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Class : 11
Unit : Business


Explain the characteristic of multinational company.

Ans : The characteristics of multinational company are explained below: i) Large scale operation:- Multinational companies perform large scale business operation of a specific nature by investing huge capital. It performs activities of large scale like production, distribution, organization. The large scale production minimizes for unit cost of the product and as such help to face competition in the market. ii) Advanced technology:- Multinational companies established research and development department for the research and innovation of new technology in production, distribution and for promotion of business activities. iii) International operation:- Multinational companies performance production and distribution activities in international level through it branches or subsidiaries. A company is said to be multinational company when it performs business at international level. iv) Efficient management:- Multinational companies invest more resources in training and development, new technology and in new operation system. It hires efficient and skilled manpower to manage all the activities which is essential for their successful operation. v) Ownership and control:- Major shares of the subsidiary companies are contributed by the parent company. So parent company plays major role in management and control of the subsidiary companies. vi) Productive organization:- Multinational company produces goods and services of specific nature both in parent company and in subsidiary companies. The parent company uses its on advanced technology, brand trademark and method of production. vii) Monopolistic market:- Medium scale, small scale and even large scale National companies cannot face competition with multinational companies. Therefore, multinational companies enjoy monopolistic power in competitive market.