 A Multinational Corporation (mnc) Or



 A multinational corporation (MNC) or

transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation.

 A corporation that has its facilities and other

assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management.  The first modern MNC is generally thought to be

the Dutch East India Company, established in 1602. Very large multinationals have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy

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ABB (Asea Brown Boveri)

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PepsiCo Inc.

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ABN-Amro

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Procter & Gamble Co.

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Adidas ltd.

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Proton

Aditya Birla Group





Honda Motor Co. Ltd.

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Sony Corporation

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IBM

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Tata Group

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ICICI Bank

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Toyota Motor Corporation

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Infosys Ltd.

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Unilever

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General Electric Company



Nike Inc.



General Motors



Nokia Corporation



Ford Motor Company



Google Inc.



Parker Hannifin

 Enterprise

operating in several countries but managed from one (home) country. Generally, any firm or group that derives a quarter of its revenue from operations outside of its home country is considered a MNC, and may fall into one of the four categories:

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(1) Multinational, decentralized firm with strong home country presence (1920-30),

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(2) Global, centralized firm that acquires cost advantage through centralized production wherever cheaper resources are available (1970-80),

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(3) International, firm that builds on the parent firm's technology or R&D (postwar years), or

 Multinational corporations can be divided into three

broad groups according to the configuration of their production facilities:- Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (example: McDonalds)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

 The global liberalization has covered the way for

fast expansion & growth of the MNCs.  World Investment Reports 2000 & 2003 provide

some indication of the economic dominance of the multinational corporations.  Virtually,

all countries & economic activities, rendering it a alarming force in a today’s world economy.

 According to one comparison of the sales volume of

firms with the GDP of countries, the sales of the top 200 firms accounted for 27.5% of world GDP in

 Of the 50 largest “economies”, 14 were TNCs & 36

were countries.  In 2006, foreign affiliates/associates accounted for

about 73 million employees, compared to 24 million in 1990.  Sales of almost $25 trillion were much higher than

world export in 2006, compared to 1990 when both were roughly equal.  Stock of outward FDD, increased from $1.7 trillion

to $6.6 trillion over the same period. th

1.

WALL-MART STORES ($351m)

6.

TOYATA MOTORS ($204m)

2.

EXXON MOBIL ($347m)

7.

CHEVRON ($200m)

3.

ROYAL DUTCH SHELL ($318m)

8.

4.

BRITISH PETROLIUM ($274m) GENERAL MOTORS ($207m)

9.

DAIMLER CHRYSLER ($190m) CONOCO PHILLIPS ($172m)

5.

10. TOTAL SA ($168m)

Country

Number of global 500 companies

United State

170

Japan

70

Britain, France (tied) China

38

India

6

20

Country rank

Company

Global rank

1

Indian Oil

135

2006 Revenues ($45,216.6 millions)

2

Reliance Industries

269

25,158.9

3

Bharat Petroleum

325

21,862.2

4

Hindustan Petroleum

336

20,935.6

5

Oil & Natural Gas

369

19,237.4

6

State Bank of India

495

15,119.4

 Of the world’s top 200 economic players in 2001, 56 were

countries and 144 were corporations.  Marks & Spencer sources its goods from more than 70

countries.  In 2000 IBM produced around 60 per cent of its laptops in

Mexico.  BP

(British countries.

petroleum)

operates

in

more

than

100

 Hewlett Packard recently slashed supply-chain costs by

US$3.5 billion and is now looking to save a further US$1 billion annually.

 MNCs have an obligation towards employers,

customers, governments, suppliers and communities as well as towards shareholders. This is known as Corporate Social Responsibility (CSR).  Most agree that CSR includes a duty to behave

honestly, legally and with integrity, not to be corrupt but to deal fairly and obey the host country’s laws.  Some MNCs would say that no more than this

bare minimum can be expected of them. They

ADVANTAGES:  MNCs can help to reduce poverty.  They can bring money into a country through employment

and investment.  Three quarters of international investment in developing

countries is from MNCs and private sources.  They can create jobs and raise labor standards.  They can pass on expertise in their field.  They work to equalize the cost of factors of production

around the world.

DISADVANTAGES:  The MNC can be guilty of pollution or human rights abuse

(e.g. by sourcing products from factories where child labor is used or by forbidding its workers to join trade unions).  The finance brought into a country by an MNC may be badly

managed by that country’s government.  Multinationals create false needs in consumers and have had

a long history of interference in the policies of sovereign nation states.  MNCs may destroy competition & acquire monopoly powers.  The

transfer pricing enables MNCs to avoid taxes by manipulating prices on intra-company transactions.

 According to Peter Drucker the period of the most

rapid growth of multinational trade was ------- fifties & sixties.  During this period, the world trading economy grew

faster – at an annual rate of 15% or so in most years.  It is estimated that between 1/4th & 1/3rd of

manufactured goods now moving in world trade are being shipped from one branch to another branch of the MNCs.  The

sale

of

foreign

subsidiaries

in

the

host

 There was a very significant increase in the export intensity

(i.e., the percentage of exports to total sales) of the foreign affiliates of many MNCs.  The export intensity of foreign affiliates of US MNCs doubled

from 20 to 40% in the case of developed economies.  It also increased from 6 to 22% in the case of Latin American

affiliates.  It increased from 23 to 64% for developing Asia.  But in the case of India, it is very low.  More than 40% of the total exports of China is done by MNCs

affiliates.

 Comparatively very little investment has taken

place in India due to several reasons, like the dominant role assigned to the public sector in the industrial policy & the restrictive Government policy toward foreign investment. Some multinationals, Coca Cola & IBM, even left India in the late 1970s as the Government conditions were unacceptable to them.  A common criticism against the MNCs is that they

tend to invest in the low priority & high profit sectors in the developing countries, ignoring the national priorities. However, in India the government policy confined the foreign investment

 Multinationals in several developing countries make

substantial contribution to export earnings. However, the performance in the case of India has been very dismal. This is attributed mostly to the government policy.  Although export promotion has been pursued since the

Third plan, the highly protected domestic market & the unrealistic much more attractive than exports.  However, since the mid 1980s with the economic

liberalization that increased domestic competition & the steady depreciation of the rupee, exports began to become attractive & several foreign companies & companies with foreign participation, as well as Indian

 Since the economic liberalization ushered in 1991,

many multinationals in different lines of business have entered the Indian market. A number of multinationals which were in India prior to this have expended their business.  The scenario for 'MNC in India' has changed a lot in

recent years, since more and more firms from European Union like Britain, Italy, France, Germany, Netherlands, Finland, Belgium etc have outsourced their work to India.  Finnish mobile handset manufacturing giant Nokia has

the second largest base in India.

 Oil companies, Infrastructure builders from Middle

East are also flocking in India to catch the boom.  South Korean electronics giants Samsung and LG

Electronics and small and mid-segment car major Hyundai Motors are doing excellent business and using India as a hub for global delivery.  Japan is also not far behind with host of electronics

and automobiles shops.  Companies like Singtel of Singapore and Malaysian

giant Salem Group are showing huge interest for investment.

Any

Please!!!!!