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Multinational companies
Multinational corporations (MNCs) are large corporate businesses that operate in many countries besides their home country. MNCs have centralized ownership and control and are registered in more than one country, with facilities and assets located in at least one foreign country. Examples of long-established MNCs include HSBC, Nestle, Philips, and Ford Motor Company. The growth of MNCs occurred in three phases from the 17th century to present day, with companies from various regions gaining prominence over time. MNCs can have both positive impacts such as capital investment, technology transfer, and R&D, as well as negative impacts like transferring obsolete technology and harming local industries in host countries like India.
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Multinational companies
- 2. MULTINATIONAL CORPORATIONS Multinational corporationrefers to a corporate giant business firm having extended its productive activity in many nations besides its home country. “Corporations which have their home in one country but operate and live under the laws and customs of other countries as well is termed as MNCs” - David E. Liliental
- 3. Multinational Corporations MNCs : Also called Trans national companies (TNC) Head Quarters located in one country and variety of international offices in different countries Centralized ownership and control Registered in more than one country Facilities and assets in at least one country other than its home country
- 4. Indian MNCs abroad Paints AsianPaints Auto & Components TATA Motors and Bharat Forge Chemicals TATA chemicals and United Phosphorus Metals TATA Steels, Sterlite Industries and TISCO Packaging Essel Oil & Gas ONCG Pharmaceuticals Ranbaxy, Wackhardt, Sun, DRL
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- 6. Examples of MNCs(cont..) NESTLE 1912 PHILIPS ELECTRONICS 1930 ALFA LAVAL 1937 BATA 1931 GLAXO SMITHLINE 1919 COLGATE PALMOLI VE 1937 RECKITT BENCKISER 1911 INGERSOLL RAND 1922 SKF 1923
- 7. History of MNCs •Multinationals in the form of trading companies started in the 17th and 18th centuries. The Hudson Bay Company, the East India Company & the French Lenant company were the major transnational companies established in those days. • In the early 20th century British Petroleum, Standard Oil, Ana Conda Copper and International Nickel were the major MNCs investing mainly in mining and petroleum industries.
- 8. • 1901 –the U.S. had 47 firms with overseas manufacturing subsidiaries • 1950 – the number of companies operating overseas had grown to 988 • 1959 – the number climbed to 1,891 • 1967 – there were 3,646 U.S. companies operating overseas • 1991 – over 10,000 American companies had manufacturing subsidiaries abroad • MNC perspective - a U.S. Ford executive once stated: “It is our goal to be in every single country there is. We at Ford Motor Company look at a world map without any boundaries.”
- 9. Phases in thegrowth of MNCs There are three phases in the growth of MNCs : 1. First phase lasted upto the 1st World War. The field was captured mostly by the European companies such as Imperial Tobacco, Dunlop, Philips etc. 2. During the second phase, covering the decades of 50’s &60’s , American MNC’s such as General Motors , Ford Motors and IBM emerged on the world scene . 3. The third phase of the growth of MNC’s began since 1970s. This new era belonged to the European, German and Japanese MNC’s.
- 10. Phases (contd…) In recentyears, MNCs have also emerged from developing countries such as India, Malaysia, Hong Kong, Singapore, South Korea, Indonesia etc.
- 11. Impact of MNCson Indian markets • MNCs have both positive and negative impact on Indian markets and Indian economy. • At the time of Independence, most of our industries were concerned with consumer goods. Barring two steel plants, we had hardly any capital goods or intermediate goods industries. Today the industrial scene is dominated by petroleum refining, chemicals and pharmaceuticals, light and heavy engineering, steel, man-made fiber manufacture and several other industries.
- 12. Impact of MNCson Indian markets (contd..) • On the other hand, these include transfer of obsolete technology, heavy remittances abroad, adverse effect on the balance of payments, myth of Indianisation, damage to indigenous industries etc.
- 13. Impact of MNCson Indian markets (contd..) • Some other positive and negative impacts of MNCs are : Positive Impact: Capital transfer Technology transfer R&D Implemented new innovations Marketing facilities
- 14. Impact of MNCson Indian markets (contd..) Negative impact: Bad business ethics Underestimate local culture Harmful to producers and consumers
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