Multinational company is a private business entity that is under the direct investment production equipment and other fixed assets and produces part of its production in at least one foreign country and its significant management decisions take place in a global context. The most common form of business of multinational companies in Slovakia is business through multinational groupings holding, multinational holding. The essence of each holding is a grouping of capital related companies, where the core is a parent company which strategically manage capital and other companies controlled by the holding company. Relations between the holding company and subsidiaries to the parent company are based on the optimization of production and competitive advantage. Competitive advantage is that the subsidiaries retain legal autonomy externally to business partners and doing so may act on the market as a large holding. Business by making a holding produces synergy effects that are achieved by combining parts into a whole, in addition to tax optimization produces other benefits, such as the use of surplus funds within the Group, risk diversification, and stabilization of cash flow and the ability to expand to other markets. Based on the relationship between the parent and subsidiary companies formed inside the holding certain flows and transfers are made. Capital flows arise from the payment of dividends (share-based profit-controlled companies, which are transferred to the controlling company), interest payments (by existing financial loans) on the basis of
royalty payments (made on the basis of conclusion of a franchise on an activity within the
Group), on the basis of transactions with shares (due contributions to share capital) and on the basis of commercial transactions (arising between group companies). Optimal management of these flows contributes to increase business efficiency through multinational holding. As defined by OECD (Organisation for Economic Cooperation and Development), the multinational companies means companies or entities whose ownership is private, public or
exert a significant influence on work of others, particularly with regard to the sharing of knowledge and resources (Štrach (2009)). Multinational companies can be divided into multinational corporations that operate transnationally, but do not have to act on a worldwide presence and transnational corporations, representing a certain stage of multinational developed that understand the world as one market (Zadražilová (2009)). Multinational companies have a significant impact on the economy of the countries in which they operate. In many less- developed countries, multinationals are major employers. They also represent stiff competition for local and national companies (Forsgren (2008)). Multinational company on the one hand provides a single organization operating in a transnational or global environment that needs to reconcile all their performances, despite the large distances between its different parts. On the other hand, it is a multinational company of a set of companies that operate in different local conditions of different countries. These subsidiaries are facing not only domestic competition, but they must also be successfully integrated within multi-national company and arrange their relations in such a way as to meet the requirements of the multinational company. The most common form of business through multinational groupings is holding. We call holding a group of companies, where top-level group is a legally separate and we call him the parent (holding as a whole, however, has no legal personality). The dominant function of the holding company is ownership and control of shares and deposits in subordinate subsidiaries. The basic aim of creating a holding company is to increase business efficiency and achieve maximum results by combining the advantages of large companies (more important market position, economic strength, the capacity) with those of smaller units holding companies (flexibility). The biggest advantage of holding grouping is diversifying its activities and a reduce of business risk. As a fundamental objective of the company is to maximize its market value, we can apply this goal as well on a holding. Market value of holding (THhs) is the sum of the market values of the parent companies (THms) and various subsidiaries (THds) within the holding and also benefiting from synergy effects (HSE). This procedure can the market value of the holding be expressed by the formula (Marek, 2009):
𝑇𝐻ℎ𝑠 = 𝑇𝐻𝑚𝑠+ ∑𝑛𝑖=1𝑇𝐻𝑑𝑠+ 𝐻𝑆𝐸 (1)
In addition to maximizing market value, among other reasons which may include reasons of creating the holding are achievement of greater competitiveness on the market by concentrating funds in the implementation of demanding investment projects, better capacity utilization, create better quality joint scientific base and improve the trading position towards suppliers and customers. The advantages of creating holdings led to the fact that this form of grouping is very common not only in well known business giants, but also smaller enterprises. The most commonly used are the advantages of holding companies that operates as a holding group of companies doing business independently, while benefiting from the effects of their mutual cooperation; holding capital to concentrate their individual businesses to large investment and innovation goals that go beyond their individual potential; holding as a whole has a greater weight in the struggle with competitors; holding allows better risk from business as it is separated from the risk of individual companies and the holding company may invest its capital and risk in projects which are intentionally constituted as a separate business; created businesses are self farming entities, which affects more transparency in the management of enterprises holding. Benefit from those advantages is the holding of a substantial part to the quality of the management of the parent company.
The strong growth of multinational grouping was triggered by the globalization of the world economy. Many of these multinational groupings have an annual turnover greater than the value of the economies of many small states. When considering reality that today in the world exists 40,000 of transnational corporations that have 250 000 subsidiaries we can say that these are
entities that determine the trend of life in the world. Annual turnover of the largest multinational companies of General Motors is $ 170 billion. General Motors employs 700,000 workers and generates more wealth than the economy of Norway. Only 20 countries have higher GDP than General Motors. The products and services offered by these groupings are the same, regardless of where in the world buy them. Possession of such goods by companies belonging to multinational groupings, anywhere in the world, is a sign of the success and a marketing triumph that brings to transnational groupings astronomical profits. Logos, brands and trademarks of such groupings promise the same product regardless of whether they buy it in New York, Paris, London or Moscow. This is particularly true when considering branded food groupings, such as McDonalds, Coca-Cola and Nestlé, but also manufacturers of sports equipment, such as Nike, Reebok or Adidas, brand in the automotive industry and many other sectors