Multinational Corporations

Meaning of Multinational Corporations

• When a company operates in a home nation established its subsidiary in other nation it becomes an MNC and there starts the process of globalization where in a local company serves the entire worlds with its products and services.

• Multinational Corporations (MNCs) is a business unit which operates simultaneously in different countries of the world. In some cases the manufacturing unit may be in one country, while the marketing and investment may be in other country.

• Internet tools like Google, Yahoo, MSN, E-Bay, Skype, Amazon make it easier for the MNC’s to reach their potential customers in the country.

Features of MNC

Main Features 1.Big size 2.Huge intellectual capital 3.Operates in many countries 4.Large number of customer 5.Large number of competitors 6.Structured way

of decision making

Why are MNC’s in India

• Huge market potential of the country • FDI attractiveness • Labor competitiveness • Macro-economic stability • One billion plus population

Top Ten Brands in the World:

• IBM• Microsoft• LG • Toyota• Samsung • Nokia • Hyundai • Fiat • Nike • Ford • Sony•

Some Indian MNC’s:• Asian Paints • Tata Motors• Tata Chemicals, • United Phosphorus • Ranbaxy• Airtel• HCL

Merits of MNC’s:

• Increase investment level • Transferring the technology • It increase host country exports & reduce its imports • Integrating national economy • Implementing new innovations • Increase competition • MNCs create employment opportunities in the host countries. • It helps to create a pool of managerial talent in the host country. • Helps removal of monopoly and improve the quality of domestic

made products. • Goods are made available at cheaper price due to economies of

scale. • Job and career opportunities at home and abroad in connection

with overseas operations. • Encourages the world unity and all resulting in world harmony.

De-merits of MNC’s

• May acquire monopoly power • Underestimate local culture • Think of about profits rather than host country interest • Inflexibility in terms & conditions • Heavy use of non-renewable natural resources • They are interested more on mergers and acquisitions

and not on fresh projects. • The host county is likely to lose its economic sovereignty • The host nation may also experience some loss of

control over its own economy Feeling that labour is being exploited by the MNC/ Outsourcing The problem of Dumping

Role of MNc in India :

1.) Profit Maximization. 2.) International Network of marketing. 3.) Diversification Policy. 4.) Concentration in Consumer goods. 5.) Location of central control offices. 6.) Techniques to achieve Public Acceptability. 7.) Existence of Modern & Sophisticated Technology. 8.) Business but not social Justice. 9.) MNCs & Process of planned Economic Development

in India. 10.) Cultural Explosion.