MULTI-NATIONAL CORPORATION

SUBMITTED BY

AKSHATA SHETTY ( 92 ) ANSARI AHMED ( 116 ) KADIR PATHAN ( )

LAXMI WAVALE ( 108 )MALIK ARJUN ( ) SHAILA GAIKWAD ( 30 )

ASST.PROF – FARHEEN AHMED

WHAT ARE MNC’S ?• MNC STANDS FOR ‘’MULTI-NATIONAL CORPORATION’’

• AN ENTERPRISE OPERATING IN SEVERAL COUNTRIES BUT MANAGED FROM ONE (HOME) COUNTRY.

• GENERALLY, ANY COMPANY OR GROUP THAT DERIVES A QUARTER OF ITS REVENUE FROM OPERATIONS

OUTSIDE OF ITS HOME COUNTRY IS CONSIDERED A MULTINATIONAL CORPORATION.

• THERE ARE FOUR CATEGORIES OF MULTINATIONAL CORPORATIONS

MULTINATIONAL CORPORATIONS

GLOBAL CORPORATIONS

INTERNATIONAL CORPORATIONS

TRANSNATIONAL CORPORATIONS

GLOBAL, TRANSNATIONAL, INTERNATIONAL AND MULTINATIONAL COMPANY

INTERNATIONAL

COMPANIES

MULTINATIONAL

COMPANIES GLOBAL

COMPANIES

TRANSNATIONAL

COMPANIES

HISTORY OF MNC

First MNC in world Oldest MNC in INDIA First INDIAN MNC

JOINT VENTURES

FRANCHISE SUB-SIDIARIES

TURN KEY PROJECTS

TYPES OF MNC’S

FACTORS CONTRIBUTED FOR GROWTH OF MNCs

• EXPANSION OF MARKET TERRITORIES

• MARKET SUPERIORITIES

• FINANCIAL SUPERIORITIES

• TECHNOLOGICAL SUPERIORITIES

ADVANTAGE & DISADVANTAGE OF MNCs TO HOST COUNTRY

ADVANTAGE

• INCREASE ECONOMIC & INDUSTRIAL ACTIVITY.

• INCREASE EMPLOYMENT & INCOME LEVEL.

• DOMESTIC INPUT SUPPLIERS GET MORE BUSINESS.

• DOMESTIC INDUSTRY GET SOPHISTICAL MANAGEMENT TECHNIQUES.

• MNCS ERN FOREIGN EXCHANGE BY EXPORTING TO NEIGHBORING COUNTRIES.

DISADVANTAGE

• MNCS MAY NOT OPERATE WITHIN NATIONAL AUTONOMY AND REGULATION.

• MONOPOLISTIC PRACTICES OF MNCS MAY KILL DOMESTIC INDUSTRY.

• TECHNOLOGY DEVELOPED BY THE MNCS MAY NOT SUITS THE NEEDS OF HOST COUNTRY.

ADVANTAGE & DISADVANTAGE OF MNCs TO HOME COUNTRY

ADVANTAGE

• CREATE THE DEMAND FOR THE HOME COUNTRY PRODUCTS.

• BOOST UP THE INDUSTRIAL ACTIVITY OF THE HOME COUNTRY

• CREATE EMPLOYMENT FOR HOME COUNTRY PEOPLE

• PRODUCE THE PRODUCT REQUIRED BY THE DOMESTIC CONSUMER IN FOREIGN COUNTRIES WITH FORGINES

RESOURCES.

DISADVANTAGE

• TRANSFER CAPITAL TO OTHER COUNTRIES AND CAUSE UNFAVOURABLE BALANCE OF PAYMENTS.

• MAY NOT CREATE EMPLOYMENT OPPORTUNITIES TO DOMESTIC PEOPLE ( I.E BPO )

• MAY NEGLECT THE INDUSTRIAL DEVELOPMENT OF HOME COUNTRY AS THE TRANSNATIONAL

COMPANIESFOLLOW THE SECULAR APPROACH.

CONTROL OVER MNCs BY GOVT

• SOME INDUSTRIES WERE NOT ALLOWED TO IMPORT TECHNOLOGIES

• PERMISSIBLE PERIOD OF AGREEMENT WAS REDUCED FORM 10 YEARS TO 5 YEARS

• IMPORT OF FOREIGN CAPITAL WAS ALLOWED BUT SOMETIMES THEY WERE BASED ON COMPANY DECISION

• EXPORT AND OTHER MARKETING RESTRICTION WHERE IMPOSED

THE ORGANIZATIONAL STRUCTURE OF A MNCs

• HORIZONTALLY INTEGRATED : is the process of a company increasing production of goods or services at the same part of the supply chain. A company may do this via internal expansion, acquisition or merger. The process can lead to monopoly if a company captures the vast majority of the market for that good or service.

E.g. HEINZ

• VERTICALLY INTEGRATED : is an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need.

E.g. APPLE

RELATIONSHIP BETWEEN HEADQUARTERS AND SUBSIDIARIES

• THE MNCS CAN DIRECTLY MANAGE, IF THE NUMBER OF SUBSIDIARIES ARE FEW. IF NUMBERS OF SUBSIDIARIES ARE MORE THEN IN NUMBER, IT HAS TO MAKE PERMEANT STRUCTURAL RELATIONSHIP BETWEEN ITS SELF AND ITS SUBSIDIARIES.

THE DIFFERENT ASPECTS OF RELATIONSHIP ARE AS FOLLOWS:

• INFORMATION SHARING

• RESOURCE SHARING

• DECISION FLOWS

• COORDINATION OF ACTIVITIES

• CONTROL OF OPERATIONS

• STRATEGY FORMULATION

MNCs IN INDIA• HUGE MARKET POTENTIAL OF THE COUNTRY

• FDI ATTRACTIVENESS

• LABOR COMPETITIVENESS

• MACRO-ECONOMIC STABILITY

• ONE BILLION PLUS POPULATION

TOP 10 MNCs in INDIA

No COMPANY NO COMPANY

1 Microsoft 6 PepsiCo

2 IBM 7 Citi Group

3 Nestle 8 Sony Corporation

4 Procter & Gamble 9 Hewlett Packard (HP)

5 Coca Cola 10 Apple Inc

FDI IN INDIA

ROLE OF MNC’S IN INDIAN ECONOMY

• PROFIT MAXIMIZATION

• INTERNATIONAL NETWORK OF MARKETING

• DIVERSIFICATION POLICY

• CONCENTRATION IN CONSUMER GOODS

• MNC’S & PROCESS OF PLANNED ECONOMIC DEVELOPMENT IN INDIA

• CULTURAL EXPLOSION

GROWING ECONOMY

GROWTH OF MIDDLE-CLASS AND THOSE WITH

DISPOSABLE INCOME GENERAL POPULATION GROWTH

TALENT POOL

HIGH OUTPUT CENTRE

EASIER ACCESS TO CAPITAL

REASONS WHY INDIA IS ATTRACTIVE TO MNC’S

STRATEGIC MANAGEMENT OF MNC’S

THE BASIC STEPS IN STRATEGIC MANAGEMENT INCLUDE:

• FORMULATION OF MISSION, OBJECTIVES AND GOALS

• ANALYSIS OF INTERNAL AND EXTERNAL ENVIRONMENT

• FORMULATION OF ALTERNATIVE STRATEGIES

• EVALUATION OF ALTERNATIVE STRATEGIES AND SELECTING RIGHT ONES

• IMPLEMENTATION OF STRATEGIES

• EVALUATION AND CONTROL OF STRATEGY

INDIANIZATION OF TRANSNATIONAL COMPANIES

INDIAN STRATEGY GLOBAL STRATEGY

ANY QUESTION ???