Finance and the Multinational Firm: The New Role

Jun 18th, 2015
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In the search for profits, U.S. corporations have been forced to look beyond our country’s borders. This movement has been spurred on by the collapse of communism and the acceptance of the free market system in third world countries. All this has taken place at a time when information technology has experienced a revolution brought on

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Finance and the Multinational Firm: The New Role Explain what has led to the era of the multinational corporation.In the search for profits, U.S. corporations have been forced to look beyond our countrys borders. This movement has been spurred on by the collapse of communism and the acceptance of the free market system in third world countries. All this has taken place at a time when information technology has experienced a revolution brought on by the personal computer and the Internet. Concurrently, the United States went through an unprecedented period of deregulation of industries. These changes resulted in the opening of new international markets, and U.S. firms experienced a period of price competition here at home that made it imperative that businesses look across borders for investment opportunities. The end result is that many U.S. companies, including General Electric, IBM, Walt Disney, and American Express have restructured their operations to expand internationally.The bottom line is what you think of as a U.S. firm may be much more of a multinational firm than you would expect. For example, Coca-Cola earns over 80 percent of its profits from overseas sales and more money from its sales in Japan than it does from all its domestic sales. This is not uncommon. In fact, in 2008, 45 percent of the sales of S&P 500 listed companies came from outside the United States.In addition to U.S. firms venturing abroad, foreign firms have also made their mark in the U

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