What is a Multinational Company?

Definition: A multinational company is a business that operates in many different

countries at the same time. In other words, it’s a company that has business activities in
more than one country.
Today’s international markets are almost unavoidable even for smaller companies. The
influx of Chinese manufacturing and less expensive Asian labor has pushed large and
small companies to invest in operations and expansions overseas

Example
The true definition of a multinational company isn’t that it manufactures in other
countries, however; the true meaning is that the business has operations in multiple
countries. This can take form in many different ways besides manufacturing. Take
McDonalds for example. They have almost 35,000 restaurants located in 119 countries
around the world. This means that not only operate the physical restaurants, they also
operate supply chains to deliver the beef and other products required to keep their
locations working properly.

As you can see, operating in another country could be running a supply chain, having
physical store locations or manufacturing plants, or even providing services abroad. The
modern internet age has brought about the ability for individuals and companies to
easily communicate and start multi-national companies easier than ever before in
history.

What Does Multi-National Company Mean?

With this ease of formation and establishment, there come accounting complexities and
problems. One of the main complications in dealing with multinational corporations is
accounting for and planning around foreign currency exchange rates. Most countries
have their own form of currency that fluctuates with the market and political climate in
their country. Multinational companies must keep these changes in mind when doing
any type of business abroad.
Financial statement reporting is also more complex for businesses operating in multiple
countries. FASB dictates the US dollar must be used for all domestic
companies’ financial statements, but other countries often require IFRS statements for
their markets.

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