The host country is likely to lose its economic sovereignty
The host nation may also experience some loss of control over its own economy
Feeling that labour is being exploited by the MNC/ Outsourcing
The problem of Dumping
Example – Chinese low quality products in Indian market
Industry Chosen : Colour Television (CTV)
Colour Television (CTV)
The Indian colour TV (CTV) market is arguably one of the most fascinating markets now in Asia or perhaps even the world.
Size of the Indian market : 5 million-sets-mark
1984-85 growth rate was140.3%
1985-86 fell to 68.6%,
1988-89 was 15%
1989-90 it touched a level of 5%
1991-92 the sales of color televisions at -14.5%.
After declining in 2000 and 2001, the Indian consumer electronics market grew by 12.4% in current value in 2003, to reach Rs129.5 billion.
A recent trend shows that TV market has grown to 373.5 per cent between January-March 2003.
Sony India, Samsung and LG are the dominant players in the CTV segment.
In March 2003 the CTV segment grew by 389.1 per cent
Samsung leading the race with a market share of 27 per cent
Sony at 20.1 per cent and
LG at 19.9 per cent.
Main players in the Indian market
Indian: BPL, Onida, Videocon
Korean: Samsung, LG
Chinese: Akai, Sansui
Japanese: Aiwa, Sony, Panasonic, Sharp
CTV Sales over the years
CTV Sales over the years
AFTER a period of slump in 1999 and 2001, colour television (CTV) sales had picked up again
FY 2003 the industry reported an upward movement in sales
The CTV market has grown rapidly in the last one decade in India
On the supply side, over the last two to three years, there has been some intense activity in the CTV market, with increased competition and players launching premium products incorporating superior technology
Till the late 1990s, the market was dominated by older domestic players such as BPL, Videocon and Onida.
Although they are still present in the market, they are steadily losing ground to multinational players such as LG and Samsung.
Most selling CTV brand 2003
BPL is an Indian electronics company. The acronym stands for "British Physical Laboratories". It deals with consumer electronics (such as refrigerators and washing machines), mobile networks etc.
The company was started at a time when the government had reserved many areas of business for the public sector
BPL, CTVs have been the flagship business
Over the years, BPL's growth has been subject to constant challenges
Using its experience of the market and the consumer, BPL concentrated on importing technology, improving product quality, innovations and manufacture of electronic products that enhanced the quality of life
Onida, a leading television brand, is still well known for its brand mascot ‘The Onida Devil’ and its punch line “ Neighbor's Envy Owner’s Pride ”.
Onida launched its advertising campaign in the 1980s when owning a television set was considered a luxury,
The mascot helped Onida gain substantial market share and brand recall among the customers and become one of the top three television brands in the country.
In 1998, Mirc Electronics (the owner of Onida brand) decided to abandon the “Onida Devil” in its communication campaigns as the brand mascot no longer appealed to the Indian consumer.
Samsung India is the hub for Samsung’s South West Asia Regional operations
Sports Marketing and Entertainment Marketing have been the key elements of the Company’s Brand Marketing Strategy
Samsung’s uses state of the art highly automated manufacturing facilities
Samsung has been awarded as the Best Retailer of the year 2005
Samsung India commences exports of 'Made in India' Colour televisions to Western Europe
A Second Production Line set up at Noida for the manufacture of Projection TVs in India
LG life’s good
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January, 1997.
LG has been able to craft out in eight years, a premium brand positioning in the Indian market and is today the most preferred brand in the segment.
In 2003, LG has emerged as the leader in Colour Televisions, Semi Automatic Washing Machines, Air Conditioners, Frost-Free Refrigerators and Microwaves Ovens.
The company has achieved a turnover of Rs 6500 crore in 2004 and aims to touch a turnover of 10 Billion US Dollars by 2010
As on today, LG is the No 1 brand in the CTV market.
Why Indian companies lost its market share to MNC’s
Primarily because of the following reasons:
They lagged behind in technology
They offered a small range of products
Provided less margin to dealers
Less number of outlets.
Poor after sales services
Most of the BPL galleries were transformed by the dealers into a gallery with a range of products from different manufacturers
What MNC’s did?
Multinationals such as LG and Samsung managed to increase their market share on the strength of aggressive marketing
What Indian companies are now doing to regain their market share
Better Innovations to products
Better pricing techniques
Better positioning of the brand
Following an aggressive marketing
Trying to move the after sales service to a new level
Segmentation of the product range by creating specific sub-brands
What did BPL do?
BPL tied up with Sanyo (a Fortune 500 consumer electronics major ). The key points to their strategy to gain a good market share are as follows-
Right pricing and the right product.
Strong regional presence
Different prices in different show rooms
Benefits from MNC
To Host Countries
Transfer of technology, capital and entrepreneurship to the host country
Improved competition in the host country and ultimately better utilization of available resources
More products for local consumers
Greater access to high quality managerial talent that tends to be scarce in the host country, particularly developing ones
Encourages the world unity and all resulting in world harmony
To home countries
Acquisition of raw materials from abroad, steady supply of raw material at a lower price that can be found domestically
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 licensing fees and management contracts
Job and career opportunities at home and abroad in connection with overseas operations.