MULTINATIONAL CORPORATION

(MNC) also called transnational corporation any corporation that is registered and operates in more than one country at a time. Generally the corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in one or more other countries. The subsidiaries are responsible to central headquarters. In economic terms, a firm's advantages in establishing a multinational corporation include both vertical and horizontal economies of scale (i.e., reductions in cost that are a result of an expanded level of output) and the resulting power of monopoly. Technical expertise, experienced personnel, and tested strategies usually can be transferred readily from country to country. Critics of the multinational corporation usually view it as an economic and, often, political means of foreign domination. Developing countries, with a narrow range of exports (often of primary goods) as their economic base, are particularly vulnerable. Monopolistic practices and disruption of more traditional means of economic growth are among the risks that face host countries.