Multinational Corporations Class

8/7/2019 Multinational Corporations Class

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MultinationalMultinational

CorporationsCorporations


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MeaningMeaning

MNCs, also known as TNCs are hugeindustrial organizations which extend their

industrial and marketing operationsthrough a network of their branches ortheir majority owned foreign affiliates(MOFAs).

There are now 40,000 MNCs with 2,50,000overseas affiliates throughout the world.


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A multinational company can organize itsoperations in different countries either ofthe following five alternatives

y Branches

y Subsidiary Companies

y Joint venture companiesy Franchise holders

y Turnkey Projects


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REASONS FORGROWTHREASONS FORGROWTH

The manifold reasons are

1. Expansion of market territory2. Marketing Superiorities

3. Financial Superiorities

4. Technological Superiorities

5. Product Innovation


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Features of MNCFeatures of MNC

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


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Why are MNCs in IndiaWhy are MNCs in Indiay Huge market potential of the country

y FDI attractiveness

y Labor competitiveness

y

Macro-economic stability

y One billion plus population


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ContCont

y India ranked 10th largest economy, 4th largest interms of Purchasing Power Parity

y 250-300 million middle class

y Gross Domestic Product (GDP) growing at over8-9%, makes it one of the fastest growing economies in

the world

y Lucrative and diverse opportunities for U.S. exporterswith the right products or services


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Top Ten Brands in the WorldTop Ten Brands in the World

IBMMicrosoftLGToyota

SamsungNokiaHyundaiFiat

NikeFordSony


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Some Indian MNCsSome Indian MNCs

1. Asian Paints

2. Bharat Forge

3. Essel Propack

4. Hindalco

5. ICICI bank

6. Infosys

7. Tata Motors8. TCS

9. Larson & Toubro

10. Aptech / NIIT

1. Microsoft

2. Nokia3. Toyota

4. Intel

5. Coca-Cola

6. Sony7. IBM

8. General Electric

9. Nike

10. Citigroup


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Major Companies operating inMajor Companies operating inIndiaIndia

1. British Petroleum2.

Vodafone3. Ford Motors4. LG5. Samsung6.

Hyundai7. Accenture8. Reebok9. Skoda Motors

10.ABN Amro Bank


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Merits of MNCsMerits of MNCs

y Increase investment level

y

Transferring the technologyy It increase host country exports & reduce its imports

y Integrating national economy

y Implementing new innovations

y Increase competition


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DeDe--merits of MNCsmerits of MNCs

y May acquire monopoly power

y

Underestimate local culturey Think of about profits rather than host country

interest

y Inflexibility in terms & conditions

y Heavy use of non-renewable natural resources


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MERITSOF MNCMERITSOF MNC

y MNCs create employment opportunities in the hostcountries. It helps to create a pool of managerialtalent in the host country.

y Helps removal of monopoly and improve the qualityof domestic made products.

y Promotes exports and reduce imports by raisingdomestic productions.

y Goods are made available at cheaper price due to

economies of scale.y Job and career opportunities at home and

abroad in connection with overseasoperations.

y Encourages the world unity and all resulting in worldharmony.


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DEMERITSOF MNCDEMERITSOF MNC

y The host county is likely to lose its

economic sovereigntyy The host nation may also experience

some loss of control over its own economy

y Feeling that labour is being exploited by

the MNC/ Outsourcingy The problem of Dumping


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y 1 Reliance Industries

y

2 Oil & Natural Gasy 3 State Bank of India Group

y 4 Indian Oil

y 5 National Thermal Power

y 6 Icici Banky 7 Steel Authority of India

y 8 Tata Steel

y 9 Tata Consultancy Services

y 10 Tata Motors

y


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y 11 Bharti Airtel

y

12 Wiproy 13 GAIL (India)

y 14 ITC

y 15 Infosys

y 16 Punjab National Banky 17 Bharat Petroleum

y 18 Canara Bank

y 19 Hindustan Lever

y 20 Sterlite Industries (India)

Multinational Corporations Class

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