6895798 Negative Impact Of Mncs

General Management

Negative impacts of MNC’s in Indian markets

Problems brought by MNC (to host countries)  The

host county is likely to lose its economic sovereignty  The host nation may also experience some loss of control over its own economy  Feeling that labour is being exploited by the MNC/ Outsourcing  Lost of cultural moorings  The problem of Dumping  Example

– Chinese low quality products in Indian market

Industry Chosen : Colour Television (CTV)

Colour Television (CTV) 

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The Indian colour TV (CTV) market is arguably one of the most fascinating markets now in Asia or perhaps even the world. Size of the Indian market : 5 million-sets-mark 1984-85 growth rate was140.3% 1985-86 fell to 68.6%, 1988-89 was 15% 1989-90 it touched a level of 5% 1991-92 the sales of color televisions at -14.5%. After declining in 2000 and 2001, the Indian consumer electronics market grew by 12.4% in current value in 2003, to reach Rs129.5 billion. A recent trend shows that TV market has grown to 373.5 per cent between January-March 2003.

Contd…..  Sony India, Samsung and LG are the dominant

players in the CTV segment.  In March 2003 the CTV segment grew by 389.1 per cent  Samsung

leading the race with a market share of 27 per cent  Sony at 20.1 per cent and  LG at 19.9 per cent.

Main players in the Indian market Indian: BPL, Onida, Videocon European: Philips American: Thomson Korean: Samsung, LG Chinese: Akai, Sansui Japanese: Aiwa, Sony, Panasonic, Sharp

CTV Sales over the years

CTV Sales over the years    

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AFTER a period of slump in 1999 and 2001, colour television (CTV) sales had picked up again FY 2003 the industry reported an upward movement in sales The CTV market has grown rapidly in the last one decade in India On the supply side, over the last two to three years, there has been some intense activity in the CTV market, with increased competition and players launching premium products incorporating superior technology Till the late 1990s, the market was dominated by older domestic players such as BPL, Videocon and Onida. Although they are still present in the market, they are steadily losing ground to multinational players such as LG and Samsung.

Most selling CTV brand

2003

BPL 

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BPL is an Indian electronics company. The acronym 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, CTVs have been the flagship business Over the years, 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 

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Onida, a leading television brand, is still well known for its brand mascot ‘The Onida Devil’ and its punch line “Neighbor'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. In 1998, Mirc Electronics (the owner of Onida brand) decided to abandon the “Onida Devil” in its communication campaigns as the brand mascot no longer appealed to the Indian consumer.

Samsung  

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Samsung India is the hub for Samsung’s South West Asia Regional operations Sports Marketing and Entertainment Marketing have been the key elements of the Company’s Brand Marketing Strategy 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 Europe A Second Production Line set up at Noida for the manufacture of Projection TVs in India

LG life’s good 

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LG 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. The company has achieved a turnover of Rs 6500 crore in 2004 and aims to touch a turnover of 10 Billion US Dollars by 2010 As on today, LG is the No 1 brand in the CTV market.

Why Indian companies lost its market share to MNC’s Primarily because of the following reasons:  They lagged behind in technology

 They offered a small range of products  Provided less margin to dealers  Less number of outlets.

 Poor after sales services  Most

of the BPL galleries were transformed the dealers into a gallery with a range products from different manufacturers

by of

Contd… What MNC’s did? Multinationals such as LG and Samsung managed to increase their market share on the strength of aggressive marketing

What Indian companies are now doing to regain their market share  Better Innovations to products  Better pricing techniques

 Better positioning of the brand

 Following an aggressive marketing  Trying

to move the after sales service to a new

level  Segmentation of the product range by creating specific sub-brands

What did BPL do? BPL tied up with Sanyo (a Fortune 500 consumer electronics major ). The key points to their strategy to gain a good market share are as follows   

Right pricing and the right product. Product positioning Strong regional presence Different prices in different show rooms

Benefits from MNC

To Host Countries Transfer of technology, capital and entrepreneurship to the host country  Employment  Improved competition in the host country and ultimately better utilization of available resources  More products for local consumers  Greater access to high quality managerial talent that tends to be scarce in the host country, particularly developing ones  Encourages the world unity and all resulting in world harmony 

To home countries Acquisition of raw materials from abroad, steady supply of raw material at a lower price that can be found domestically  Technology and management expertise acquired from competing in global markets  Export of components and finished goods for assembly or distribution in foreign markets  Inflow of income from overseas profits, royalties licensing fees and management contracts  Job and career opportunities at home and abroad in connection with overseas operations. 

Thank you!! By Darshna Iyer  Sampada Chavan  Deepak Agarwal  Shantanu Chaubal  Minal Damle  Amit Chavan  Vinay Dhake

Questions???