What Does it Mean to Be a Global Company?

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Domestic companies are relatively simple to define. If a company makes and sells its products within the same nation, using materials purchased from the local area, then it can be said that the company is a domestic company. Many companies, in the course of purchasing materials, making products and distributing them, however, do some business with other nations. This makes the term "global company" more difficult to define. It can, in fact, have a number of definitions.

International Business

Global companies conduct some form of business in more than one part of the world. To be considered international or global, a company generally must have some sort of presence in two or more countries. Exactly what constitutes a presence, however, is subject to debate. While merely purchasing a products from another country probably won't make a company global, visiting that country and conducting business there may allow a company to call itself "global."

Multinational

According to the legal reference website U.S. Legal, the term "multinational" formerly referred exclusively to corporations that operated in two or more countries. Given the rapid advance of globalization that the world experienced at the end of the 20th century, however, the term is now more selectively applied and refers to companies that operate in many countries. Otherwise, with the rise of the Internet, most dot-coms and businesses with Internet presences could, in a sense, be considered multinationals.

Considerations

According to U.S. Legal, the term "global business" has no specific legal significance. Rather, the term is a relative one that can be accurately--if often misleadingly--applied to a number of situations. For example, a company in China that makes products designed for export to the United States could be considered "global" in the sense that its products are shipped across the world. The company itself, though, remains only in China; therefore, it might more accurately be called a domestic company that ships internationally.

International Business Company

According to the website BusinessDictionary.com, companies may be registered in a country but may not be allowed to conduct any actual business in that country. For example, a company may be licensed only to manage global operations from a country that is considered a tax haven. A company that does business in one country but is technically registered in another country might be considered "global." That company, however, also might be considered a domestic company that uses offshore accounting.

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