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There is no single agreed-upon definition of the multinational or transnational enterprise This is because multinationality has many dimensions and can be viewed from several perspectives - economic political legal etc Ownership criterion some argue that ownership is the key criterion A firm becomes multinational only when the headquarter or parent company is effectively owned by nationals of two or more countries For example Shell and Unilever controlled by British and Dutch interests are good examples However by ownership test very few multinationals can be called multinational The ownership of the overwhelming majority of MNCs are uninational see video Nationality mix of headquarter managers An international company is multinational if the managers of the parent company are nationals of several countries Usually managers of the headquarters are nationals of the home country This may be a transitional phenomenon However very few companies pass this test currently Business Strategy global profit maximization Ethnocentric companies follow policies that are home country-oriented Polycentric companies follow policies that are host country-oriented Geocentric companies follow policies that are world-oriented An MNC is a parent company that engages in foreign production through its affiliates located in several countries exercises direct control over the policies of its affiliates implements business strategies in production marketing finance and staffing that transcend national boundaries geocentric MNCs exhibit no loyalty to the country in which they are incorporated The two main strategies that MNCs are following the global strategy and the transactional strategy give rise to a globally dispersed web of productive activities Firms pursuing these strategies disperse each value creation activity to its optimal location in the world Thus a product might be designed in one country some of its components manufactured in a second country other components manufactured in a third country all assembled in a fourth country and then sold worldwide The volume of intrafirm transactions in such firms is very high
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