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Forms of Multinational companie(MNC)s

MNCs have to adopt different forms for their operations. These forms can be also defined as methods of operations of MNCs. MNCs can adopt any one kind of method or forms subject to legal requirments, international agreement and commercial treaties.

these forms or methods are discussed below:
1. Branches: MNCs can extend their business operation by establishing different branches in different countries. In case of MNCs, branch is the simplest method of operation. Necessary activities to be performed by the branches are controlled and managed by the head office of the MNCs. Branches have no independent entity and is linked up to the head office and also guided by the law of the country where the branch is located.

2. Subsidiary companies: MNCs can also perform its operation by establishing a subsidiary companies in the different country, where MNCs want to do its business. In this connection, the MNC  will be holding company. Generally, the subsidiary company is set up by the laws of the respective country. Under this type of form of organisation, the MNCs can enjoy the advantages of flexibility in controlling marketing and production of activities, Concession of tax, protection of patent etc. are the different drawbacks associated with this form of organisation.

3. Joint venture companies: MNCs can also do business by entering into a joint venture with an existing indegenous firm as business of a foreign country. This form of organisation enjoys the advantages of safest, easiest and less expensive from financial point of view. Of course, this form of organisation can not have corporate objectives, profit standard as like sole ownership enjoy.

4. Franchise Holder: Franchise is a method of granting liacense by the Government or any company to another company or person premitting to use or sell a particular product or service to maintaining to criterias. In case of MNC it. Head office or main company can grant a liacense under the system of franchise to the business of different country, Where the MNCs want to do the business. In this connection, the MNCs is called franchiser and the business to whom the liacense is granted is called franchisee and the agreement is called franchising. There are mainly three forms of franchising such as:
(a)manufacturer: Retailer system. As for example automobile dealership.
(b)manufacturer: wholeseller system. As for example soft drink companies.
(c)service firm: Retailer system. as for example lodging services and fast food out lets.

5. Turn-key projects: In caes of turn key projects, the MNCs undertakes an order to complete the project from scratch to operational stage. After completion of the project it handed over to the host country, Generally in case of projects requiring high technical skill, underdeveloped countries invite tenders for the propose of construction of the project. This type of form of organisation is suitable to carry out the activities which involves huge resources and high quality managerial and technical expertise. Turn key contracts are used in international business for the purpose of supplying creating and commissioning of plants in case of Oil Refineries still mills, cement and fertilizer plants etc. Even, this turnkey project involve goverment or public sector either as buyer or as seller in special kind of cases.


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