1. Multinational corporations

Why do companies go global?

Multinational corporations operate in locations across the world. Each company has its own motive for its presence in different countries.

Consider the following case:

Happy Lime Industriess domestic demand has matured and leveled off. Consequently, the firm is looking to expand its operations overseas because it believes that its growth opportunities are more promising in foreign markets.

Which of the following best describes the reason Happy Lime Industries has decided to go global?

To broaden its markets

To avoid political, trade, and regulatory hurdles

To seek production efficiency

Now consider the case of Northern Rubber Company, which has decided to establish worldwide production facilities and markets to cushion itself from adverse economic conditions in any particular country. Northern Rubber Company has decided to go global in order to .

Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high returns and diversification, it makes financial management more complicated for financial executives and managers. Based on your understanding of the factors that complicate financial management in multinational firms, complete the following statement:

Compared to domestic corporations, multinational corporations have exposure to risks that arise from complex tax laws and multiple money markets.