mnc 1226082281842875-9
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Multinational CorporationIn India
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What is a Multinational Corporation???
It is a corporation that:
And/or
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Multinational corporation (MNC) is a enterprise that manages production or delivers services in more than one country can also be referred to as an international corporation.
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How Is A Company Classified As An MNC?
Subsidiaries in foreign countries;
Operations in a number of countries;
High proportion of assets in or/ and revenues from global operations;
Stakeholders are from different countries.
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Multinational corporation structure:
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Multinational corporate structure
Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products.
(example: McDonald's)
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Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas)
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Multinational corporate structure (Contd)
Diversified multinational corporations manage production establishments located in different countries that are neither horizontally nor vertically nor straight, nor non-straight integrated.
(example: Hilton Hotels)
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Organization of Multinational CorporationsSubsidiaries
Joint Ventures Companies
Franchise Holders
Turn Key Project.
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Micro-multinationals A new breed enabled by Internet based
communication tools.Employees, clients and resources located in
various countries.Use of internet, cheaper telephony and lower
traveling costs.Internet tools like Google, Yahoo, MSN, Ebay,
Skype and Amazon make it easier for the micro-multinationals to reach potential customers in other countries.
Service sector micro-multinationals, like Indigo Design & Engineering Associates Pvt. Ltd.
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Fortune Global 500 List 2013: Top 10
RANK COMPANY COUNTRY FIELD
1 Wal-Mart Stores United States Retail
2 Royal Dutch Shell Netherlands Petroleum
3 Exxon Mobil United States Petroleum
4 BP United Kingdom Petroleum
5 Sinopec China Petroleum
6China National
Petroleum China Petroleum
7 State Grid China Power
8 Toyota Motor Japan Automobiles
9Japan Post Holdings
Japan Diversified
10 Chevron United States Petroleum
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SWOT Analysis of MNCStrengths
• Low Cost• Well Developed Infrastructure
Weakness
• Location is often very distant• Lack of Transportation facilities• Relative Inflexibility
Opportunities
• Leverage Government • Create the necessary infrastructure• Attract new industries
Threats
• Emergence of Private companies• Establishment of monopoly
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Advantages of MNC in India
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Advantages of MNCs to the Host Country:
Transfer of technology, capital and entrepreneurship.
Increase in the investment level and thus, the income and employment in the host country.
Greater availability of products for local consumers.
Increase in exports and decrease in imports.
MNC’s generate jobs &income Technology transfer
Cost reduction
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Advantages of MNCs to the Home Country.
Acquisition of raw materials from abroad.
Technology and management expertise acquired from competing in global markets.
Export of components and finished goods for assembly or distribution in foreign markets.
Inflow of income from overseas profits, royalties and management contracts.
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Pros & Cons of MNC Pros:
Increase investment level
Transferring the technology
It increase host country exports & reduce its imports
Integrating national economy
Implement new innovations
Increase competition
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Pros & Cons of MNC (cont.)
Cons:
May acquire monopoly power
Underestimate local culture
Think only about profit rather than host country interest
Inflexibility in terms & conditions
Heavy use of non-renewable natural resources
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MNC In India
MNC in India are attracted towards:
India’s large market potential
India presents a remarkable business opportunity by virtue of its sheer size and growth
Labor competiveness
FDI attractiveness
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MNC In India
vast population
increasing its purchasing power
emerging as the manufacturing and sourcing location of choice for various industries
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MNC In India…
MNC in India represent a diversified portfolio of companies representing different nations.
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Indian companies in fortune global 500 list 2013:
COUNTRY RANK
COMPANY GLOBAL 500 RANK
CITY REVENUE($ millions)
1 Indian Oil 98 New Delhi 68,837
2 Reliance Industries
134 Mumbai 58,900
3 Bharat Petroleum
272 Mumbai 34,102
4 State Bank of India
292 Mumbai 32,450
5 Hindustan Petroleum
336 Mumbai 28,593
6 Tata Motors 359 Mumbai 27,046
7 Oil & Natural Gas
361 Dehradun 26,945
8 Tata Steel 370 Mumbai 26,065
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The Indian MNCs ………………
Paints – Asian Paints
Auto & Components – Tata Motors, Bharat Forge
Chemicals – Tata Chemicals, United Phosphorus
Metals – Sterlite Industries, TISCO
Packaging – Essel
Pharmaceuticals – Ranbaxy, Wockhardt, Sun, DRL
Oil & Gas – ONGC
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Bottlenecks Of MNC in India Socio-economic challenges
Language
Culture
Autonomy to “local” managers – how comfortable are we?
Handling of potential liabilities related to Labour, IPR etc
Difficult operating environment
Weak infrastructure
And ………………Patience !
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International powers of MNC’s
International - Large MNC’s influence in international relations
Tax competition- Tax breaks, pledges of govt. assistance etc.
Market withdrawal-Eg. Pharmaceutical companies
Lobbying & Patents
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Threats to MNC
Nationalization
Lack of Govt. assistance
Opposition by local traders.
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THANK YOU