Question

Role and importance of multinational corporation in international business

Answer 1

Businesses incur several different costs that are independent of the level of sales they produce. For example, a coffee shop still has to pay rent and utilities on its facilities even if nobody buys any of its beverages. On top of those expenses, employees still receive salaries and insurance is still paid. Operating expenses are used by most businesses, since they have recurring costs, such as for travel, that are not directly related to actual goods.

Cost of Goods Sold

A cost of goods sold account (COGS) is not necessarily used by every company. If a company does not maintain an industry, is not involved in construction, or otherwise does not use physical resources in the production or provision of its final goods/services, chances are it does not include COGS on its income statement. This is because COGS sold represents the business expenses that are directly incurred because a transaction has taken place. When the coffee shop sells a coffee, this expense account captures the price of the cup, the coffee sleeve, the water, the processed beans, etc. One very general, though imperfect, way of determining if an expense is a COGS is to ask the question, "Would this have been an expense even if no sales were made?"

Answer 2

Corporations may make a foreign direct investment. Foreign direct investment is direct investment into one country by a company located in another country. ... To compete, political powers push toward greater autonomy for corporations. MNCs play an important role in developing economies of developing countries.