INTRODUCTION ON MULTINATIONAL COMPANIES (MNCs)

A multinational corporation (MNC) or enterprise (MNE) ,is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries. The word Multinational is the combined word of Multi and national which gives meaning of many countries. Hence multinational companies are those business organizations which have head office in one country and their operation are spread over several other countries. There are two classes of companies under multinational companies. The head office is regarded as the parent company and branches as subsidiary company. The parent company manages and controls the activities of subsidiary company. The subsidiary companies are affiliated with parent companies through investment, trade-mark, patent and technology. The multinational companies are operated with huge investment and wide range of product or services. They cover large area of market. There are four categories of multinational corporations: (1) a multinational, decentralized corporation with strong home country presence, (2) a global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available, (3) an international company that builds on the parent corporation's technology or R&D, or (4) a transnational enterprise that combines the previous three approaches. According to UN data, some 35,000 companies have direct investment in foreign countries, and the largest 100 of them control about 40 percent of world trade. MNCs play an important role in globalization. Apart from playing an important role in globalization and international relations, these multinational companies even have notable influence in a countrys economy as well as the world economy. The budget of some of the multinational companies are so high that at times even exceed the Gross Domestic Product (GDP). These are not the major sole prior causes of the Nokia, Fiat, Ford motors and as the list moves down to flourish in India. As the basic economic data suggest suggest that after the liberalization in 1991, it has brought in hosts of foreign companies in India and the share of U.S shows the highest. They account about 37% of the turnover from top 20 companies that function in India. The Dutch East India Company was the first multinational corporation in the world and the first company to issue stock. It was also arguably the world's first mega corporation, possessing quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money, and establish colonies. The first modern multinational corporation is generally thought to be the East India Company. Many corporations have offices, branches or manufacturing plants in different countries from where their original and main headquarters is located. Such companies

have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. For the past decades the multinational corporation has been a key subject to be found at the center of political and ideological debates. This special situation has meant that proponents, opponents, and critics are sometimes assigned to one or other of these positions: ideological brackets and all writings about business and business organizations are considered suspect by one or other of the groups. Furthermore, one of the most powerful forces in modern societies the mediais owned and controlled by multinational corporations, which means that the general circulation of information concerning them is often biased, lacking in objectivity, or part of a corporate supporting mythology. An entry designed to have a longer life than a newspaper or academic article must attempt to identify trends that are likely to persist rather than focus on the most immediate issues. Tatum (2010) proposes that multinationals operate in different structural models. The first and common model is for the multinational corporation positioning its executive headquarters in one nation, while production facilities are located in one or more other countries. This model often allows the company to take advantage of benefits of incorporating in a given locality, while also being able to produce goods and services in areas where the cost of production is lower (Ozoigbo and Chukuezi, 2011).The second structural model is for a MNC to base the parent company in one nation and operate subsidiaries in other countries around the world. With this model, just about all the functions of the parent are based in the country of origin. The subsidiaries more or less function independently, outside of a few basic ties to the parent. A third approach to the setup of an MNC involves the establishment of a headquarters in one country that oversees a diverse conglomeration that stretches to many different countries and industries. MNCs are, first and foremost, creatures of their home countries. The home country always gets first priority whenever MNCs have to make hard choices: If faced with a downturn in the market, multinationals will close facilities abroad to protect those at home. The influence of a multinational can also be gauged by its effect on local suppliers as it creates new demand and sets new standards of quality. All these elements are part of a world where the local production of MNCs in overseas markets now greatly exceeds the sum of world trade.

WHY ARE MULTINATIONAL COMPANIES IN INDIA???

There are a number of reasons why the multinational companies are coming down to India. India has got a huge market. It has also got one of the fastest growing economies in the world. Besides, the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market. However, the scenario changed during the financial liberalization of the country, especially after 1991. Government, nowadays, makes continuous efforts to attract foreign investment by relaxing many of its policies. As a result, a number of multinational companies have shown interest in Indian market. It is to specify that the companies come and settle in India to earn profit. A company enlarges its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and such is the case of MNCs that have flourished here. Moreover India has wide market for different and new goods and services due to the ever increasing population and the varying consumer taste. The government FDI policies have somehow benefitted them and drawn their attention too. The restrictive policies that stopped the companys inflow are however withdrawn and the country has shown much interest to bring in foreign investment here. Besides the foreign directive policies, the labor competitive market, market competition and the macro economic stability are some of the key factors that magnetize the foreign MNCs here. Following are the reasons why multinational companies consider India as a preferred destination for business: 1. Huge market potential of the country. 2. FDI attractiveness. 3. Labour competitiveness. 4. Macro-economic stability.

WHY COMPANIES BECOME MULTINATIONAL COMPANIEs

MNC

to protect themselves from uncercenties and risk. To tap the growing global market for various goods and services.

MNC

to increase the market share. to reduce the cost.

MNC

to overcome tariffs. to have technological advantages.

FACTORS THAT CONTRIBUTED FOR THE GROWTH OF MNCs IN INDIA

Expansion of the market territory

Market Superiorities

Financial Superiorities

Product innovation

Technological Superiorities

FEATURES OF MULTINATIONAL COMPANIES

1. Centralized Management: An MNC has its headquarters in home country. It expands its business to other countries so it can easily manage companies. 2. World Wide Spread: MNCs are spread worldwide. The MNCs operate in many countries with multiple products on large scale. A MNC may operate both manufacturing and marketing activities in a number of countries. Some MNCs operate in several countries, whereas, others may operate in a few countries.

3. Formation: MNCs are formed or registered under companys Act of respective country. 4. Huge Capital: MNCs are able to raise huge capital by issuing share to general public within or outside the country. 5. Employed: Employees in MNCs are highly qualified and professional persons. They are appointed on basis of merit. 6. Multiple Operations: MNCs carry multiple operations such as manufacturing, marketing, research etc. 7. Comprehensive Term: - In general, the term MNC is a Comprehensive term and includes international and transnational corporations. The term global corporation is also included in the list of MNC. 8. Quality Consciousness: - MNCs are quality and cost conscious and managed by professionals and experts. They have their own organization culture and systems.

ADVANTAGES OF MULTINATIONAL COMPANIES

Advantages of MNC are for the host country:

MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. 3. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 4. Domestic industries can make use of R and D outcomes of MNC's. 5. Level of industrial and economic development increases due to the growth of MNC's in the host country.

Advantages of MNCs for the home country:

MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. It gives a boost to the industrial activities of home country. 3. MNC's help to maintain favourable balance of payment of the home country in the long run. 4. Home country can also get the benefit of foreign culture brought by MNC's. 5. They create employment opportunities to the people of home country both at home and abroad.

DISADVANTAGES OF MULTINATIONAL COMPANIES

Roses do not come without thorns. Disadvantages of having MNCs in developing countries like India are as follows:

Disadvantages of MNC are for the host country: 1. MNC's may transfer technology which has become outdated in the home country. 2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monopolising the host country's market. 4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty.

Disadvantages of MNC are for the home country: 1. MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development.

TYPES OF MULTINATIONAL Companies

1. Horizontally integrated multinational corporations:

Horizontally integrated multinational corporations are those MNCs that manage production establishments located in different countries to produce the same or similar products. ( example: McDonalds)

2. Vertically integrated multinational corporations: Vertically

integrated multinational corporations are those MNCs that manage production establishment in different countries/country to produce products that serve as input to its production establishments in other country/countries. (example: Adidas)

3. Diversified multinational corporations: Diversified multinational

corporations are those MNCs that do not manage production establishments located in different countries that are neither horizontal nor vertical nor straight as well as nonstraight. ( example: Hilton Hotels)

Different Forms of Multinational Companies

Multinational Corporations operate in the following ways.

1. Franchising:
In this form, multinational Corporation grants firms in foreign countries the right to use its trade marks, patents, brand names etc. The firms get the right or licence to operate their business as per the terms and conditions of franchise agreement. They pay royalty or licence fee to multinational corporations. In case the firm holding franchises violate the terms and conditions of the agreement, the licence may be cancelled. This system is popular for products which enjoy good demand in host countries.

2. Branches:
In this system multinational corporation opens branches in different countries. These branches work under the direction and control of head office. The headquarters frames policies to be followed by the branches. Every branch follows laws and regulations of the head office and host countries. In this way multinational companies operate through branches.

3. Subsidiaries:
A multinational corporation may establish wholly owned subsidiaries m foreign countries. In case of partly owned subsidiaries people in the host countries also own shares. The subsidiaries in foreign countries follow the polices laid down by holding company (Parent company). A multinational company can expand its business operations though subsidiaries all over the world.

4. Joint Venture:
In this system a multinational corporation establishes a company in foreign country in partnership with local firms. The multinational and foreign firm share the ownership and control of the business. Generally, the multinational provides technology and managerial skill and the day to day management is left to the local partner. For example, in Maruti Udyog the Government of India and Suzuki of Japan have jointly supplied capital. Suzuki supplies technology and the day to day management lies with the Government of India.

5. Turn Key Projects:

In this method, the multinational corporation undertakes a project in foreign country. The multinational constructs and operates the industrial plant by itself. It provides training to the staff in the operation of plant. It may also guarantee the quality and quantity of production over a long period of time.

SWOT ANALYSIS OF MULTINATIONAL CORPORATION

Strengths: Low Cost Well developed infrastructure

Weakness: Location is often very distant Lack of transport facilities Relative inflexibility

Opportunities: Leverage Government Attract new industries

Threats: Government restrictions Quotas

HISTORY OF PROCTER AND GAMBLE

William Procter, a candle maker, and James Gamble, a soap maker, both born in the United Kingdom of Great Britain and Northern Ireland, emigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris.[4] Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was created.

WILLIAM PROCTER

JAMES GAMBLE

Procter & Gamble has dramatically expanded throughout its history, but its headquarters still remains in Cincinnati. Procter & Gamble is the largest consumer goods company in the world and sells products under more than 50 brand names. The Procter and Gamble Company is today more familiarly known as P&G in most of the English-speaking world, and has grown from its humble roots as a Cincinnati soap maker to one of the 20 largest multinational corporations in the world (based on sales). P&G racked up over $76 billion in total sales in 2009. Procter & Gamble was a highly successful business from its inception. Cincinnati was a regional hub for the animal processing and meat packing industries, so the raw materials for soap products were widely available and inexpensive. P&G developed a reputation for quality products and innovation in marketing in just a few short years, coming up with several new products, including the accidentally invented, but phenomenally successful, ivory soap.

Procter & Gamble's relationship with India started in 1951 when Vicks Product Inc. India, a branch of Vicks Product Inc. USA entered Indian market. In 1964, a public limited company, Richardson Hindustan Limited (RHL) was formed which obtained an Industrial License to undertake manufacture of Menthol and de mentholated peppermint oil and VICKS range of products such as Vicks Vapor, Vicks Cough Drops and Vicks Inhaler. In May 1967, RHL introduced Clearasil, then America's number one pimple cream in Indian market. In 1979, RHL launches Vicks Action 500 and in 1984 it set up an Ayurvedic Research Laboratory to address the common ailments of the people such as cough and cold P&G's sales had reached $1 million by 1859 and the company already had 80 employees. With the invention and naming of Ivory soap by James Norris Gamble and Harley Procter in 1879, P&G's growth exploded even further and soon Procter & Gamble products were found in homes all across the United States. William Alexander Procter, the youngest son of the founder, became the first president of the company in 1890. He managed some remarkable growth during his 17-year tenure and was well regarded for his progressive labor policies (including employee profit sharing). William Cooper Procter took over from his father in 1907 and continued the tradition of progressive, employee-centered leadership. P&G developed Crisco shortening and the safety razor that would later become the world-famous Gillette razor during his tenure as president. The first non-founding-family leader of the company was Richard R. Dupree, who became president of the company in 1930. P&G became an international company under his watch, purchasing the English company Thomas Hedley & Co., Ltd. P&G also introduced Draft, the first synthetic detergent for household use, in 1933 under his watch, and soon there were a host of synthetic detergent products like the household cleaner Oxydol or the shampoo Drene available to American consumers. P&G was also among the first companies to sponsor radio shows known as "soap operas" that dramatically increased in popularity just a few years later with the advent of television. Robert A. MacDonald became the CEO of Procter & Gamble in 2009, and P&G has begun a major rebranding and push into the growing markets of the developing world under his watch. He is assisted in this significant endeavor by an experienced Board of Directors including Meg Whitman (former CEO of eBay) and Kenneth Chenault (former CEO of American Express). It is still relatively early in this multi-year rebranding campaign, but international sales have demonstrating steady quarter-to-quarter growth since mid-2011. Today, Proctor & Gamble is the second largest FMCG Company in India after Hindustan Lever Limited.

OBJECTIVES OF MULTINATIONAL CORPORATION

The objectives of MNCs are as follows:

1. To study and analyze Multinational Companies with reference to Procter and Gamble Limited. 2. To study various issues related to Multinational Companies. 3. To understand the general framework of Multinational Companies. 4. To provide suggestions to alleviate the problems of Multinational Companies. 5. To maximize the profit of multinational companies at lowest possible cost. 6. To secure the least costly production of goods for world markets which can be achieved through acquiring the most efficient locations for production facilities or obtaining tax concessions from host governments. 7. To remain faithful to the capitalist principle and do anything to resist the tendency to make them deviate from their age-long tenets. 8. To manage complex set of issues in the host country by implementing corporate social responsibility strategy (CSR) because such issues may risk the success of their operations. 9. To acquire raw materials with ease from overseas source at competitive prices and easily export components and finished goods for assembly or distribution in foreign markets. 10. To avail competitive advantage internationally and to make best use of technological advantages by setting up production facilities abroad.

RESEARCH METHODOLOGY
Procter and Gamble have continually used the strategy of innovation to lead the consumer goods industry. The constantly changing market place has forced the strategist at Procter and Gamble to focus on innovation as a way of maintaining their position in the market. The strategy of innovation is to always ensure that their products and services are of the highest quality and above meets the expectation and needs of the consumers. (Davila, T. Etal 2006) said Procter and Gamble is very adaptable to changing customer demands by carefully and clearly defining its innovative strategies; it almost lost the market dominance in the mid 1980s, had it not been its aggressive play to win strategy. To make its strategy successful, Procter and Gamble employs effective communication strategy in implementing its strategy. The management amongst others ensures that every unit understands the process. And coupled with understanding it, the management also ensures everyone is interested in the process through motivation of all employees. Organizational changes are carefully managed to ensure success. One of the reasons that have contributed to the ability of Procter and Gamble to manage changes in the market place over the year is her strong organizational culture that had been built over the year. It is important to stress that culture must be nurtured to accept changes at all levels. The success of organization cultures relies to a great deal on managerial responsibility of planning, organizing, directing, motivating and controlling. This claim to understand research and methodology is establishing a fame work of primary and secondary research. Primary research means new data gathered to help and solve the problem at hand. As compared to secondary data which is previously gathered data. An example is the information gathered by a questionnaire quantative data that are newly collected in the course of research; consist of original information gathered from surveys, independent observation and test result data gathered by the researcher in the act of conducting research. Primary data is basically collected by getting questionnaire filled by the respondent. Secondary data means the information that already exist somewhere having been collected another purpose sources includes trade publication and subscription services. There are two types of secondary data i.e. internal and external. Secondary data is used to consist of books and website.

CHAPTER 2
LITERATURE REVIEW
Multinational companies (MNCs) combine the advantages of global strategies with embeddedness in heterogeneous social, and especially national, contexts. This embeddedness contributes to the innovativeness of MNCs by facilitating access to external resources and competences as well as coordination with internal and external actors. After a theoretical introduction to the embeddedness concept, highlighting its multidimensionality and dynamics as well as the role of agency, the contribution of International Business (IB) studies and economic sociology to clarifying the embeddedness concept will be discussed. In four strands of IB literature, the environments of MNCs are characterized by assets, contingencies, resources and rules. Sociological approaches focus on the influence of the broader institutional environment on MNCs, on the micro-political and cognitive-cultural dimensions of agency and on interdependency between transnational and other social spaces. These two fields of study contribute to a better understanding of the challenges faced by MNCs in dealing with heterogeneous social contexts. The controversies surrounding the process of globalization have raised concerns that multinational companies (MNCs) might be pursuing profit at the expense of vulnerable workforces, environmental degradation and so on. In response to such concerns, MNCs have increasingly taken steps aimed at demonstrating their social responsibility as business organizations. One prominent development has been the elaboration and adoption of a code of conduct concerning corporate social responsibility (CSR). It is well known in the IB literature that MNCs can generate and implement a wide range of global integration strategies that eventually fit into certain organizational structures which in turn correspond to distinctive expansion motives. Traditionally there are two main, distinct, reasons why companies invest abroad in foreign countries. Vertical FDI is traditionally related to the desire of MNC to carry out unskilled-labour intensive production activities in locations that are relatively abundant with unskilled-labour. The behavior of many multinational enterprises is not well described by existing models of FDI. Firms often follow strategies that involve vertical integration in some countries and horizontal integration in others, a strategy known as complex integration.

Another important aspect inspired by the transaction cost literature could be incorporated in the analysis to enhance our understanding of the complexity of these strategies. If we incorporate the transaction cost literature we then discuss about the boundaries of the firm and its organizational structure and consequently the challenges which MNCs have to face to be able to accommodate a dynamic path of international expansion. Location factors should be complimented with firm-level factors to explain the form of integration a firm will pursue through its network of affiliates.

CHAPTER 3
DATA ANALYSIS

P & G Revenue Chart

90000 80000 70000 60000 50000 40000 30000 20000 10000 0 2005 2006 2007 2008 2009 2010 2011 2012

Sales grew at an annualized rate of 5.7% over this period, but over a more recent period, sales growth has been flat. The company has restated numbers which are not shown here and that points to be mild growth. In some ways, the chart is not quite as bad as it looks, because the company was actively divesting brands over the period, including the large Folgers Coffee brand to smokers, rather than focusing on growth. Still, investors are broadly and correctly unimpressed by P&Gs performance over this period. The following revenue chart shows that the revenue for Procter and Gamble has been increasing over the years. This is because P&G is introducing more and more products and have been facing tough competition existing in the market. .

4 3.5 3 2.5 2 1.5 1 0.5 0 2005 2006 2007 2008 2009 2010 2011 2012

EPS Dividend

Procter and Gamble EPS and Dividend

In terms of earnings per share, the company grew at an annualized rate of 4.7%. However, earnings have declined over the later period as a part of cost-cutting.

The company has stated that its targets high single digit EPS growth. When combined with a dividend yield of over 3 %, that would mean long term low double-digit returns. As far as the dividend is concerned, it currently yields 3.28% with a payout ratio of under 60%. The dividend has grown by a rate of 11% annually, and the most recent increase was 11%

CHAPTER 4 Procter & Gamble Company (PG)

Procter & Gamble is the world's largest producer of household and personal products by revenue, with its products reaching 4 billion people worldwide. Including Tide detergent, Pampers diapers, and Gillette razors, that generate over $1 billion in revenue annually. One of the key areas of growth for the company is in emerging markets worldwide. P&G already owns large and growing market share in countries including China and Russia. P&G has created products such as Downy Single Rinse, low-water volume detergent, and naturally, a low-income feminine protection product, specifically for developing nations. In light of the global economic downturn, P&G has announced it will focus its growth strategy on emerging markets, opening almost all of its 20 new manufacturing facilities outside its established markets. Proctor and Gamble looks to bring in new product ideas from outside the company. Connect + Develop has led to the development of 42% of new P&G products in recent years. In February 2010, the company said it will launch a "flurry" of new products globally, using innovation to boost sales in fiscal 2010 coming out of the global recession. With $79 billion in sales across the world in fiscal 2010 and 24 brands with $1 billion of sales each, P&G is a global giant for household and personal goods. P&G divides its business into three Global Business Units (GBUs) that develop and produce products and its corporate group which handles the operation and administration of the company.

Beauty (34.0% of 2010 sales, 38% of 2010 net income): The Beauty GBU includes all hair and skin products, medications, razors, electric shavers, and batteries. This business unit

includes several product lines acquired when the P&G bought consumer products company Gillette in 2005. Proctor & Gamble's global market share in blades and razors is 70%, primarily centered around its Mach3, Fusion, Venus, and Gillette brands. In June 2009, P&G further expanded its men's grooming business with the acquisition of the high-end shaving company "The Art of Shaving" and the men's skin care line Zirh.

Health and Well-Being (18.3% of 2010 sales, 20% of 2010 net income) The Health and Well-Being GBU provides oral care, feminine health, pharmaceuticals, snacks, coffee, and pet care products. In oral care, the company has the number two market share position at 20% globally. In potato chips, the company's Pringles brand holds a market share of approximately 10%. Household Care (48.4% of 2010 sales, 50% of 2010 net income: The Household Care GBU manufactures a wide range of products from laundry detergent to diapers. The company's baby care market share in 2008 was 29%.

How P&G Tripled Its Innovation Success Rate

Back in 2000 the prospects for Procter & Gambles Tide, the biggest brand in the companys fabric and household care division, seemed limited. The laundry detergent had been around for more than 50 years and still dominated its core markets, but it was no longer growing

fast enough to support P&Gs needs. A decade later Tides revenues have nearly doubled, helping push annual division revenues from $12 billion to almost $24 billion. The brand is surging in emerging markets, and its iconic bulls-eye logo is turning up on an array of new products. This isnt accidental. Its the result of a strategic effort by P&G over the past decade to systematize innovation and growth. To understand P&Gs strategy, we need to go back more than a century to the sources of its inspirationThomas Edison and Henry Ford. In the 1870s Edison created the worlds first industrial research lab, Menlo Park, which gave rise to the technologies behind the modern electric-power and motion-picture industries. Under his inspired direction, the lab churned out ideas; Edison himself ultimately held more than 1,000 patents. Edison of course understood the importance of mass production, but it was his friend Henry Ford who, decades later, perfected it. In 1910 the Ford Motor Company shifted the production of its famous Model T from the Piquette

Avenue Plant, in Detroit, to its new Highland Park complex nearby. Although the assembly line wasnt a novel concept, Highland Park showed what it was capable of: In four years Ford slashed the time required to build a car from more than 12 hours to just 93 minutes. How could P&G marry the creativity of Edisons lab with the speed and reliability of Fords factory? The answer its leaders devised, a new-growth factory, is still ramping up. But already it has helped the company strengthen both its core businesses and its ability to capture innovative new-growth opportunities. P&Gs efforts to systematize the serendipity that so often sparks new-business creation carry important lessons for leaders faced with shrinking product life cycles and increasing global competition.

Laying the Foundation Innovation has long been the backbone of P&Gs growth. As chairman, president, and CEO Bob McDonald notes, We know from our history that while promotions may win quarters, innovation wins decades. The company spends nearly $2 billion annually on R&Droughly 50% more than its closest competitor and more than most other competitors combined. Each year it invests at least another $400 million in foundational consumer research to discover opportunities for innovation, conducting some 20,000 studies involving more than 5 million consumers in nearly 100 countries. Odds are that as youre reading this, P&G researchers are in a store somewhere observing shoppers, or even in a consumers home.

These investments are necessary but not sufficient to achieve P&Gs innovation goals. People will innovate for financial gain or for competitive advantage, but this can be self-limiting, McDonald says. There needs to be an emotional component as wella source of inspiration that motivates people. At P&G that inspiration lies in a sense of purpose driven from the top downthe message that each innovation improves peoples lives.

Procter & Gamble sticks by forecasts; profit meets expectations

Fri Oct 25, 2013 11:31

(Reuters) - Procter & Gamble Co (PG.N) is chugging along with its turnaround, posting a quarterly profit that met Wall Street's expectations and holding to its annual forecasts as the world's largest household products maker gets a lift from cost cuts and a lower tax rate.

Shares of P&G fell nearly 1 percent to $79.93 in morning trading on Friday. The maker of Pampers diapers and Tide detergent is trying to reinvigorate itself under Chief Executive Officer A.G. Lafley, who returned in late May to replace Bob McDonald. Lafley, who did not speak on the company's conference call on Friday, has previously said the current fiscal 2014 would be a "transition" year, after the "stepping stone" year that ended in June. He has already split P&G into four businesses, hoping the new structure will boost efficiency "We continue to think the appointment of Lafley is more temporary in nature, until a permanent successor can be named," said Morningstar analyst Erin Lash. She said she was "a bit perplexed" by P&G's decision to have Lafley participate only on certain calls and at major industry conferences as the company works to "instill confidence and reignite its momentum." P&G said it still expected 5 percent to 7 percent growth in earnings per share this fiscal year, excluding restructuring charges. The company abandoned quarterly forecasts earlier this year. It still expects organic sales, which strip out the impact of currency changes, acquisitions and divestitures, to rise 3 percent to 4 percent this fiscal year. Regarding Lafley's absence from the call, a P&G spokesman Paul Fox said: "This change reflects our focus on annual results and trends rather than quarterly results and is consistent with our recent move to fiscal guidance."
SHAMPOO SHOWDOWN

P&G held or increased market share in businesses that represent about two-thirds of its sales during the quarter, Chief Financial Officer Jon Moeller said. While he said he was "reasonably happy" with the results, he added: "We simply have to execute better, more consistently and more reliably." P&G competes against a variety of companies, including Unilever Plc (ULVR.L) (UNc.AS). On Thursday, Unilever's results suggested that its North American market share in the high-margin personal care business suffered because of promotions that P&G ran on its hair care products such as Pantene shampoo. However, Moeller refuted such assertions, saying that P&G's hair care product promotions were down from a year earlier. The company's market share in the category was flat. Colgate-Palmolive Co (CL.N) also discussed a more promotional U.S. market when it released its results on Thursday. "We see a different reality," Moeller told reporters. "Promotion is important, and we will be competitive in our promotional activities, but it is not an area where

we seek to lead." In North America overall, P&G's share of the volume of goods that were sold on promotions was down 7 percent from a year earlier, Moeller said. P&G said it had earned $3.03 billion, or $1.04 per share, in the first quarter ended on September 30, up from $2.81 billion, or 96 cents per share, a year earlier. Sales rose 2.2 percent to $21.21 billion, topping Wall Street's forecast of $21.04 billion. Organic sales rose 4 percent. Such sales were up in every category except healthcare, where they were flat, due in part to a pet food recall. The beauty business was a disappointment, with organic sales growth of just 1 percent, analysts said. P&G blamed the sluggish growth on factors such as a decrease in skin care product sales. JPMorgan analyst John Faucher said he had expected 3 percent organic sales growth in the beauty division.

Unilever CEO Expects to Catch P&G in Five Years

Jun 21st 2011

In a recent interview, Unilever's CEO Paul Polman admitted that his company had grown "too little" over the past 10 to 15 years, but said he expects it to catch up with rivals such as Procter & Gamble (PG) within the next four or five years. We value Unilever (UL) stock with a $35 Trefis price estimate -- roughly a 10% premium over its current market price -- and discuss below why stock analysis firm Trefis believes Polman's goals may be a little too ambitious. What catching up with P&G requires

Unilever closed 2010 with over $58 billion in sales while P&G's revenues were a little under $80 billion. Even with a conservative growth rate of 4%, P&G's revenues by 2015 can be expected to be over $97 billion. So "catching up with P&G" by 2015 translates into Unilever growing at almost 11% year-on-year over the next five years. Why this seems too optimistic for now: Out of line with past performance Unilever grew from near $48 billion in 2005 at a compounded annual growth rate of 4%. The recently published earnings guidance for the first quarter of the current fiscal year wasn't very promising either. While sales grew by just over 4% in Q1 2011 compared to the same period last year, the underlying volumes grew by only 2.5% with price increases contributing the remaining 1.8%. This sluggish volume growth would need to pick up considerably to meet the CEO's stated goals.

CCI finds no unfair trade practices by Procter & Gamble

PTI Nov 26, 2013, 10.31PM IST

NEW DELHI: Competition Commission has rejected allegations of unfair trade practices against Procter and Gamble Home Products, which was made by a contract manufacturer.

In its order, the Competition Commission of India (CCI) said that Procter & Gamble Home Products' dominance, if any, in the market of toothbrushes, toothpastes and detergent powder has no concern with manufacturing contracts. JHS Svendgaard Laboratories which filed the complaint is into manufacturing of fast moving consumer goods on contractual basis. The complaint was also against Gillette India Ltd and Gillette Diversified Operations Pvt Ltd. The Commission noted that all allegations have been made on termination of agreement and refusal to renew the pacts between Procter and Gamble Home Products and JHS Svendgaard, "which are contractual disputes and the remedy for the same lies elsewhere". "... the terms of manufacturing agreement between the Informant and Opposite Party 1 (Procter & Gamble Home Products) cannot be considered as violative of the provisions of Section 3(4) of the Act," the order said.

IMPACT OF MNCs ON COUNTRIES

MNCs benefitted the countries in the following ways: 1) A large amount of tax collected through MNCs. 2) Increased Revenue. 3) Economic health improved. 4) Employment increased. 5) Foreign relations increased. 6) Foreign currency maintenance and dealing efficiency increased. 7) Markets sentiments improved. 8) Demand supply scenario was balanced. 9) Available resources were used effectively and income was generated for countries and other domestic companies. 10) Import export policies were implemented effectively and later on the exports were increased so the country benefitted in dual mode.

SHOULD MNCs BE FAVOURED OR NOT?????

Multinational Companies are becoming more and more every day .With the growing economy the need to have more foreign investment for development is obvious. These Multi National Companies brings in that required investment to developing countries and helps the country to progress. But at the same time there are instances when the same Multi National Companies have become a danger to the developing country. MNCs should definitely be favored as they help the host countries. They help in training of local labor with more sophisticated techniques which on the long run will bring external benefits to the host country when these techniques can be used in all economic sectors. They raise the growth rate of host nation by introducing new investment and new technology and also induce their local rivals to become more innovative and competitive. They contribute to taxes plus provide the host country with foreign exchange that can be used to purchase vital imports. Also, MNCs help to transfer the resources such as modern technology, skilled and professional persons, raw materials etc. from advance country in which they operate their activities. Also, they acquire raw material from abroad which cheaper in cost. MNCs increase the investment level and employment in the host country. They also ensure minimum standards. The success of multinationals is often because consumers like to buy goods and services where they can rely on minimum standards. i.e. if you visit any country you know that the Starbucks coffee shop will give something you are fairly

familiar with. It may not be the best coffee in the district, but it wont be the worst. People like the security of knowing what to expect. Other reason for favoring the MNCs is that they provide an efficient means of integrating economies. Also, MNCs are able to raise huge capital by issuing share to general public within or outside the country. By initiating a higher level of investment and reducing the technological gap, the foreign exchange gap is reduced and the natural resources are utilized carefully.

CHAPTER 5 RECOMMENDATIONS:
Market Development Strategy:
P&G is emphasizing on the urban areas while it has neglected the suburban areas, which is also a big market for soaps like safeguard. For this purpose they should efficiently utilize their marketing information system to collect information about the demand and attitudes of the people in these areas. By using this strategy, safeguard can fetch the customers of competitors and will be successful in building new customers.

Product Development Strategy:

It describes to develop new products or modify the existing products with respect to size, colour, packaging etc. Safeguard is a well perceived product among the customers and at this moment it is advisable in two sizes75 gm and 125gm which cannot the demand of every segment. While the product of the competitors are available in multiple sizes which provide multiple choices for purchases to customers for e.g. Lifebuoy Gold has 140gm an d95gm and Medicare has 80gm sold available in the market. This provides an opportunity to the customer to have multiple choices. On the other hand, in case if safeguard the choice to customer is very limited. Therefore, it is necessary that safeguard should be available in maximum possible sizes to meet the selection criteria of the customer. As far as launching of new product is concerned, it is

not necessary for P & G at this moment, but in future, they will require taking this step as well because they have some other soap like ivory, and zest which are very famous in international market.

Market Penetration Strategy:

It describes that a company tries to sell more of its product by implementing new supplementary uses. Safeguard is that product, which contains such chemicals useful for beauty care as well. This characteristic, we have analysed through its product formula. Therefore, it is more useful to supplement this idea with existing safeguard or introduce safeguard into different pack sizes especially for capturing the female customers.

CONCLUSION
Over the years, there have been many countries that have sought out multinationals to establish operations in their countries. This has typically led to the relaxation of regulations, working standards, environmental safeguards, community development initiatives, and human rights violations to draw in corporate entities. The purpose of having an MNC in a developing nation is for government officials to gain a quick infusion into state coffers, most of which has traditionally benefited the wealthiest in society. Multinationals offer advantages to non-industrial countries, as well as posing certain problems. It is the result of the advantages, that many governments adopt favorable attitudes towards multinationals. Companies with international subsidiaries are known for introducing new technologies and providing employment. With them, may come new ideas, new methods of organization and contracts. For developing nations, the arrival of a multinational may also mean training in management skills, and trade skills, such as welding and fitting. It is also felt that MNCs promote international trade and contribute to the integration of industrially developing nations into the mainstream of the world community. In the late 1980s, free traders in Europe joined with European workers in successfully opposing the proposed merger of Honeywell International and General Electric on antitrust grounds. The United States and the European Union also entered in a trade war. They clashed over European restrictions on imports of American beef and bananas, and the U.S. steel industry accused European firms of dumping steel on American markets. European business and political leaders retaliated with charges that Washington unfairly subsidized U.S. exports and rejected its efforts to resolve trade disputes.

In a world becoming smaller each day, with corporate mergers across national boundaries becoming more common and a technological and information revolution unlike any in the past, calls will continue to grow about bringing the aspirations of private enterprise more in line with national needs. How that will happen or whether it is even possible remain unanswered questions. The failure of the United States and Europe to resolve their economic differences and a growing movement toward economic regionalism in East Asia, including mutual currency supports, cooperative exchange systems, and an East Asian free trade area, even suggest a worldwide backlash already under way against economic globalization. At the same time, it is difficult to imagine anything less than a highly integrated world economy or one without the glue of the multinational corporations that helped bring it about in the first place.

MNCs are beneficial or India and it also has disadvantages to India. They give employment, growth, development etc. but they also create monopoly in the market. Thus small sectors existing in markets are getting closed. Multinational corporations (MNCs) and Transnational corporations (TNCs) entering into new markets can have both positive and negative impacts on local economy , therefore a greater understanding of corporate international trade must be achieved of business field , international economy and the increasing role of multinational corporation (MNCs) raise about issued of stabilization , inequality and inefficiency. However, a unitary approach to the taxation of MNCs could better reflect how MNCs operate today. It could also lead to a more transparent and easy-to-administer system. Under unitary taxation of MNCs, artificial profit-shifting to companies based in tax havens, often with no real economic activity, would become pointless. In conclusion, MNCs are beneficial to less developed countries. They improve the foundations of a "backwards" economic environment through the diffusion of capital, technology, skills, and exports. MNCs have a direct effect on the development of a more citizen welfare conscious government. Accordingly, the number of jobs increases, consumer spending increases, the tax base grows and health care is more widely accessible. They also have an apparent lasting effect on the values and institutions of the host country. The values of the country change to reflect a country committed to staying in pace with a rapidly changing global environment; extending to political norms and nationalistic tendencies. Once there is openness to capitalism, or a more developed capitalist society emerges then there will be a more stable global society. However, in the end there really is no other more reliable way to improve the social, economic, and political environment of a state than by allowing a MNC to invest. Multinational corporations may find themselves so hindered by contradictory national regulations that they may press various governments to initiate efforts to achieve greater

international uniformity. At this point the prospects for international economic organization improve. The role of the multinational corporation today cannot be understood merely in economic terms, but must be seen in terms of this larger political challenge and response.

APPENDIX
QUESTIONNAIRE:
1. What is Multinational Corporation?
A multinational corporation or multinational enterprise is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries.

2. What do MNCs offer host countries?

Capital-scarce countries look up to MNCs as harbingers of capital, technology and best practice systems. But they have often to accept them with generous pinches of salt. The rent-extracting objectives of multinational organizations would certainly vary with the aspirations of host countries. With expectations working at cross-purposes, multinational investment may translate into undesirable forms.

3. Is globalization responsible for the growth of MNCs in India?

Multinational Corporations are both a cause and a result of the globalization process. One can view the seventeenth-century Dutch and English India companies as a preview of what was to come. In fact, defining the MNC as a company with headquarters in one country and major investments in one or more other countries might just allow the India companies to fit in. Unilever is closer to being a true predecessor.

4. Are MNCs beyond the government control?

Absolutely not. The relationship between governments and multinationals is characterized by a complex distribution of benefits. Multinational corporations increasingly demand the "freedom" they need to optimize their operations across borders, with the goal of lowering their total costs and continuously upgrading quality. But once multinationals enter a country, they are, to some

degree, locked in by the commitments that they have made to develop local operations and provide job training. Multinationals need access to local skills and other resources such as hotspot clusters.

5. What is the impact of MNCs in India?

1) Increase in job opportunities 2) Cheaper goods 3) Increased foreign exchange 4) Indian companies are under stiff completion as the MNC's products are at par then the Indians. 5) Increase in rate of Economic Growth

BIBLIOGRAPHY
The above information of the project have been collected from various sources like internet, newspapers, books, magazines and also under the guidance of Prof. Indira 1. http://articles.economictimes.indiatimes.com 2. https://www.google.co.in 3. http://www.indiabix.com 4. http://www.bms.co.in 5. http://wiki.answers.com 6. http://www.scribd.com 7. http://www.preservearticles.com 8. https://www.pg.com 9. http://articles.economictimes.indiatimes.com 10. The Economic Times. 11. Mint Newspaper. 12. M.Com-Part 1 Mumbai University