Multinational Enterprise and International Business

This article discusses the concept of multinational enterprise (MNE) and its role in international business. It explores how MNEs conduct business in multiple countries, procure resources globally, and facilitate cross-border transactions. The article also highlights the impact of MNEs on globalization and the macroeconomic factors that foster their growth. Additionally, it provides a case study of General Electric (GE), an American MNE operating in various sectors.

A multinational enterprise is a business organisation that conducts its business in
more than one country. MNE has a worldwide approach to markets, production and services
in several countries. Every organisation has a place for procurements of its resource. A
multinational enterprise derives its resources from any country other than the home country.
The study of internationalised process of MNE is called international business. International
business refers to the process of trading of goods, services, capital, knowledge or technology
of a business enterprise at global forefront. The business operations of MNE involve cross-
border transactions of products and services among two or more countries. Also, this type of
enterprise facilitates delivery of economic resources to global markets. Transactions of
economic resources comprise of skill, competence, knowledge, human resource and capital
for the purpose of international production of physical goods and services. These products
and services may be finance, transportation, communication, banking, insurance, construction
etc.
Such types of enterprises give a boost to the process of globalisation which refers to
interaction of people, business organisations and governments at international level. To
conduct business overseas, multinational enterprises need to separate national markets into
one global marketplace. There are two macro economic factors that foster the growth of a
business organisation at global front. The first factor comprises of elimination of barriers to
international trade and commerce (e.g. free flow of goods and services, and capital) more
commonly known as liberalisation. The second factor that promotes the process of globalised
organisation is technological change. Updating the operation of business with the latest trends
and changes coming in economy facilitate easier flow of goods and services in international
markets. Updation of technology may include developments of various aspects of business
enterprise particularly communication, information processing, and transportation
technologies.
General Electric(GE) is an American multinational company operating through
various segments like aviation, healthcare, power, renewable energy, digital
technology, additive manufacturing, venture capital and finance, lighting, transportation, oil
and gas. General Electric Company (GE) has an organizational structure that supports the
transformation of the business into digital industrial company. This transformation and
leading industry position is highlighted in company’s vision and mission. Company’s
corporate structure defines the composition and arrangement of components relative to each
other, such as the interconnections among various offices and departments located all around
the globe. In case of GE, corporate structure has evolved to enable support for operations of
separate subsidiaries or segments. The global activities of GE span across all geographic
regions and primarily encompass manufacturing for local and export markets, import and sale
of products produced in other regions, leasing of aircraft, sourcing for our plants domiciled in
other global regions and provision of financial services within these regional economies.
Thus, when countries or regions experience currency and/or economic stress, they often have

increased exposure to certain risks, but also often have new profit opportunities. Potential
increased risks include, among other things, higher receivable delinquencies and bad debts,
delays or cancellations of sales and orders principally related to power and aircraft
equipment, higher local currency financing costs and slowdown in established financial
services activities. New profit opportunities include, among other things, more opportunities
for lower cost outsourcing, expansion of industrial and financial services activities through
purchases of companies or assets at reduced prices and lower U.S. debt financing costs.
Estimated results of global activities include the results of our operations located outside the
United States plus all U.S. exports. Thus, GE qualifies as a Multinational Enterprise (MNE).