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Multi-national corporations

MNC’S &

foreign Collaborations

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A multinational corporation (MNC) is

a corporation or an enterprise thatmanages production or delivers servicesin more than one country.

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Types of MNC’s 

Horizontally integrated multinationalcorporations

Vertically integrated multinationalcorporations

Diversified multinational corporations

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What is FOREIGN DIRECT

INVESTMENTFDI occurs with the purchase of“physical assets or a significant

amount of ownership (stock) of acompany in another country in orderto gain a measure of managementcontrol.”

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• An investor or investment fund that is registered in acountry outside of the one in which it is currently

investing. Institutional investors include insurancecompanies, pension funds and mutual funds etc.

• The term is used most commonly in India to refer to

outside companies investing in the financial markets ofIndia. International institutional investors must registerwith the Securities and Exchange Board of India toparticipate in the market.

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Foreign collaboration

• Collaboration meaning- working jointly onan activity, venture or a project.

• Joint participation of foreign and domestic.

• There are three kinds – 

• Joint participation between private parties

• between foreign firms and Indian government

• between foreign government and Indiangovernment

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Two types of foreign collaborations

Financial collaboration (foreign equity participation)where foreign equity alone is involved

Technical collaboration (technology transfer)involving licensing of technology by the foreign

collaborator on due compensation.

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Main role of SEBI

• INVESTOR PROTECTION

• REGULATORY ROLE

• DEVELOPMENTAL ROLE

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Segments of the capital market

Investors

Capital seekers

Regulatory bodies

The stock exchange

The registered intermediaries

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Following are the reasons why multinationalcompanies consider India as a preferreddestination for business: 

Huge market potential of the country

FDI attractiveness

Labor competitiveness

Macro-economic stability

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Advantages of MNC's in

India 

Increase in job opportunities

Better and cheaper products will be available

to the consumers The government will also benefit by earning

more in taxes etc

It will lead to an increase in infrastructureimprovement

Di d t f MNC’ i

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Disadvantages of MNC’s in

India 

MNC’s create monopolies in the market andeliminate local competitors.

MNC’s may create depletion of resources dueto its continues use by these overseascompanies.

MNC’s generally carry out their R&D in their

home country and supply to the host country.

MNC’s generally import huge raw materialsdue to its continuous use by these overseas

companies.