MNCs.docx
- 1. Project Report On Multinational Corporation Submittedto: Submittedby: Dr. Surya Rashmi Rawat Atul Sharma (5219) Prince Thakur(5325) Ajay Thakur(5207) ManojKumar(5237) RajatLoomba(5249) Vikas (5285)
- 2. INTRODUCTION A multinational corporation/company is an organization doing business in more than one country. Transnational company produces, markets, invests, and operates across the world. It is integrated global enterprise which links global with global market at profit. These companies have sales offices and/or manufacturing facilities in many countries. A corporation (MNC) engages in various activities like exporting, importing, manufacturing in different countries. MNCs have worldwide involvement and a global perspective in its management and decision- making. 1.MNCs consider opportunities throughout the globe through they do the business in a few countries. 2.MNCs invest considerable portion of their assets internationally. 3.MNCs engage in international production and operate plants in the number of countries. 4.MNCs take managerial decision based on a global perspective. The international operations are integrated into the corporations overall business. MNCs are huge industrial/ business organizations. They extend their industrial/ marketing operations through a network of branches or their majority owned foreign affiliates. MNCs produce the products in one or few countries and sell them in most of the countries. Transnational corporations produce the products in each country based on the specific needs of the customers of that country and market these. A transnational corporation mostly uses the inputs of the host country where it operates unlike a multinational company.
- 3. HISTORY The history of the multinational is linked with the history of colonialism. Many of the first multinationals were commissioned at the behest of European monarchs in order to conduct expeditions. Many of the colonies not held by Spain or Portugal were under the administration of some of the world's earliest multinationals. One of the first arose in 1600:the British East India Company, which took part in international trade and exploration, and operated trading posts in India. Other examples include the Swedish Africa Company, founded in 1649, and the Hudson's Bay Company, which was founded in the 17th century. Features of a MultinationalCompany 1. High Turnoverand Many Assets MNCs operate on a global scale. Which means they have huge assets in almost all countries in which they operate. Their turnovers can also be incomprehensibly large. For example, Apple has a market capitalization of 1 trillion dollars. This is bigger than the entire economy of Saudi Arabia! 2. Control MNCs have unity of control. So while they have many branches in many countries, the main control will remain with the head office in its country of origin. The business operations in the host country have their own management and offices, but the ultimate controlwill still remain at the head office.
- 4. 3. Technological Advantages As we saw earlier, an MNC has at its disposal huge amounts of wealth and investments. This allows them to use the best technology available to boost their products and their company. Most companies also invest huge money in their Research & Development Department to invent and discover new technological marvels. 4. Management by Professionals An MNC is run by very competent and capable individuals. They have suitable managers to take care of their business operations technology, finances, expansion etc. And they are also able to attract the top talent to their corporations due to their resources and their reputations. 5. Aggressive Marketing MNCs can spend a lot of their money on marketing, advertising, and promotional activities. They target an international audience, so effective marketing becomes necessary. Aggressive marketing allows them to capture the market and sell their products globally. List of Multinational Companies in India Microsoft Apple LTI Deloitte Coca Cola
- 5. OBJECTIVES The fundamental objective of an MNC is to earn profit and this might clash with the host government’s objective of achieving a better quality of life for its citizens. Such conflicts need to be resolved by the MNC using their initiative. Following are the financial goals of MNC and their subsidiaries: Minimize the cost of production, especially the labour cost. Capture the lucrative foreign market against international competitors. Avail the competitive advantage internationally. Achieve greater efficiency by producing in local markets and then exporting the products. Make the diversification intentionally effective so that a steady growth of business could be achieved. To safeguard the company's interest in order to get behind the tariff walls. Make the best use of technological advantages by setting up production facilities abroad. Establish an international corporate image. Counter the regulatory measures in the parent country. Manufacture in those countries where it finds the greatest competitive advantage. To expand the business beyond the boundaries of the home country, where they were originally established
- 6. Advantages of Multinational Companies – MNC’s As one can imagine, there are a lot of merits of having a multinational corporation exist and function in an economy. They also bring many advantages to the consumers as well. Let us see some merits of an MNC in both the host country and the home country. Merits of a MultinationalCompaniesin a Host Country One of the main advantages to the host country is that MNCs boost their economic growth. They bring with them huge investments and capital. And then through subsidiaries , joint ventures branches, factories they promote rapid industrial growth. In fact, MNCs are known as the messengers of progress. A multinational corporation helps the technological growth of the country as well. They bring new innovations and technological advancements to the host country. They help modernize the industry in developing countries. MNCs also reduce the host countries dependence on imports. Imports reduce while exports from the country see a rise. All MNCs have enormous capital and resources at their disposal. A good portion of such resources is invested in R&D. This can be very beneficial to the host countries where they set up their R&D facilities.
- 7. Multinational corporations also promote maximum utilization of the country’s resources. This, in turn, leads to economic development. Merits of Multinational Companies in the Home Country MNCs make their home countries (country of origin) very rich by their revenues. The corporation will collect fees, royalties, profits, charges from all their host countries and bring them back to the home country. This huge inflow of foreign exchange is very beneficial to the home country. MNCs provide a means of co-operation between developed countries and developing or underdeveloped countries. This allows both to benefit from the partnership. And these multinational corporations also help promote bilateral trade relations between countries. This is beneficial to both the countries and the global market and economy. A multinational corporation only has a profit motive. Their interests may not align with the national interests of the host country and be harmful to their economy and development In some host countries, the presence of MNCs can restrict competition and may even cause a monopoly or monopolistic competition. They also charge heavy fees and charges in their host countries. And move all the profits to their home country. This outflow of foreign exchange can be detrimental to the host country.
- 8. CONCLUSION Multinational companies need to evaluate social responsibility, employee devilment, competitors, and customers in accordance with business ethics. The companies can operate well if they follow cultural practices in countries where they operate. In addition, they should consider the regulations and ethical framework in countries where they operate. From the discussion, it appears that combining business and ethics is somewhat difficult. While international businesses have to respond to social issues, their aim is to make profits. Often, the public good is not considered or given less priority. As such, multinational consider profitability before evaluating the governing ethics. For multinational companies to grow in terms of sales and profits, it is vital for them to consider business ethics. The companies should develop ethics initiatives build on cultural, regulatory, and ethical frameworks of the countries where they operate in. As such, the companies can establish business ethics that that are acceptable and contribute to their growth. The multinational corporation is the only organization which has the resources and scope to think, to plan, and to act with worldwide planning of markets and sources.