MULTI-NATIONAL ENTERPRISE

A multi-national enterprise is typically a business corporation whose operations literally straddle the globe. An example is PepsiCo. PepsiCo does not ship its famous product around the world directly from the United States. Instead, it produces Pepsi Cola in over 600 plants in 148 countries around the world. A multi-national enterprise typically has substantial portions of its total wealth invested in production facilities outside of its country of origin. Because of the expanded activities of these corporations, international banks have grown, allowing the monies of international enterprises to pass quickly over national frontiers to take advantage of favorable interest rate changes in multi-national banking operations. A multi-national enterprise considers the entire world to be its potential market, not merely for shipping its home-produced goods, but a market within which it may actually manufacture its product.

By selling products to world markets a multi-national enterprise is able to profitably take advantage of different business situations in various countries such as lower wages, lower tax and tariff rates, less business regulation, and other business-friendly incentives. In this way, a multi-national enterprise is able to produce its products in countries where the wages are lower, and to sell their products in countries where people can often afford to pay higher prices for it. The multi-national enterprise meets the international demand for products, resulting in business profitability and consumer satisfaction at the same time.

See also: General Agreement on Tariffs and Trade (GATT), Free Trade