International corporation

International multinational corporations, multinational enterprises, companies, capital companies, conducting business activity in at least two countries and creating an integrated, international system of economic ties, subordinated to a common strategy.

The units of international corporations are most often divided into:

• geographical criterion of outlets
• commodity groups, including branches producing the same product (regardless of the geographical location of the branch)
• matrix structure (including division according to geographic outlets and commodity groups)
• International corporations are one of the main forces driving globalization processes. They contribute to an increase in interdependencies between countries. They decide what place the less developed countries will occupy. Due to their economic and financial potential, international corporations have an impact on other entities of foreign and international economic policy, in particular on governments and international organizations.

International corporations have a great economic power, which consists of:

• large size (measured, for example, by sales value)
• modern products and technologies as well as systems for their rapid diffusion on an international scale
• highly qualified management and marketing staff (especially international product distribution systems)
• high mobility of owned and controlled capital

Genesis

According to studies by K. Moor and D.Lewis, organizations exhibiting the characteristics of contemporary international enterprises already existed in ancient civilizations, and their beginnings date back to the twentieth century BC. The ancient transnational "companies" involved in production and trade were created not only by the Romans but also by the Phoenicians, while Assyria is considered to be the place of origin. They were characterized by the fact that their activities included areas beyond the appropriate ones for a given civilization.

Features of the corporation

• sovereignty - independence from states and business partners
• complexity - coordination of activities using organizational and legal forms, and by concluding agreements with independent entities,
• geographical location - opening branches in various countries around the world,
• specialization - entrusting specific tasks to subsidiaries or independent entities that will carry them out most effectively,
• Arbitration ability - making transactions using, among others economic and cultural conditions, which leads to increased benefits and efficiency of operations.
• organizational flexibility - the ability to adapt methods of resource engagement, and distribution and implementation of tasks depending on changing environmental conditions,
• global efficiency - achieving the highest efficiency by reducing net costs at the level of the entire corporate system,
• integrating ability - it involves coordinating entrusted, geographically deployed activities through the use of mutual information flow technology,
• hierarchical organization
• employing foreigners
• orientation on the search for resources and new markets

The structure of the corporation

• U-type (unitary) - it is based on centralization and functional division. It works well for simple operations.
• type H (holding) - it is based on decentralization of activities, the units in the given organization remain autonomous. Works well with conglomerates where businesses are not closely related.
• M type (divisional) - it is based on the fact that individuals retain a large degree of autonomy, however, they are simultaneously subject to many supervisors, which helps to maintain control in companies operating in several businesses, on different markets and with many functions.

Functions

• stimulating growth and economic efficiency,
• stimulating competition on the market and in the economy,
• activating restructuring through acquisitions and mergers,
• dissemination of new technologies, production methods and patterns,
• creating new jobs,
• unification of the level of development in a given country,
• influencing the processes and areas taking place in the global economy.

International corporation — recommended articles

Development of the organization — Industrial park — International division of labor — Definition of strategic management — Managament of development — Internationalization — Cluster — Holding — Cluster development

References

• Adler, M., & Dumas, B. (1983). International portfolio choice and corporation finance: A synthesis. The Journal of Finance, 38(3), 925-984.
• Kogut, B., & Zander, U. (1993). Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of international business studies, 24(4), 625-645.
• Hymer, S. (1969). Multinational corporation and international oligopoly: the non-American challenge (No. 76). Center Discussion Paper.