What are Global Enterprises?

A company whose business operations extend beyond the country in which it is incorporated is known as Global Enterprise or Multinational Company (MNC). Global enterprises are thus large-scale industrial organisations that extend their industrial and marketing operations across multiple countries via a network of branches. These enterprises operate in several areas, producing a variety of products, and their business strategy spans several countries. They do not aim to make a profit from one or two products but rather spread their branches widely. For example, Pepsi and Coca-Cola are registered in the USA, but they operate across the world.

In the words of W.H. Moreland,”Multinational corporations or companies are those enterprises whose management, ownership and controls are spread in more than one foreign country”. 

Global enterprises have huge sizes, a large number of products, advanced technology, marketing strategies and network of operations all over the world and because of these factors, they are able to influence the international economy.   

Features of Global Enterprises

These corporations have distinguishing characteristics that set them apart from other private-sector firms and public-sector enterprises. These are:

1. Huge capital resources:

These businesses are distinguished by substantial financial resources and the ability to raise funds from various sources. These enterprises can raise funds from a variety of sources. They may sell public equity, debentures, or bonds. They can also borrow from financial institutions and foreign banks. They are well-known in the capital market. Even local investors and banks are interested in investing in them. Because of their financial strength, they can survive in any situation.

2. Foreign collaboration:

Global enterprises typically enter into agreements with Indian companies regarding the sale of technology, the manufacture of goods, use of brand names for final products, and so on. These MNCs may work with both public and private sector companies. The agreement usually contains a number of restrictive clauses pertaining to the transfer of technology, pricing, dividend payments, tight control by foreign technicians, and so on.

Collaboration with MNCs has benefited large industrial houses looking to diversify and expand in terms of patents, resources, foreign exchange, and so on. However, these foreign collaborations have resulted in the growth of monopolies and the concentration of power in a few hands.

3. Advanced technology:

These enterprises have technological advantages in their production methods. They are able to meet international standards and quality specifications. This leads to industrial progress in the country where such corporations operate because they are able to optimally exploit local resources and raw materials. Computerization and other inventions have resulted from MNCs’ technological advances.

4. Product innovation:

These enterprises are distinguished by highly sophisticated research and development departments tasked with developing new products and superior designs for existing products. Qualitative research necessitates significant investment, which only global corporations can afford.

5. Marketing strategies:

Global companies’ marketing strategies are far more effective than those of other companies. They use aggressive marketing strategies to boost sales in a short period of time. They have a more trustworthy and up-to-date market information system. Their advertising and sales promotion strategies are extremely effective. As they have already established a presence in the global market and their brands are well-known, selling their products is not a problem.

6. Expansion of market territory :

Global enterprises operate through a network of subsidiaries, branches and affiliates in host countries as their activities extend beyond the physical boundaries of their own countries. This expands their territory and enables them to become international brands.

7. Centralised control:

Their headquarters are in their home country, and they have authority over all branches and subsidiaries. However, this control is limited to the parent company’s broad policy framework. There is no disruption to day-to-day operations.