multinational companies ppttt

8/18/2019 Multinational Companies Ppttt

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Multinational

Companies


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What are MNCs?

• A multinationalcorporation or multinationalenterprise is an organization that owns

or controls production of goods orservices in one or more countries otherthan their home country. It can also bereferred as an international corporation,

a "transactional corporation", ora stateless corporation.


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Overview

• A multinational corporation is usually a largecorporation which produces or sells goods orservices in various countries.

•

Importing and eporting goods and services• Ma!ing signicant investments in a foreign

country.

• #uying and selling licenses in foreign mar!ets.

• $ngaging in contract manufacturing%permitting a local manufacturer in a foreigncountry to produce their products.


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Transnational Corporations•A transnational corporation di&ers from a traditionalmultinational corporation in that it does not identify itself with

one national home. 'hile traditional multinationalcorporations are national companies with foreign subsidiaries,

transnational corporations spread out their operations inmany countries to sustain high levels of local responsiveness.

•An eample of a transnational corporation is (estl) who

employ senior eecutives from many countries and try toma!e decisions from a global perspective rather than fromone centralized head*uarters.

•Another eample is +oyal utch -hell, whose head*uartersare in he /ague, (etherlands, but whose registered o0ce

and main eecutive body are head*uartered in 1ondon,2nited 3ingdom.


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Characteristics of MNCs•4.'5+1 'I$ 56$+AI5( he multinational companies etend their operation to two or morecountries. hey establish parent o0ce in one country and etendbranches ,subsidiary and a0liation to other countries.

7.C+$A$ MA8IM2M 56$+AI5( he multinational companies are etended to many countries. 6eoplecan grasp the opportunity. 6eople can 9oin the multinational companiesaccording to their capabilities. Manpower can be well utilized in themultinational companies.

:.A;A(C$ $C/(515


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Advantages of the growing MNCs to India

• here are certain advantages that theunderdeveloped countries li!e and thedeveloping countries li!e India derive from the

foreign M(Cs that establishes. hey are asunder initiating a higher level of investment.

• +educing the technological gap.

• he natural resources are utilized in true

sense.• he foreign echange gap is reduced.

• #oosts up the basic economic structure.


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Disadvantages of MNCs

• +oses does not come without thrones. isadvantages ofhaving an M(Cs in a developing country li!e India are asunderDCompetition to -M-I

•

6ollution and $nvironmental hazards.• -ome M(Cs come only for ta benets only.

• $ploitation of natural resources.

• 1ac! of employment opportunities.

•

i&usion of prots and ?ore Imbalance.• 'or!ing environment and conditions.

• -lows down decision ma!ing.

• $conomical distress.


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Top MNC’sin theworld


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Microsoft• A subsidiary, named as Microsoft Corporation India 6rivate

1imited, of the 2. -. E2nited -tatesF based Microsoft Corporation,one of the software giants has got their head*uarter in (ew elhi.-tarting its operation in the country from 4GGH, this company hasgot the following business units

Microsoft Corporation India E6vt.F 1imited EMar!eting ivisionF

• Microsoft


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an!a"# $a!oratories $imited

• +anbay 1aboratories 1imited, one of the biggest

pharmaceutical companies in India, started theirbusiness in the country from the year 4G4. hecompany made its public appearance in 4GL:though.

•

/ead*uartered in this nation, this international,research based, integrated pharmaceuticalcompany is the producer of a huge range ofa&ordable cum *uality medicines that are trustedby both patients and healthcare professionals allover the world.

• In the business year 7H4H, the registered globalsales of the company was 2- J 4, KK Mn.-uccessful development of business forms the

!ey component of their trading strategy.


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International %usiness Machines

• I%M India &rivate $imited' a part of I%M has !eenoperating from this countr# since the #ear ())*+This glo!al compan# is ,nown for invention andintegration of software' hardware as well asservices' which assist forward thin,ing institutions'enterprises and people' who !uild a smart planet+

• The net income of this compan# post completion ofthe -nancial #ear end of *.(. was /(0+1 !illion witha net pro-t margin of (0+) 2+ With innovativetechnolog# and solutions' this compan# is ma,ing aconstant progress in India+ &resent in more than *..cities' this compan# is ma,ing constant progress inglo!al mar,ets to maintain its leading position+


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ee!o, International $imited

• his global brand is a famous name in theeld of sports as well as lifestyle products.+eebo! International 1imited, a subsidiaryof Adidas A


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&epsiCo• 6epsiCo. Inc. entered the Indian mar!et with the

name of 6epsiCo India from the year 4GKG. 'ithina short time span of 7H years, this company hasemerged as one of the fast growing as well as

largest beverage and food manufacturer.• As per the annual report of the company in the

last business year, the net revenue of 6epsiCogrew by :: N. #y the year 7H7H, this food

manufacturing company intends to triple theirportfolio of en9oyable and wholesome o&erings.

• he epansion of their


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3on#•

-ony India is a part of the renowned brand name-ony Corporation, which started their businessoperation in the year 4G> in Papan. $stablishedin India in (ovember 4GG>, this company hascaptured one of the leading positions in the eldof consumer electronics goods.

• #y the end of the business year 7H4H on :4stMarch, 7H44, the company showed a remar!ableincrease in the share related to numerous

categories. -ony India is planning to investaround I(+. 4@H crore for the mar!eting of theactivities related to A1 and #1.

• As far as #ravia ;s are concerned, they are

loo!ing forward to hold their mar!et share of :H


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Tata Consultanc# 3ervices

• Commonly !nown as . C. -., this multinational

company is a famous name in the eld of I. .EInformation echnologyF services, #usiness6rocess 5utsourcing E#. 6. 5.F as well as businesssolutions. his company is a subsidiary of the ata


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4odafone• ;odafone


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5"port v6s 7DI• ?oreign production is not always an answer.

?oreign mar!ets can be better served byeporting, rather than by creating a foreignsubsidiary if there are economies of scale. If large

scale production reduces unit cost, it is better toconcentrate production in one place.

• M$- is the minimum rate of output at whichAverage Cost EACF is minimized. If minimum

e0cient scale EM$-F is not achieved, then eport.• If foreign demand eceeds the minimum e0cient

scale, then ?I.

• If demand is less than M$-, do not build a foreign

production plant.


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3tages ofevolution


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7oreign &roduction 3tage

EiF here is a limit to foreign eports, due totari&s, *uotas and transportation costs.

EiiF 'age rates may be lower in 1Cs.

EiiiF $nvironmental regulations may be la in 1CsEe.g., ChinaF. ItaiDItai Emeaning ouch ouchFdisease in Papan since the 4G7Hs was caused bycadmium poisoning. Contaminated eSuents Oewinto rice paddies and water source.F 'atch themovie, $rin #rochovich.

EivF Meet Consumer demands in the foreigncountries.


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$icensing• 1icensing is usually the rst

eperience Ebecause it is easyFe.g.3entuc!y ?ried Chic!en in the 2.3.

• oes not re*uire any capitalependiture.

• ?inancial ris! is zero.

• +oyalty payment T a ed N of saleslicensor may provide training,e*uipment, etc.


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3igni-cance of multinational corporations 8MNCs9:

• he multinational corporations today have a revolutionary e&ect on theinternational economic system. It is so because the growth of internationaltransactions of the multinationals has a&ected the more traditional forms ofcapital Oows and international trade for many economies. oday theyconstitute a powerful force in the world economy.

• he value of the products sold by the M(Cs in 4GL4 was more than J @HH

billion which was about oneDfth of the


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• Among the developing countries only India had an annualincome twice that of


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