A multinational corporation (MNC) is defined as a company that controls production facilities in more than one country through foreign direct investment. MNCs are defined based on their size, structure, behavior, and performance. There are currently 889,416 MNCs worldwide, with the top 100 MNCs having combined sales of nearly $8.5 trillion. MNCs must respect national sovereignty and human rights, adhere to host country laws, and not engage in corrupt practices.

1. Presentation By:
Deepika Luthra Diwakar Saini
Sagar Batra

2. DEFINITION:
“A corporation that controls production facilities in more than
one country, such facilities having been acquired through the
process of foreign direct investment. Firms that participate in
international business, however large they may be solely by
exporting or by licensing technology are not multinational
enterprises.”

3. SOME MULTINATIONAL COMAPANIES

4. DEFINITIONAL DIMENSIONS
By Size: The term MNC implies
bigness. Bigness also has
number of factors like market
value, sales, profits, return on
equity
By Structure: Structural
requirement include the
number of countries in which
the firm does business and
the citizenship of corporate
owners and top managers.
By Behaviour: This is an
abstract as a measure of
multinationalisation and it refers
mostly to the behavioural
characteristics of top
management.
By Performance:
Performance depends on
such characteristics as
earnings, sales and assets.

5. FACTS AND FIGUERS
published by the UNCTAD (United Nations Conference on Trade and Development)
 There is a total of 889,416 MNCs around the world.
 The 100 largest MNCs sales combined amounted to nearly $8.5
trillion.
 There is a total of 3,057 multinational companies (MNCs) in India:
815 based in the country and 2,242 foreign affiliates.
 From 2004 to 2009, the number of Indian-based MNCs decreased
nearly 50%, while the number of foreign affiliates increased 90%.

6. SOME IMPORTANT TERMS
Parent
enterprises
Subsidiary
Transnational
corporations
Associate Foreign affiliates

7. CHARACTERISTICS OF DIFFERENT
ORGANISATIONAL MODELS
ORGANISATIONAL
CHARACTERISTIC
S
MULTINATIONAL GLOBAL INTERNATIONAL TRANSACTIONAL
Configuration of
assets and
capabilities
Decentralised and
nationally self -
sufficient
Centralised and
globally scaled
Sources of core
competencies
centralised, other
decentralised
Dispersed
,independent and
specialised.
roles of overseas
operation
Sensing and
exploiting local
opportunities
Implementing parent
company strategies.
Adapting and
leveraging parent
company strategies
differentiate
contributions by
national units to
integrated world
wide operation
Development and
diffusion of
knowledge
Knowledge
developed and
retained within each
unit
Knowledge
developed and
retained at the
centre
Knowledge
developed at the
centre and
transferred to
overseas units
Knowledge
developed jointly
and shared
worldwide

8. BENEFITS TO THE HOST COUNTRY
 Increase the investment level and thereby income and
employment
 Transfer technology mainly in developing countries
 Also kindle a managerial revolution through professional and
highly sophisticated management techniques
 MNCs enable to increase their export and decrease the import
 Equalise the cost of factors of production around the world
 Provide an efficient means of integrating national economies
 MNCs make a contribution to inventions and innovations
through research and development systems
MNCs may encourage and assist domestic supplier
 MNCs help increase competition and break domestic

9. MNCs AND INTERNATIONAL TRADE
 According to peter drucker MNCs and international trade are the two
side of the same coin
 The period of fifties and sixties was the most rapid growth of
multinational trade
 Foreign affiliates of MNCs account for about one-third of the world
exports
 More than 40% of total exports of China is done by MNCs
 Apart from trade in commodities other transaction also take place
extensively:
 The granting of loans
 Licensing of technologies
 Provision of services

10. PROBLEMS FACED BY HOST COUNTRY
MNCs technology is designed for world wide profit
maximisation, not the development needs of poor countries
 Through there power and flexibility, MNCs can evade or
undermine national economic autonomy and control
MNCs may destroy competition and acquire monopoly powers
 On political involvement, MNCs have been accused on
occasion of:
 Supporting repressive regimes
 Paying protection money to terrorist groups
 Paying bribes to secure political influence
 Not respecting human rights
 Destabilizing national government of which they do not
approve

11. Cont.
MNCs retard growth of employment in the home country
 Transfer pricing enables MNCs to avoid taxes by manipulating
prices on intra-company transactions
 MNCs have been accused of the following environmental
problems:
 Polluting the environment
 Not paying compensation for the environmental damages
 Causing harmful changes in the local living conditions
 Paying little regard to the risks of accidents causing major
environmental catastrophes

12. Cont.
 The MNCs criticized for their business strategies and
practices in the host countries for:
 Undermine local cultures and traditions
 Change the consumption habits for their benefits
 Promote conspicuous consumption
 Dump harmful products in developing countries etc.

13. PERSPECTIVES
Increasing emphasis on market
forces
Growing role for the private sector
in nearly all developing countries
Rapidly changing technologies
that are transforming the nature of
organisation
The rise of services to constitute
the largest single sector in the
world economy
The globalisation of firms and
industries
Regional economic integration

14. CODE OF CONDUCT
 MNCs must respect the national sovereignty of host countries
and observe their domestic laws, regulations and
administrative practices
 Adhere to host nations economic goals, development
objections and sociocultural values
 Respect human rights
 Not interfere in internal political affairs or in intergovernmental
relations
 Not engage in corrupt practices

15. MULTINATIONALS IN INDIA
 There was very little foreign investment has taken place in
INDIA. Due to Government conditions which were
unacceptable to them. For Ex. Coca Cola and IBM, even left
India in late 1970’s.
 The Foreign Exchange Regulation Act (FERA), 1973 was not
in the favour of Multinational's.
 An often heard criticism is that MNC’s drain the foreign
exchange of the developing countries

16. Cont.
 India followed policies that discriminate against export
production and in favour of production for the local market
since 1980s
 Due to economic liberalisation in 1991, many multinationals in
different line of business have entered in Indian market and
multinational prior in India have expanded their business.

17. TOP 10 MNCs IN INDIA
 Microsoft
 IBM
 PepsiCo
 Ranbaxy Laboratories Ltd.
 Nestle
 CocaCola
 Procter & Gamble
 Nokia
 Sony Corporation
 Citigroup Inc

19. Round:- 1

20.  A corporation that controls ________ facilities in more than
one country
a) Trade
b) farming
c) developing
d) Production
QUESTIONS: 1

21. QUESTION: 2
 Different dimensions used to define the MNCs are size, structure,
behaviour and __________.
a) Emotions
b) Investment
c) Performance
d) employment

22. QUESTION: 3
 MNCs must respect ______ rights
a) Animals
b) politician
c) Human
d) Bribers

23. QUESTION: 4
 There is a total of MNCs _______ around the world.
a) 889,416
b) 889,616
c) 666,666
d) 989,516

24. Round:- 2

25. QUESTION: 5
 According to ________ ________ MNCs and international
trade are the two side of the same coin
a) Peter parker
b) Peter subhramanyam swami
c) Peter dranken
d) Peter drucker

26. QUESTION: 6
 Due to economic _____________ in 1991, many
multinationals in different line of business have entered in
Indian market
a) Demonization
b) Development
c) Liability
d) Liberalisation

27. QUESTION: 7
 The Foreign ________ Regulation Act, 1973 was not in the
favour of Multinational's.
a) Investment
b) Exchange
c) Import Export
d) Policies

28. Final Round

29. QUESTION: 8
 Transnational corporation are enterprises comprising
________ _________ and there _________ affiliates.
a) Foreign enterprises and their parent
b) Native enterprises and their host
c) Associate enterprises and their subsidiary
d) Parent enterprises and their foreign

30. THANK YOU HAI JI …..