Types of Multinational Corporations

Some of the common forms of Multinational Companies are:

Franchise Operations

Under this form, a multinational corporation endows firms in foreign countries the legal right to use its business model and brand per the terms and conditions of franchise agreement, which can be reviewed and renewed periodically. The firms who get the right or license pay royalty or license fee to multinational corporations.

Branches and Subsidiaries

In this kind of a system, the multinational company opens its own braches in different countries, which operate under the direct control and supervision of the company’s head office. Sometimes, a multinational company may establish subsidiaries in foreign countries. These subsidiaries may be fully owned by the multinational (parent company) or partly owned, where the host countries own share capital. The subsidiaries follow the guidelines of the parent company.

Joint Venture

A multinational company establishes its company in a foreign country in partnership with the local firms or companies in the host company. The ownership and control of the business is shared by multinational and foreign company, where the governing policies are that of the multinational company and the day-to-day management is left to the local company.