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Multinational Corporation
In India

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What is a Multinational
Corporation???
 It is a corporation that:

And/or

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 Multinational corporation (MNC) is a

enterprise that manages production or
delivers services in more than one
country can also be referred to as an
international corporation.

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How Is A Company Classified As
An MNC?
Subsidiaries in
foreign
countries;
Operations in a
High proportion of
number of
assets in or/ and
countries;
revenues from
global operations;

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Stakeholders
are from
different
countries.
Multinational corporation
structure:

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Multinational corporate
structure
Horizontally integrated multinational

corporations manage production
establishments located in different
countries to produce the same or similar
products.
(example: McDonald's)

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Vertically integrated multinational

corporations manage production
establishment in certain country/countries
to produce products that serve as input to
its production establishments in other
country/countries. (example: Adidas)

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Multinational corporate structure
(Contd)
 Diversified multinational corporations

manage production establishments located in
different countries that are neither horizontally
nor vertically nor straight, nor non-straight
integrated.

(example: Hilton Hotels)

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Organization of Multinational
Corporations
Subsidiaries
Joint Ventures Companies
Franchise Holders
Turn Key Project.
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Micro-multinationals
A new breed enabled by Internet based
communication tools.
Employees, clients and resources located in
various countries.
Use of internet, cheaper telephony and lower
traveling costs.
Internet tools like Google, Yahoo, MSN, Ebay,
Skype and Amazon
make it easier for the
micro-multinationals to reach potential customers in
other countries.
Service sector micro-multinationals, like Indigo
Design & Engineering Associates Pvt. Ltd.
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Fortune Global 500 List 2013: Top
10
RANK

COMPANY

COUNTRY

FIELD

1

Wal-Mart Stores

 United States

Retail

2

Royal Dutch Shell

 Netherlands

Petroleum

3

Exxon Mobil

 United States

Petroleum

4

BP

 United Kingdom

Petroleum

5

Sinopec

 China

Petroleum

6

China National
Petroleum

 China

Petroleum

7

State Grid

 China

Power

8

Toyota Motor

 Japan

Automobiles

9

Japan Post Holdings

 Japan

Diversified

10

Chevron

 United States
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Petroleum
SWOT Analysis of MNC
Strengths
• Low Cost
• Well Developed Infrastructure

Opportunities
• Leverage Government
• Create the necessary infrastructure
• Attract new industries

Weakness
• Location is often very distant
• Lack of Transportation facilities
• Relative Inflexibility

Threats
• Emergence of Private companies
• Establishment of monopoly

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Advantages of MNC in India

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Advantages of MNCs to the Host
Country:
 Transfer of technology, capital and entrepreneurship.
 Increase in the investment level and thus, the income and

employment in the host country.

 Greater availability of products for local consumers.
 Increase in exports and decrease in imports.
 MNC’s generate jobs &income Technology transfer
 Cost reduction

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Advantages of MNCs to the
Home Country.
 Acquisition of raw materials from abroad.
 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 and

management contracts.

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Pros & Cons of MNC
Pros:
 Increase investment level
 Transferring the technology
 It increase host country exports & reduce its imports
 Integrating national economy
 Implement new innovations
 Increase competition
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Pros & Cons of MNC (cont.)
Cons:
 May acquire monopoly power
 Underestimate local culture
 Think only about profit rather than host country interest
 Inflexibility in terms & conditions
 Heavy use of non-renewable natural resources

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MNC In India
 MNC in India are attracted

towards:

India’s large market potential
India presents a remarkable

business opportunity by virtue
of its sheer size and growth

Labor competiveness
FDI attractiveness
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MNC In India
 vast population


increasing
power

its

purchasing

 emerging as the

manufacturing and sourcing
location of choice for various
industries

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MNC In India…
 MNC in India represent a diversified portfolio of

companies representing different nations.

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Indian companies in fortune global 500
list 2013:
COUNTRY
RANK

COMPANY

GLOBAL
500 RANK

CITY

REVENUE
($ millions)

1

Indian Oil

98

New Delhi

68,837

2

Reliance
Industries

134

Mumbai

58,900

3

Bharat
Petroleum

272

Mumbai

34,102

4

State Bank of
India

292

Mumbai

32,450

5

Hindustan
Petroleum

336

Mumbai

28,593

6

Tata Motors

359

Mumbai

27,046

7

Oil & Natural
Gas

361

Dehradun

26,945

8

Tata Steel

370

Mumbai

26,065

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The Indian MNCs ………………
 Paints – Asian Paints
 Auto & Components – Tata Motors, Bharat Forge
 Chemicals – Tata Chemicals, United Phosphorus
 Metals – Sterlite Industries, TISCO
 Packaging – Essel
 Pharmaceuticals – Ranbaxy, Wockhardt, Sun, DRL
 Oil & Gas – ONGC
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Bottlenecks Of MNC in India
 Socio-economic challenges
 Language
 Culture
 Autonomy to “local” managers – how comfortable are we?
 Handling of potential liabilities related to Labour, IPR etc
 Difficult operating environment
 Weak infrastructure
 And ………………Patience !
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International powers of MNC’s
 International - Large MNC’s influence

in international relations
 Tax competition- Tax breaks, pledges

of govt. assistance etc.
 Market withdrawal-Eg. Pharmaceutical

companies
 Lobbying & Patents

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Threats to MNC
 Nationalization
 Lack of Govt. assistance
 Opposition by local traders.

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THANK YOU

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Mnc 1226082281842875-9

  • 2. What is a Multinational Corporation???  It is a corporation that: And/or Your Logo
  • 3.  Multinational corporation (MNC) is a enterprise that manages production or delivers services in more than one country can also be referred to as an international corporation. Your Logo
  • 4. How Is A Company Classified As An MNC? Subsidiaries in foreign countries; Operations in a High proportion of number of assets in or/ and countries; revenues from global operations; Your Logo Stakeholders are from different countries.
  • 6. Multinational corporate structure Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (example: McDonald's) Your Logo
  • 7. Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas) Here comes your footer  Page 7 Your Logo
  • 8. Multinational corporate structure (Contd)  Diversified multinational corporations manage production establishments located in different countries that are neither horizontally nor vertically nor straight, nor non-straight integrated. (example: Hilton Hotels) Your Logo
  • 9. Organization of Multinational Corporations Subsidiaries Joint Ventures Companies Franchise Holders Turn Key Project. Your Logo
  • 10. Micro-multinationals A new breed enabled by Internet based communication tools. Employees, clients and resources located in various countries. Use of internet, cheaper telephony and lower traveling costs. Internet tools like Google, Yahoo, MSN, Ebay, Skype and Amazon make it easier for the micro-multinationals to reach potential customers in other countries. Service sector micro-multinationals, like Indigo Design & Engineering Associates Pvt. Ltd. Your Logo
  • 11. Fortune Global 500 List 2013: Top 10 RANK COMPANY COUNTRY FIELD 1 Wal-Mart Stores  United States Retail 2 Royal Dutch Shell  Netherlands Petroleum 3 Exxon Mobil  United States Petroleum 4 BP  United Kingdom Petroleum 5 Sinopec  China Petroleum 6 China National Petroleum  China Petroleum 7 State Grid  China Power 8 Toyota Motor  Japan Automobiles 9 Japan Post Holdings  Japan Diversified 10 Chevron  United States Your Logo Petroleum
  • 12. SWOT Analysis of MNC Strengths • Low Cost • Well Developed Infrastructure Opportunities • Leverage Government • Create the necessary infrastructure • Attract new industries Weakness • Location is often very distant • Lack of Transportation facilities • Relative Inflexibility Threats • Emergence of Private companies • Establishment of monopoly Your Logo
  • 13. Advantages of MNC in India Your Logo
  • 15. Advantages of MNCs to the Host Country:  Transfer of technology, capital and entrepreneurship.  Increase in the investment level and thus, the income and employment in the host country.  Greater availability of products for local consumers.  Increase in exports and decrease in imports.  MNC’s generate jobs &income Technology transfer  Cost reduction Your Logo
  • 16. Advantages of MNCs to the Home Country.  Acquisition of raw materials from abroad.  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 and management contracts. Your Logo
  • 17. Pros & Cons of MNC Pros:  Increase investment level  Transferring the technology  It increase host country exports & reduce its imports  Integrating national economy  Implement new innovations  Increase competition Your Logo
  • 18. Pros & Cons of MNC (cont.) Cons:  May acquire monopoly power  Underestimate local culture  Think only about profit rather than host country interest  Inflexibility in terms & conditions  Heavy use of non-renewable natural resources Your Logo
  • 19. MNC In India  MNC in India are attracted towards: India’s large market potential India presents a remarkable business opportunity by virtue of its sheer size and growth Labor competiveness FDI attractiveness Your Logo
  • 20. MNC In India  vast population  increasing power its purchasing  emerging as the manufacturing and sourcing location of choice for various industries Your Logo
  • 21. MNC In India…  MNC in India represent a diversified portfolio of companies representing different nations. Your Logo
  • 22. Indian companies in fortune global 500 list 2013: COUNTRY RANK COMPANY GLOBAL 500 RANK CITY REVENUE ($ millions) 1 Indian Oil 98 New Delhi 68,837 2 Reliance Industries 134 Mumbai 58,900 3 Bharat Petroleum 272 Mumbai 34,102 4 State Bank of India 292 Mumbai 32,450 5 Hindustan Petroleum 336 Mumbai 28,593 6 Tata Motors 359 Mumbai 27,046 7 Oil & Natural Gas 361 Dehradun 26,945 8 Tata Steel 370 Mumbai 26,065 Your Logo
  • 23. The Indian MNCs ………………  Paints – Asian Paints  Auto & Components – Tata Motors, Bharat Forge  Chemicals – Tata Chemicals, United Phosphorus  Metals – Sterlite Industries, TISCO  Packaging – Essel  Pharmaceuticals – Ranbaxy, Wockhardt, Sun, DRL  Oil & Gas – ONGC Your Logo
  • 24. Bottlenecks Of MNC in India  Socio-economic challenges  Language  Culture  Autonomy to “local” managers – how comfortable are we?  Handling of potential liabilities related to Labour, IPR etc  Difficult operating environment  Weak infrastructure  And ………………Patience ! Your Logo
  • 25. International powers of MNC’s  International - Large MNC’s influence in international relations  Tax competition- Tax breaks, pledges of govt. assistance etc.  Market withdrawal-Eg. Pharmaceutical companies  Lobbying & Patents Here comes your footer  Page 25 Your Logo
  • 26. Threats to MNC  Nationalization  Lack of Govt. assistance  Opposition by local traders. Here comes your footer  Page 26 Your Logo
  • 27. THANK YOU Here comes your footer  Page 27 Your Logo