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MN s Role in International

r de

Prepared by:

Chandan Agarwal

Bengal

Institute of

Business Studies

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MNCs

Multinationalcompanies(MNCs) are theorganizations or enterprisesthat manage production or

offer services in more thanone country.

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International Trade

International trade isexchange of capital,goods and services acrossinternational borders or

territories.

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Evolution

Since times immemorial.

Unexpected expansion after world war II.

The post 1990s has given greater fillip to

international trade.The MNCs which were producing the products intheir home countries and marketing them invarious foreign countries before 1980s, started

locating their plants and other manufacturingfacilities in foreign/host countries.

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Advantage of MNCs

Promotes economic growthProvides lower-priced, higher-qualitygoods to consumers

Brings capitalTransfers technology: includingorganizational, management andmarketing skills

Pay higher wages (increaseproductivity)Introduces competition to domesticfirms

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Disadvantage of MNCs

Foreign business can destroy localbusinesses

The finance brought into a country by an

MNC may be badly managed by that countrysgovernment.

Avoidance of taxes by manipulating prices.

Market power-After firms driven out, can exertmarket power and increase prices,create barriers to entry

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Important Facts500 largest MNCS control over of global tradeflows and 1/5 of global gdp.

90% of worlds 500 largest MNCs are in NorthAmerica, Japan and Europe

More than 40% of the total exports of China isdone by MNCs affiliates.

BP (British petroleum) operates in more than 100countries.

Marks & Spencer sources its goods from more than70 countries.

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ONAL?WHY GO

INTERNATIONAL?Expanding the production

Capacities beyond the Demand of

the Domestic Country.Serve Competition in the Home Country.

Limited Home Market.Nearness to Raw Materials.

Availability of Quality Human Resources at LowCost.

To Increase Market Share.

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Fortune global 500(2010)

How country stack upCountry Number of global 500

companies

United States 139

Japan 71

China 46

France 39

India 8

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The largest

component ofthe annual

$2.5 trilliontrade in

international

services istravel andtourism

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Importants of Multinational

Companies in India

Huge market potential of thecountry

FDI attractiveness

Labor competitiveness

Macro-economic stability

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WHAT INDIA OFFERS1.1 billion plus population

India ranked 10th largest economy, 4th

largest in terms of Purchasing Power Parity250-300 million middle class

Gross Domestic Product (GDP) growing at over

8-9 %, makes it one of the fastest growing

economies in the world

Easier access to capital

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I n this century I ndia's economy wil l belarger than the United States.Bill Clinton, Former President of

the United States

Thank You