This PPT contains MULTINATIONAL CORPORATIONS #1 - Introduction, Definitions and Characteristics

1. Sundar B. N.
Assistant Professor

2. Introduction
● A Multinational Corporation/company is an
organization doing business in more than one
country.
● 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,

3. Introduction
International business describes business or operations of firms
having interests in multiple countries. Such firms are called
multinational corporations (MNCs).
Some of the as well known MNCs include fast food companies like
 McDonald’s and Yum Brands,
 Vehicle manufacturers such as General Motors and Toyota,
 Consumer electronics companies like Samsung, LG and Sony, and
 Energy companies such as Exxon Mobil and BP.
Most of the largest corporations operate in multiple national markets.
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4. Introduction
(I) MNCs consider opportunities throughout the globe through they do
the business in a few countries.
(II) MNCs invest considerable portion of their assets internationally.
(III) MNCs engage in international production and operate plans in a
number of countries
(IV) MNCs take managerial decisions based on a global perspective.
The international operations are integrated into corporations overall
business.
(V) MNCs are huge industrial/business organizations. They extend their
industrial / marketing operations through a network of branches or
their majority owned foreign affiliates.

5. 5
• An ‘International Corporation’ may be defined as a
company which has business operations in at least one
foreign country
IC
• A ‘Multinational Corporation’ is a company which operates
in several countries and a considerable share of its
business is from foreign countries.
MNC
• A ‘Global Corporation’ is a company which views the entire
world as a single homogenous market and caters to the
global market through globally standardized products.
GC
TNC
A ‘Transnational Corporation’ is a multinational, the ownership and control
of which are dispersed internationally. It has no principal domicile and no
single central source of power. Unilever, Shell and Royal Dutch are
examples of transnational corporation.

6. Definitions of MNC
● Definition by Size
● Definition by Structure
● Definition by Performance
● Definition by Behaviour
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7. Definition by Size
MNCs refer to a company which is big in size, but this size has many
dimensions.
One company may be big in terms of turnover while another may be
in terms of profit and still another in terms of market value.
But corporate size in terms of ‘sales’ is primarily used to describe a
company as a Multinational Corporation.
The World Investment Report 1997 indicates that there were about
45,000 MNCs with some 2,80,000 affiliates, whereas
According to the World Investment Report 2002, there were about
65,000 of them with about 8.5 lakh foreign affiliates.
But corporate size alone cannot be used as a criterion to be
classified as MNC.
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8. Definition by Structure
This definition measures MNCs by how many
countries it is operating in and by the citizenship of its
corporate owners and top managers.
Example: Coca Cola operates in approximately 200
nations and has widespread share holdings.
The boardroom and the top management of top companies
is becoming global.
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9. Definition by Performance
Definitions by performance depend on such characteristics as earnings, sales
and assets.
These performance characteristics indicate the extent of the commitment of
corporate resources to foreign operations and the amount of reward from that
commitment.
Example: A major chunk of Coca Cola’s revenue comes from overseas operations.
In India, Ranbaxy is considered as a true MNC as half to its turnover comes from
the overseas market.
Human resource or overseas employees are customarily considered as part of
the performance requirement rather than as part of the structural requirement.
Company’s willingness to use overseas personnel is a significant criterion for
multinationals.
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10. Definition by Behaviour
According to this definition, it is the behavioral
characteristics of the top management which decides
whether a firm is a multinational or not.
Thus, a company becomes more multinational if its
management is more international.
If a management has a geocentric thinking then this firm is
treated as a true MNC.
In a geocentric approach, the firm considers the whole
world rather than the particular country as its target
market.
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11. CHARACTERISTICS OF MNC
Giant in Size
International Operations
Centralized Control
Oligopolistic Power
Sophisticated Technology
Professional Management
International Market
Multiple objectives
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