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Multinational Companies and Its Environment

Multinational companies operate in multiple countries and face unique factors that influence their operations compared to domestic companies. These factors include foreign ownership, multinational accounting across currencies, and foreign exchange risk. Multinational companies must also navigate international trade blocs like NAFTA, EU, and ASEAN, as well as international organizations that regulate trade such as the World Trade Organization. Tax rules also differ for resident foreign and non-resident foreign corporations.

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Loren Rosaria
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89 views10 pages

Multinational Companies and Its Environment

Multinational companies operate in multiple countries and face unique factors that influence their operations compared to domestic companies. These factors include foreign ownership, multinational accounting across currencies, and foreign exchange risk. Multinational companies must also navigate international trade blocs like NAFTA, EU, and ASEAN, as well as international organizations that regulate trade such as the World Trade Organization. Tax rules also differ for resident foreign and non-resident foreign corporations.

Uploaded by

Loren Rosaria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MULTINATIONAL

COMPANIES AND ITS


ENVIRONMENT
ALEXIS IMEE O. PASILIAO
WHAT IS MULTINATIONAL COMPANY?

• It is a corporation that manages production or services in


more than one country. It can also referred as an international
companies.
WHAT IS KEY TRADING BLOCS?

• It is a group of countries within geographical region that


protect themselves from imports from non members. It is a
form of economic integration and increasingly shape the
pattern of world trade.
INTERNATIONAL FACTORS AND THEIR INFLUENCE
ON MNC’S OPERATION
FACTORS DOMESTIC COMPANY MULTINATIONAL
COMPANY

Foreign ownership All assets owned by domestic Portions of equity of foreign


entities investment owned by foreign
partners, affects decision
making.
Multinational Accounting All consolidation of financial Different currencies and specific
statements based on one translation rules influence the
currency consolidation
Foreign Exchange Risk All operations in one currency Fluctuations in foreign currency
can affects revenue and profits
as well as the overall value of
the firm
TYPES OF TRADING BLOCS

• North American Free Trade Agreement (NAFTA)


Free trade and open markets among Canada, Mexico and United states

• Central American Free Trade Agreement (CAFTA)


Trade agreement signed in 2003-2004 by US, the Dominican Republic and Five
central American countries; Costa rica, El Salvador, Guatemala, Honduras, and
Nicaragua
• European Union (EU)
A significant economic force currently made up of 27 nations
that permit free trade within the union
• Mercosur
A major south American trading bloc that includes countries that
account for more than half of total latin American GDP.
• ASEAN
Compromises ten member nations.
GENERAL AGREEMENT ON TARIFFS AND
TRADE (GATT)
• A treaty that has a governed world trade throughout most of
the postwar era; it extends free-trading rules to broad areas of
economic activity and is policed by the World Trade
Organization.
WORLD TRADE ORGANIZATION

International body that policies world trading practices and


mediates disputes among member countries.
JOINT VENTURE

• A business arrangement in which two or more parties agree to pool their


resources for the purpose of accomplishing a specific task.
TAX RULES

CLASSIFICATIONS RESIDENT FOREIGN NON RESIDENT FOREIGN


CORPORATION CORPORATION
Tax base and rate Taxable income, normal tax rate Gross income, Final withholding
30% tax rate 30%
Minimum Corporate Income Tax Gross income, 2% Not applicable
(MCIT)

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