Wiley CIAexcel Exam Review 2014 Focus Notes: Part 3, Internal Audit Knowledge Elements

Domain 8

Focus on: Global Business Environment (0–10%)

ECONOMIC/FINANCIAL ENVIRONMENTS

International Organization Structures

The organization structure of the Multinational Corporation (MNC) evolves over time due to changes in economic policies, tax laws, government regulations, and political structures. The organizational structure of the MNC varies, in which each manager’s level has a varied degree of authority and responsibility.

MNCs are firms with significant foreign direct investment assets. They are characterized by their ability to derive and transfer capital resources worldwide and to operate facilities of production and penetrate markets in more than one country, usually on a global scale. Multinational enterprise (MNE) has been a popular term because it reflects the fact that many global firms are not, technically speaking, “corporations.” The terms transnational corporation and supranational corporation are often used within the United Nations system, in which many internationalists argue that the operations and interests of the modern corporation “transcend” national boundaries.

Information Flows and Organization Structures of MNCs

• With the international division or department, information flows from subsidiaries to the vice president of the international division.
• In MNCs organized by product line, information flows from subsidiaries to the vice president of the product line.
• In an MNC organized by function, information flows from subsidiary to headquarters according ...