Multinational Corporations
Multinational Corporations
Multinational Corporations
CORPORATIONS
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OVERVIEW
What is MNC?
History and Evolution of MNC
MNC Structure.
Organization of MNC.
Criticism of MNC.
MNCs in India.
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WHAT IS A MULTINATIONAL
CORPORATION???
It is a corporation that:
Manages And/or
Delivers
production services
In more than
one country
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WHAT IS A MULTINATIONAL
CORPORATION? (CONTINUED)
According to Franklin Root (1994), an MNC is a
parent company that:
engages in foreign production through its affiliates
located in several countries,
exercises direct control over the policies of its
affiliates,
implements business strategies in production,
marketing, finance and staffing that go beyond
national boundaries.
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EXAMPLES OF MNCS:
The largest MNCs:
Ford
Wal-Mart Stores
IBM
Exxon Mobil
British Petroleum
Royal Dutch Shell
Mc Donald’s
These companies have
turnovers in excess of
Phillips the GNPs of some
countries. 5
HOW IS A COMPANY CLASSIFIED
AS AN MNC?
Subsidiaries Stakeholders
in foreign are from
countries;
Operations in different
a number of High proportion countries.
countries; of assets in or/
and revenues
from global
operations;
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HISTORY AND EVOLUTION OF MNCS:
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MULTINATIONAL CORPORATION
STRUCTURE:
Horizontally integrated
multinational
corporations.
Vertically integrated
multinational
corporations.
Diversified multinational
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corporations.
MULTINATIONAL CORPORATE STRUCTURE
Horizontally integrated multinational corporations
manage production establishments located in different
countries to produce the same or similar products.
(example: Mac Donald. )
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)
Diversified multinational corporations manage
production establishments located in different countries
that are neither horizontally nor vertically nor straight, nor
non-straight integrated. (example: Microsoft or Siemens)
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SWOT Analysis of MNCs:
Strengths Weakness
• Low Cost • Location is often very distant
• Well Developed • Lack of Transportation facilities
Infrastructure • Relative Inflexibility
Opportunities
Threats
• Leverage Government
• Attract new industries • Govt. restrictions
•Quotas
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REASONS FOR THE
ESTABLISHMENT OF MNCS
To increase market share.
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Advantages
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Destroy competition and acquire monopoly.
WORLD’S TOP MNCS:
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TOP 10 CO.S IN FORTUNE 500 LIST 2016
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FORTUNE GLOBAL 500 2016:
COUNTRY WISE:
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CRITICISM OF MNCS:
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contd…
Depletion of resources due to their
continuous use by these corporations.
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MNCs in India have a long history and tradition:
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WHAT INDIA OFFERS???
One billion plus population.
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TRENDS OF MNCS IN INDIA:
Contd……. 29
Increasing flocking of Europian Union companies
to India.
Mobile handset manufacturing giant SAMSUNG
is the largest Multinational Corporation In India.
Italian automobile giants like Fiat, Ford Motors,
Piaggio etc expanded their operations in India
with R&D wing attached.
Culture.
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Definitions
Transnational Companies
(TNC’s)
As defined by United Nations Commission on Transnational
Corporations as ‘enterprises which own or control production or
service facilities outside the country in which they are based.
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D i f f e r e n c e B e t w e e n M N C ’s & T N C ’s
• Transnational corporations are a type of Multinational
corporations.
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BIBLIOGRAPHY
www.wikkipedia.com
www.investopedia.com
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