rekso Group, yang merupakan induk usaha perusahaan minuman ringan Sinar Sosro.

2. UNILEVER
Unilever plc is a British multinational consumer goods company headquartered in London,
England. Unilever products include food, confections, energy drinks, baby food, soft
drinks, cheese, ice cream, tea, cleaning agents, coffee, pet food, bottled
water, toothpaste, chewing gum, frozen pizza, pregnancy
tests, juice, margarine (Upfield), beauty products, personal care, breakfast
cereals, pharmaceutical and consumer healthcare products. Unilever is the largest producer of
soap in the world.[3] Unilever's products are available in around 190 countries.

Unilever owns over 400 brands, with a turnover in 2017 of 53.7 billion euros,[5] and thirteen
brands with sales of over one billion euros:[6] Axe/Lynx, Dove, Omo, Heartbrandice
creams, Hellmann's, Knorr, Lipton, Lux, Magnum, Rexona/Degree, Sunsilk and Surf.
Unilever is organised into three main divisions – Foods & Refreshments (beverages and ice
cream), Home Care, and Beauty & Personal Care. It has research and development facilities
in China, India, the Netherlands, the United Kingdom, and the United States.[7]
Unilever was founded on 2 September 1929, by the merger of the Dutch margarine
producer Margarine Unie and the British soapmaker Lever Brothers. During the second half
of the 20th century, the company increasingly diversified from being a maker of products
made of oils and fats and expanded its operations worldwide. It has made numerous corporate
acquisitions, including Lipton (1971), Brooke Bond (1984), Chesebrough-Ponds (1987), Best
Foods (2000), Ben & Jerry's (2000), Alberto-Culver(2010), Dollar Shave Club (2016) and
Pukka Herbs (2017). Unilever divested its specialty chemicals businesses to ICI in 1997. In
the 2010s, under the leadership of Paul Polman, the company gradually shifted its focus
towards health and beauty brands and away from food brands showing slow growth.

Branding and advertising

Unilever's largest international competitors are Nestlé and Procter & Gamble.[133]
Logo
In 1930, the logo of Unilever was in a sans-serif typeface and all-caps. The current Unilever
corporate logo was introduced in 2004 and was designed by Wolff Olins, a brand consultancy
agency. The 'U' shape is now made up of 25 distinct symbols, each icon representing one of
the company's sub-brands or its corporate values.[134] The brand identity was developed
around the idea of "adding vitality to life."[135]
Brands
Dove
Dove describes itself as being dedicated to "help ... women develop a positive relationship
with the way they look – helping them raise their self-esteem and realize their full
potential".[136] Dove employs the use of advertising for its products to display its messages
of positive self-esteem. In September 2004 Dove created a Real Beauty
campaign,[137] focusing predominately on women of all shapes and colour. Later in 2007,
this campaign furthered itself to include women of all ages. This campaign consisted mostly
of advertisements, shown on television and popularised by the internet. Dove fell under
scrutiny from the general public as they felt the Dove advertisements described the opinion
that cellulite was still unsightly and that women's aging process was something for which to
be ashamed

3. ADIDAS
Adidas AG (German: [ˈʔadiˌdas]; stylized as adidas since 1949) is a German multinational
corporation, founded and headquartered in Herzogenaurach, Germany, that designs and
manufactures shoes, clothing and accessories. It is the largest sportswearmanufacturer in
Europe, and the second largest in the world, after Nike. It is the holding company for the
Adidas Group, which consists of the Reebok sportswear company, 8.33% of the German
football club Bayern München, and Runtastic, an Austrian fitness technology company.
Adidas' revenue for 2018 was listed at €21.915 billion.
The company was started by Adolf Dassler in his mother's house; he was joined by his elder
brother Rudolf in 1924 under the name Gebrüder Dassler Schuhfabrik ("Dassler Brothers
Shoe Factory"). Dassler assisted in the development of spiked running shoes (spikes) for
multiple athletic events. To enhance the quality of spiked athletic footwear, he transitioned
from a previous model of heavy metal spikes to utilising canvas and rubber. Dassler
persuaded U.S. sprinter Jesse Owens to use his handmade spikes at the 1936 Summer
Olympics. In 1949, following a breakdown in the relationship between the brothers, Adolf
created Adidas, and Rudolf established Puma, which became Adidas' business rival.[1]
The three stripes are Adidas' identity mark, having being used on the company's clothing and
shoe designs as a marketing aid. The branding, which Adidas bought in 1952 from Finnish
sports company Karhu Sports for the equivalent of 1,600 euros and two bottles of
whiskey,[6][7] became so successful that Dassler described Adidas as "The three stripes
company"