1. Achievers 1-Muhammad Talha 2-Raja Saim Azad 3-Usman Khan 4-H.M.Nouman Riaz 2. Topics: Introduction Nature and History of MNC Characteristics of MNC Reasons for becoming MNC Five ways to become a MNC H.M. Nouman Riaz Raja Saim Azad 3. Topic How local companies keep MNC at bay? (Six Strategies) Usman Ali & Muhammad Talha 4. H.M. Nouman Riaz Topics: Introduction Characteristics of MNC 5. Introduction Every country does not have all resources, so there is a need of international business in order to export resources, That are abundant in our country and to import resources that are not available in our country. 6. What is MNC & MNE? MNC MNE TNC Multi-National Multi-National Transnational Corporation Enterprise Corporation International Business 7. Definition: According to ILO (International Labor Organization): MNC is any corporation that has its management head quarters in one country i.e. (Home Country) & operates in several other countries i.e. (Host Countries). 8. Logos of Different MNCs 9. History MNCS took birth in the early 1860s it was after the Second World War that multinational have grown rapidly. In the early days, the United States was the home of the most of the MNCS. Now there are a large number of Japanese and European multinationals. Now in the list of 10 or 20 largest MNCS, Japan has the largest number. 10. Characteristics of MNC GIANT SIZE. CENTRALIZED CONTROL. INTERNATIONAL OPERATIONS. SOPHISTICATED TECHNOLOGY. MULTINATIONAL CENTRAL MANGEMENT. DIRECT INVESTMENT BASE IN SEVERAL COUNTRIES. DERIVES LARGE PART OF THEIR PROFIT FROM FOREIGN OPERA TIONS. 11. Characteristics of MNC Large size: The firms are large in size means their resources & capital are very huge. Example: PC, Toyota, Microsoft 12. Multi-country Operations: MNC operates in several countries other than home country. Example: McDonalds , (all of above) Characteristics of MNC 13. Characteristics of MNC Multiple Environments: MNC operates in different countries and face various environments. There are employees from different cultures. 14. Characteristics of MNC Profit back to HQ: The revenue generated in host countries is ultimately dragged back to home countries. 15. Characteristics of MNC ADVANCED TECHNOLOGY Multinational companies invest a huge amount of money on research and development of latest technology. Therefore transfer advanced technology to developing countries through subsidiaries and branches. 16. Raja Saim Azad Topics: Reasons for becoming MNC 5 ways to become MNC 17. Reasons for becoming MNC Increase Market Share Secure cheaper premises & labor Avoid Tax & Trade barriers Enhance profitability 18. Reasons for becoming MNC To diversify themselves against the risks and uncertaintie s of the domestic business cycle. In response to foreign competition MNC moves toward th e less competitive Countries. To Capture more potential Customers, a company may h ave reached a flat satisfying domestic demand, which is not growing. Looking for new markets. 19. Reasons for becoming MNCs To reduce costs, like cheap labor. Take advantage of local low cost & avoid middle man. To avoid transportation cost, because transportation costs are l ike tariffs that work as barriers which raise consumer prices. e.g. Toyota 20. Five ways to become MNC Branches Subsidiaries Joint Venture Franchises Turn Key Projects 21. How local companies keep MNCs At Bay 22. Outline Introduction Six strategies: Create customized products and service Deploy models to overcome key obstacles Deploy the latest technology Take advantage of low cost labor, and train staff in house Scale up quickly Invest in talent to sustain growth 23. Introduction 24. LOCAL GIANT vs. TNCs ( local companies) (transnational corporations) 25. TNCs MULTINATIONAL CORPORATIONS: Colossi Size 13? Enormous financial resources State Of The Art Technologies Powerful Brands Abnormal Profits & Worlds Best Management Lowered Tariff Barriers & Permitted FDI 26. Cont. Under pressure allow TNCs to operate in home grounds These monsters will wipe out the local companies 27. How MNCs are kept at bay! Sample of 10 developing economies Domestic champions holds Market leaders Staved of challenges Seized new opportunities This is due to the execution of their strategies 28. This doesn't indicate well for TNCs Still seeking growth and profit Many of them have pulled them off due to local competition 29. Yahoo and E-bay 30. NEC & PANASONIC 31. Question!!!!!!! Why doesn't the strategies of TNCs work well ??? 32. ANSWER!! TNCs believe that local companies are lacking behind. 9.. 33. Entrepreneurship is fuelling the competition TNCs Cant tackle local champions with old strategies. so What makes local giant champs in emerging markets Its not about low cost structure.. 34. Grupo positive in brazil Largest share of PC Market 35. Baidu in china 58.76% 25.41% 12.58% 1.34% 0.92% Baidu 360 Search Sogou Google Bing 36. Grupo Elektra in Mexico 37. Six strategies 1. Create customized products and service.12 2. Deploy models to overcome key obstacles 3. Deploy the latest technology 4. Take advantage of low cost labor, and train staff in house 5. Scale up quickly 6. Invest in talent to sustain growth 38. Usman Khan 39. Create customized products or services: 40. 1-Create customized products or services: Simple customization techniques, based on intimate knowledge of local consumers, have sparked major success for homegrown champions. create the customized products and services plus new ideas , invocation and culture taste Cost leadership.price low and quality may equal to genuine 41. EXAMPLE: Q Mobile . Customer point of 90 % same functions then low price. Maintain t he local market strategic. Nokia. iPhones etc. Example: Goodbaby Group of china. (The largest manufacturers and supplier of infants & children's produc t.) 42. Develop business models to overcome key obstacles 43. 2-Develop business models to overcome key obstacles: Smart local companies identify key challenges posed by domestic markets, then design business models to overcome them. Local smart companies copy the multinational company then plus $ develop strategic built up new products. Local companies develop the strategic then automatically knowledge transfer and gain information to the multinational companies according to other counties culture. 44. EXAMPLES Shanda Games (Chinese) vs. Microsoft (then first mover advantage) TATA Nano car ( India)copies plus new ideas generates in other companies Auto parts company. It is local company but export large quantities of parts in foreign country like India and chain. ( another country people automatically share information in foreign local country) 45. Deploy the latest technologies 46. 3-Deploy the latest technologies Innovative technologies keep operating on low cost but deliver goo d quality products. New technologies can help older companies get a second wind afte r economic liberalization. Example: National bank ATM machine . New technologies adopted bu ilt much benefits Advantages in ATM machine 47. Take advantage of low cost labor & train staff in house 48. Take advantage of low cost labor Use low cost labor Not relying on automation E.g. focus media 49. Focus media Placed 130000 LCDs In 90 cities Whether to use automation system or low cost labor 50. Train staff in house Apollo hospital 4000 specialists 3000 medical officers in 41 facilities 51. Scale up quickly 52. Scale up quickly Expansion Acquisition Mergers E.g. focus media jumped through Americas clear channel (1998) JCDecaux (2005) Focus medias hits 5 deals B/W January 2006- February 2007 53. Some create regional entities to scale up quickly E.g. Good baby 35 companies in chinas cities 1600stores 300 distributors 54. Invest in talent to sustain growth 55. Invest in talent to sustain growth Managerial capabilities Investing in such talent will sustain growth 56. e.g. wimm-bill-dann in Russia Founded in 1992 by 5 entrepreneurs and produce Dairy products Fruit juices Acquired 19 dairy companies B/W 1995-2003 & 100 distributors 57. DANONE (dairy products) Coca-Cola (fruit juices) 58. Hire new CEO which Led Reducing cost improving quality investing in its people improved forecasting and demand supply simplify its legal structure invested in IT adopted a number of HR practices linked salaries with performance 59. Results.. (cont.) WBD share increased to 34% in Russian market compare d to DANONE's 16% share Become one of the top three players in fruit juices with 18 % share.