Through its propensity to nestle everywhere, settle everywhere, and establish connection everywhere, the multinational corporation destroys the possibility of national seclusion and self-sufficiency, and creates a universal interdependence.
As much as 40 percent of all international trade is transacted within the multinational corporation—so-called intra-corporate trade. This allows globally reaching firms to exploit their multinational enterprise system through skillful transfer pricing of cross-border shipment of parts or subassemblies, timely leading and lagging of payments among sister subsidiaries, comprehensive multilateral netting of payments, and consolidation of liquidities to reduce financing costs and take advantage of centralized cash management. This comprehensive optimization exercise in value creation is, however, severely constrained by national regulations, tax laws, and tariff duties.
After reading this chapter you will understand:
By its very nature, a multinational corporation has considerable flexibility in designing and operating its financial ...