Globalization and the Modern Multinational
Falling trade barriers and rapid reductions in the costs of communication have transformed the way large American corporations do business. National borders don’t matter so much anymore. Fifty years ago, most research and manufacturing was done in the United States. And the bulk of revenues came from sales to U.S. customers. Foreign sales subsidiaries were organized along national lines. Today, vast amounts of U.S. multinationals’ production capacity, and even some research, have shifted overseas. Between 1980 and 2010, the number of manufacturing jobs in the United States dropped from 19.2 million to 11.6 million. Modern multinational operations are highly interdependent. Various components of a product line many be manufactured in different countries, and there may only be one supply chain for that product worldwide. Sales forces are organized regionally. In this environment, there is more intrafirm international trade.
KeywordsTransfer Price Sales Force Cayman Island Foreign Profit Unrelated Party
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