MULTINATIONAL CORPORATION IN INDIA

SHABIR HUSSAIN

MBA 120124

MNCS

• MULTINATIONAL CORPORATIONS (MNCS) ARE HUGE INDUSTRIAL ORGANIZATIONS HAVING A WIDE NETWORK OF BRANCHES AND SUBSIDIARIES SPREAD OVER A NUMBER OF COUNTRIES. THE TWO MAIN CHARACTERISTICS OF MNCS ARE THEIR LARGE SIZE AND THE FACT THAT THEIR WORLDWIDE ACTIVITIES ARE CENTRALLY CONTROLLED BY THE PARENT COMPANIES. 

FEATURES OF MNCS

1. MNCS HAVE MANAGERIAL HEADQUARTERS IN HOME COUNTRIES, WHILE THEY CARRY OUT OPERATIONS IN A NUMBER OF OTHER (HOST) COUNTRIES.

2. A LARGE PART OF CAPITAL ASSETS OF THE PARENT COMPANY IS OWNED BY THE CITIZENS OF THE COMPANY'S HOME COUNTRY.

3. THE ABSOLUTE MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS ARE CITIZENS OF THE HOME COUNTRY.

4. DECISIONS ON NEW INVESTMENT AND THE LOCAL OBJECTIVES ARE TAKEN BY THE PARENT COMPANY.

5. MNCS ARE PREDOMINANTLY LARGE-SIZED AND EXERCISE A GREAT DEGREE OF ECONOMIC DOMINANCE.

CONTI…

• 6. MNCS CONTROL PRODUCTION ACTIVITY WITH LARGE FOREIGN DIRECT INVESTMENT IN MORE THAN ONE DEVELOPED AND DEVELOPING COUNTRIES.

• 7. MNCS ARE OLIGOPOLISTIC IN CHARACTER. IT IS SUSTAINED BY MODERN TECHNOLOGIES, MANAGEMENT SKILL, PRODUCT DIFFERENTIATION AND ENORMOUS ADVERTISING.

• 8. MNCS ARE NOT JUST PARTICIPANTS IN EXPORT TRADE WITHOUT FOREIGN INVESTMENTS

ROLE OF MNC’S

•  MULTINATIONALS HAVE PLAYED AN IMPORTANT ROLE IN GLOBALIZATION. GIVEN THEIR INTERNATIONAL REACH AND MOBILITY, MANY COUNTRIES, AND SOMETIMES REGIONS WITHIN COUNTRIES, SOMETIMES COMPETE WITH EACH OTHER TO HAVE MNCS LOCATE THEIR FACILITIES (AND SUBSEQUENT TAX REVENUE, EMPLOYMENT, AND ECONOMIC ACTIVITY)WITHIN.

ORGANIZATIONAL OF MULTINATIONAL CORPORATION

MULTINATIONAL COMPANY CAN ORGANIZE ITS OPERATIONS IN DIFFERENT COUNTRIES THROUGH EITHER OF THE FOLLOWING ALTERNATIVES

• BRANCHES

• SUBSIDIRIES

• JOINT VENTURE COMPANIES

• FRANCHISE

• TURN KEY PROJECT

WHY ARE MULTINATIONAL COMPANIES IN INDIA?

• HUGE MARKET POTENTIAL OF THE COUNTRY

• FDI ATTRACTIVENESS

• LABOR COMPETITIVENESS

• GDP

WHAT INDIA OFFERS

• ONE BILLION PLUS POPULATION

• 250-300 MILLION MIDDLE CLASS POPULATION

• GROSS DOMESTIC PRODUCT GROWING OVER 8-9%, MAKES IT ONE OF THE FASTEST GROWING ECONOMIES IN THE WORLD

• EASIER TO ACCESS CAPITAL

BPL

• BPL IS AN INDIAN ELECTRONICS COMPANY. ITS STANDS FOR "BRITISH PHYSICAL LABORATORIES".

• IT DEALS WITH CONSUMER ELECTRONICS (SUCH AS REFRIGERATORS AND WASHING MACHINES), MOBILE NETWORKS ETC.

• THE COMPANY WAS STARTED AT A TIME WHEN THE GOVERNMENT HAD RESERVED MANY AREAS OF BUSINESS FOR THE PUBLIC SECTOR

• BPL'S GROWTH HAS BEEN SUBJECT TO CONSTANT CHALLENGES USING ITS EXPERIENCE OF THE MARKET AND THE CONSUMER, BPL CONCENTRATED ON IMPORTING TECHNOLOGY, IMPROVING PRODUCT QUALITY, INNOVATIONS AND MANUFACTURE OF ELECTRONIC PRODUCTS THAT ENHANCED THE QUALITY OF LIFE

ONIDA

• ONIDA, A LEADING TELEVISION BRAND, IS STILL WELL KNOWN FOR ITS BRAND MASCOT ‘THE ONIDA DEVIL’ AND ITS PUNCH LINE “NEIGHBOUR'S ENVY OWNER’S PRIDE”.

• ONIDA LAUNCHED ITS ADVERTISING CAMPAIGN IN THE 1980S WHEN OWNING A TELEVISION SET WAS CONSIDERED A LUXURY

• THE MASCOT HELPED ONIDA GAIN SUBSTANTIAL MARKET SHARE AND BRAND RECALL AMONG THE CUSTOMERS AND BECOME ONE OF THE TOP THREE TELEVISION BRANDS IN THE COUNTRY.

SAMSUNG

•  SAMSUNG INDIA IS THE HUB FOR SAMSUNG’S SOUTH WEST ASIA REGIONAL OPERATIONS

• SAMSUNG’S USES STATE OF THE ART HIGHLY AUTOMATED MANUFACTURING FACILITIES

• SAMSUNG HAS BEEN AWARDED AS THE BEST RETAILER OF THE YEAR 2005

• SAMSUNG INDIA COMMENCES EXPORTS OF 'MADE IN INDIA' COLOUR TELEVISIONS TO WESTERN EUROPEA SECOND PRODUCTION LINE SET UP AT NOIDA FOR THE MANUFACTURE OF PROJECTION TVS IN INDIA

LG

• LG LIFE’S GOOD ELECTRONICS INDIA PVT. LTD., A WHOLLY OWNED SUBSIDIARY OF LG ELECTRONICS, SOUTH KOREA WAS ESTABLISHED IN JANUARY, 1997.

• LG HAS BEEN ABLE TO CRAFT OUT IN EIGHT YEARS, A PREMIUM BRAND POSITIONING IN THE INDIAN MARKET AND IS TODAY THE MOST PREFERRED BRAND IN THE SEGMENT.

• IN 2003, LG HAS EMERGED AS THE LEADER IN COLOUR TELEVISIONS, SEMI AUTOMATIC WASHING MACHINES, AIR CONDITIONERS, FROST-FREE REFRIGERATORS AND MICROWAVES OVENS.

• LG IS THE NO 1 BRAND IN THE CTV MARKET.

ADVANTAGES OF MNC’S

• MNC’S HAVE BECOME VEHICLES OF TECHNOLOGY TO THE DEVELOPING COUNTRIES

• GREATER EMPLOYMENT AND CAREER OPPORTUNITIES ARE PROVIDED BY THESE MNC’S.

• MNC’S MAKE COMMENDABLE CONTRIBUTION TO INVENTIONS AND INNOVATIONS IN THE HOST COUNTRY.

• PRACTICE OF MNC’S BRING TO THE HOST COUNTRY, THE LATEST TECHNIQUE IN THE FIELD OF MANAGEMENT.

• VARITY OF GOODS AND SERVICES PRODUCED FOR LOCAL CUSTOMERS.

DISADVANTAGES OF MNC’S

• MNCS CREATE MONOPOLIES IN THE MARKET AND ELIMINATE LOCAL COMPETITORS.

• MNC’S MAY CREATE DEPLETION OF RESOURCES DUE TO ITS CONTINUES USE BY THESE OVERSEAS COMPANIES.

• MNC’S GENERALLY CARRY OUT THEIR R&D IN THEIR HOME COUNTRY AND SUPPLY TO THE HOST COUNTRY.

• MNC’S GENERALLY IMPORT HUGE RAW MATERIALS DUE TO ITS CONTINUOUS USE BY THESE OVERSEAS COMPANIES.

• THE PROBLEM OF DUMPING EXAMPLE – CHINESE LOW QUALITY PRODUCTS IN INDIAN MARKET