Presentation on:

Multinational

Companies

BY: Rahul ThakurMayank Sharma

About MultinationalCompanies

What do you mean byMultinational Companies?

Multinational consists of two different words ‘multi’ & ‘national’. Multi means many & national means countries or nations. So multinational means a company which operates in many countries. Such a company has branches, factories & workshops in different countries.

Some Examples :1.Coca-Cola2.BMW3.Nike4.Reebok5.Sony6.L.G.7.Samsung

Merits of MNC’sGiant Size: The assets & sales of multinational companies are quite large. These companies operate on large scales. For example; The physical assets of IBM (International Business Machines) exceeds 8 Billion$

International Market: Due to vast resource and excellent marketing skills, a Multinational corporation has access to international markets. It is able to sell its products/services in different countries.

Sophisticated Technology: Multinational companies make use of latest technology to supply world class products. They employ capital-intensive technology & innovative techniques of production.

Professional Management: A multinational corporation employs professional experts, specialized people & keeps updating the knowledge and skills of their employees by imparting them training from time to time. It employs professionals to handle the advance technology.

Factor mobility.

Economic reforms.

Growth urge.

Market potential.

Risk minimize.

Development in communication

technology.

Reasons for thegrowth of MNCs

Fastest Growing economy

Huge market potential

FDI attractions

Labour competitiveness

Macro economic stability

Why is India AttractingMultinational Companies?

• Work culture for employees.• Systems.• Training and Learning.• Technology – especially concept of working with

better technologies.• Safety, Health and Environmental Learning's.• Culture and Ethos.• Excellent training grounds for many

entrepreneurs.

Key advantages ofexistence of MNC in India

What is Home country or Host country?Home Country is a country in which the headquarters of the multinational company is situated & the Host Country is country in which one of the branch of the multinational company works.

1. The home country can obtain raw materials and labours at comparatively lower cost.

2. It can export components & finished products.3. It can acquire technical and managerial

expertise of foreign nation.

Benefits to the Home Country

Benefits to the Host Country1.Providing employment opportunities.2.Multinationals will bring with them technology

and production methods that are probably new to the host country.

3.The presence of one multinational may improve the reputation of the host country.

Disadvantages of MNC’s1. DEPLETION OF NATURAL RESOURCES: MNC’s cause

rapid depletion of some of the non-renewable natural resources in host countries.

2. ALIEN CULTURE: The MNC’s propagate their own culture to sell the goods

For example: MNC’s are developing the habit among peoples of eating synthetic food etc.

3. Creation of Monopoly: MNC’s join hands with big business houses & give rise to monopoly & concentration of economic power in host countries

For example: Coca-Cola company took over Thums up & Walls company took over Kwality Ice creams.

4. Disregard of National Objectives: The MNC’s prefer to invest in profitable projects. They fail to solve the chronic problems such as poverty etc. of Host Countries.

• Domestic market like India versus International expansion.

• Language .• Culture .• Autonomy to “local” managers.• Styles of doing business .• Handling of potential liabilities related to Labour,

IPR.

Key challenges that“Indian MNC” would face

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

Role Play by FDI

1. Greenfield investment (a new operation).

2. Brownfield investment (expansions or re-investment in existing foreign affiliates or sites).

3. Mergers & Acquisitions (M&As).4. Privatization & equity investment.5. New forms of investment (joint

ventures, strategic alliances, licensing).

Five Main Formsof FDI…

Merits of FDI1. Helps in economic development of the country in which invested.2. Helps in creating jobs and increases employment.3. Resource transfer, countries are able to learn newer forms of technologies and skills.4. Increase in productivity due to newer equipment.

Demerits of FDI1.FDI hinders domestic investment, demand for

domestic investment decreases.2. Exchange rates increasing in one and reducing in the other.3. Capital intensive from the investors point of view.4. Investment in certain areas is banned in foreign markets.

Role of Walmart1. Walmart the worlds largest retailers by sales for foreign

investment in retail business.2. Bharti Retail a subsidiary that runs ‘Easy day’ with managerial support for walmart has stopped expanding its operation since Nov. 2012.3. They are facing bribery allegations, It has expressed its inability to government on meeting sources from small scale industries. 4. Walmart has put its expansion plans for India on hold, closed down more than dozen properties.

FDI = Foreign Direct Investment(measure of foreign ownership of productive assets, such as factories, mines and land. )

Statistics of FDI inflow

Foreign direct investment flowCentral reserve bank of india

Type:Industry:

Founded:

Founders:

Societies EuropaeaClothing & Consumer Goods Manufacture1924 as Gebruzed Dazzler Schuhfabrik (Registered in 1948)

Rudolf Dazzler

Headquarters:Area Served:Key People:

Products:

Herzogenaurach,Germany

Worldwide

Jochen zeitz(Chairman)Fraz koch(CEO)Claus bauer(COO)

Footwear, sportswear,sports, goods, fashion accessories

Revenue:Operating Income:

Profit:Total Assets:Total Equity:

Employs:Parent:

€2.70 Billion€306.8 Million€202.2 Millions€2.367 Billion€1.386 Billion9,310Kering

Strate

gies of

Multinatio

nal

Companies

Outsourcing:It refers to getting a business task done from an outside agency.

# Benefits of Outsourcing1.Concentration on Core Competence.2. Reduction in Cost.3. Helps to avoid Labour Problem.4. Benefit of latest development.

KPO(Knowledge Processing Outsourcing)

Indian companies have a long history of providing services for the IT, ITES& KPO industry.Choose India offshore partner for your KPO requirements & get access to the offshore KPO advantages that India offers.

Advantages of KPO1. It creates value for client.2. It increases efficiency & cost saving3. It provides error free works.4. It lead to speedy delivery.5. It assures the security of your confidential

information

Purchasing ForeignCompetition:

A multinational company may not operate in all of the countries in the world, choosing instead to operate and even sell its goods and services in only certain parts of the world.

The multinational play both positive & negative roles. In recent years India has adopted an open arm policy for MNCs. But hopes of India are not fulfilled. Most of the MNCs have entered low tech areas such as soft drinks, electronics etc. Several Indian companies were forced to sell out to MNCs. Therefore, it is necessary to safeguard the countries interest while allowing multinationals to operate in India.

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