Introduction
The international level of a multinational enterprise provides for a complex organizational structure that includes many divisions and branches located on the territory of different states. With colossal capital, multinational companies are the leading trade and economic relations participants in the international market. Most multinational companies are powerful associations that include several smaller companies from specific industries. The main task of the MNE, like any company — is to extract profit only on a large scale. Like any small enterprise, a multinational enterprise has factors that ensure its growth and development.
Main body
For multinational large enterprises, there are factors that affect growth and development. There are many other factors that affect the development of MNEs, but this five is the main one (Oezel & Miklian, 2017). These factors are macroeconomic conditions, receptivity, capital mobility, protectionism, and technological change (Jones, 2005). At the macroeconomic level, it is essential to invest a large number of financial resources to ensure the development of the enterprise. This is quite risky since the business is conducted abroad in its state. The receptivity factor depends on how indifferent the country in which the company is undertaken is.
Capital mobility means the ability to move FDI from one country to another. In general, capital mobility through trade and FDI maximizes the use of resources by promoting financial development and improving global production efficiency and growth (Ansah, 2019). The essence of protectionism is to enable countries to participate safely in international trade. The last factor concerns the issue of control over the management of an organization in another country. With the development of technology, this has become much easier, but it remains an essential factor that needs constant improvement.
An example of a multinational company using these factors for development is British Petroleum. The company is developing all over the world, so it needs to use the factor of capital mobility across the borders of countries. For the same reason, the company’s macroeconomic conditions must be met. The company is actively developing the sale of its own shares to other oil companies. The company expands the number of countries of presence based on the receptivity factor, in order to be located in a large number of countries and be able to sell oil around the world. Due to the fact that the company freely sells its shares to the market and gives the opportunity to invest, it is protected from various crises, that is, in this case, the protectionism factor works. The technological factor is also actively working and developing the company, by searching for new ways to extract oil. This makes the organization more modern, developed and increases its economic level. The company is improving and actively uses development factors.
Conclusion
In conclusion, a multinational company is one of the most complex forms of international business. Such a company uses a transnational approach in the search for foreign markets for resources and products and in the placement of production. Furthermore, they use a global business philosophy that provides for economic activities both within the country of origin and abroad. The priority measures for improving the activities of MNEs in the global economy should be the formation of specialized institutions to support innovation. Moreover, improve the legal framework for investment activities and state support for the creation, and create organizational mechanisms for managing the innovation activity of MNEs.
References
Ansah, J.W. (2019). Capital mobility and development process: The new political economy thoughts. E-international relations. 1-16. Web.
Jones, G. (2005). Multinationals and Globalization. Multinationals and Global Capitalism: From the Nineteenth to the Twenty First Century. 16-41.
Oetzel, J. & Miklian, J. (2017). Multinational enterprises, risk management, and the business and economics of peace. Multinational Business Review, 25(4), 270-286. Web.