A multinational enterprise is, simply put, a business organization the operations of which spans different countries and is intricately linked to its subsidiaries or other subsidiaries of the same mother firm. Therefore, what then makes a firm into an MNE is the nature of its activities, that its activities are geographically expanded across the borders under common ownership. There are times when a stage of the firm’s operations is intended to be performed in another country, for any number of reasons such as greater cost-effectiveness or locating closer to raw material or human resources. But rather than outsourcing that stage of operations to another, domestic, firm, the company instead sets up its own subsidiary or unit in that country to perform that stage of the operations.
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