Multinational Finance

There is no single agreed-upon definition of the multinational (or transnational) enterprise. This is because multinationality has many dimensions and can be viewed from several perspectives - economic, political, legal, etc. Ownership criterion: some argue that ownership is the key criterion. A firm becomes multinational only when the headquarter or parent company is effectively owned by nationals of two or more countries. For example, Shell and Unilever, controlled by British and Dutch interests, are good …

…long-term investments (Hill, 2000). According to the above analysis, we can justify how multi-national firms are using organisational structure and transfer pricing to gain competitive advantage. The firms try to be highly competitive in the international market, and cut costs through divisionalisation and as a result, international transfer pricing. The main objectives of international transfer pricing are taxation and tariffs avoidance, elimination of exchange rates fluctuations and enabling subsidiaries to lower prices to undercut local competitors.