BUSINESS ENVIRONMENT

PRESENTATION ON MULTINATIONAL
CORPORATIONS

SUBMITTED TO: DR. EKTA NARULA

SUBMITTED BY: BHAVNA
M.COM-I
18127/19
 WHAT IS MULTINATIONAL
CORPORATION?
A multinational corporation is a corporate organization that owns or
controls production of goods or services in at least one country other
than its home country.
HOW A COMPANY IS CLASSIFIED AS MNC?

MULTINATIONAL CORPORATION

High
Having Having Stakeholders
proportion of
subsidiaries operations in revenues from
are from
in foreign number of different
global
countries. countries. countries.
operation.
 STRUCTURE OF MULTINATIONAL
CORPORATIONS

STRUCTURE OF MNCs

Horizontally Vertically Diversified

Integrated Integrated MNCs

• Produces similar • Produces products • Neither horizontally

products. that serve as input. nor vertically
integrated.
• Manages production • Manages
in different countries. production in • Manages production
certain countries. in different countries.
• Example:
McDonald’s, IBM • Example: Adidas • Example: Hotel
Chains
MULTINATIONAL CORPORATIONS IN INDIA
INDIAN MNCs IN OTHER COUNTRIES
 TOP 5 COMPANIES IN DIFFERENT
SECTORS WITH THEIR MARKET CAP
SOFTWARE AUTO & ANCILLARIES
COMPANY MARKET CAP COMPANY MARKET CAP
(Rs Cr.) (Rs Cr.)
• TCS 641,488.93 • TATA MOTORS 20,989.57

• INFOSYS 257,280.41 • BAJAJ AUTO 59,252.24

• WIPRO 108,410.96 • MAHINDRA 33,895.64

AND
• HCL 112,671.37 MAHINDRA
TECHNOLOGI • HERO 32,546.53
ES MOTOCORP
• ORACLE 16,538.20 • MARUTI 128,190.69
FINANCIAL SUZUKI INDIA
 BANKING PHARMA
COMPANY MARKET COMPANY MARKET
CAP (Rs Cr.) CAP (Rs
Cr.)
• SUN 82,429.15
• STATE BANK OF 166,533.25
PHARMACEUTICAL
INDIA

• DR. REDDY’S 51,513.35

• HDFC BANK 454,948.28 LABORATORIES

• ICICI BANK 201,587.48

• CIPLA 33,301.55
• AXIS BANK 101,142.92 • LUPIN 26,237.65

• KOTAK 226,140.26 • TORRENT 33,153.27

MAHINDRA BANK PHARMACEUTICAL
 TELECOM FMCG
COMPANY MARKET COMPANY MARKET CAP (Rs
CAP (Rs Cr.)
Cr.)
• BHARTI AIRTEL 229,733.52 • ITC 204,481.27

• HINDUSTAN 471,773.67
• VODAFONE IDEA 8,735.56 UNILEVER
LTD
• RELIANCE 190.82 • NESTLE 151,070.89
COMMUNICATIONS INDIA
• ASIAN 154,066.35
• TATA 6,831.45 PAINTS
COMMUNICATIONS
• GODREJ 56,227.40
CONSUMER
• TATA 369.48 PRODUCTS
TELESERVICES
 WHAT ARE THE DIFFERENT FORMS OF
MULTINATIONAL CORPORATIONS?
Multinational Corporations operate in the following ways.

FORMS OF MNCs

Subsidiaries Joint Venture Turn Key

Franchising Branches Projects
A MNC may In this system a
In this form, MNC In this system MNC multinational
establish wholly In this method, the
grants firms in opens branches in corporation
owned subsidiaries m MNC undertakes a
foreign countries the different countries establishes a
foreign countries project in foreign
right to use its trade which work under the company in foreign
A multinational country and
marks, patents, brand direction and control country in
company can expand operates the
names etc to operate of head office. The partnership with local industrial plant by
its business
their business as per headquarters frames firms.
operations though itself. It provides
the terms and policies to be
subsidiaries all over training to the staff
conditions of followed by the
the world. in the operation of
franchise agreement. branches.
plant.
 SWOT ANALYSIS OF MNCs

STRENGHTS WEAKNESSES

• Low cost • Location is often very distant

• Well developed infrastructure • Lack of transportation facilities
• Best use of resources • Relative inflexibility
• Availability of large market

OPPORTUNITIES THREATS

• Leverage Government • Emergence of private

• Attracts new industry companies
• Necessary infrastructure may be • Establishment of monopoly
created • High competition
 ADVANTAGES OF MULTINATIONAL
CORPORATIONS

Advantages of MNCs can be studied under two categories. These are

classified below:

ADVANTAGES OF MNCs

TO HOST TO HOME
COUNTRIES COUNTRIES
 ADVANTAGES OF MNCS TO THE
HOST COUNTRY
• Transfer of technology, capital and entrepreneurship.

• Increase in the investment level and thus, the income and employment in
the host country.

• Greater availability of products for local consumers.

• Improvement of the host country’s balance of payments.

• Creation of local jobs and carrier opportunities.

• Improved competition and better utilization of resources.

• Greater access to high quality managerial talent.

• Encouragement to world economic unity.

 ADVANTAGES OF MNCS TO THE
HOME COUNTRY.
• Acquisition of raw materials from abroad.

• 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 and management

contracts.

• Job career opportunities at home and abroad in connection with overseas

operations.
 DRAWBACKS OF MULTINATIONAL
CORPORATIONS
The several drawbacks of MNCs are highlighted below:

DRAINAGE OF
CULTURAL LOSS
RESOUCES

MINIMUM TRANSFER
OF TECHNOLOGY

EXPLOITATION OF EVASION OF TAXES

LABOUR

STRAIN ON FOREIGN
EXCHANGE RESERVES

CREATION OF DEPLETION OF
MONOPOLIES NATURAL RESOURCES
 CAUSES HARM TO OUTFLOW OF LARGE
THE ENVIRONMENT SUMS OF MONEY

ENCOURAGES POLITICAL
CORRUPTION

DO NOT LEAVE FAULTY TECHNOLOGY

PROFITS LOCAL TRANSFER

PUT OTHER COMPANIES

(SMEs) OUT OF BUSINESS

INTERFERENCE IN
INFLICT HEAVY
ECONOMIC
DAMAGE TO THE
SOVEREIGNTY OF
ECONOMY
HOST COUNTRY
 WHY MULTINATIONAL COMPANIES IN
INDIA ?
There are a number of reasons why the multinational companies are coming
down to India. India has got a huge market. It has also got one of the fastest
growing economies in the world. Besides, the policy of the government
towards FDI has also played a major role in attracting the multinational
companies in India.

WHY MNCs CONSIDER INDIA A PREFERRED

DESTINATION

FDI Labour Macro economic Huge market

Attractiveness competiveness stability potential
 CURRENT SCENARIO
• Tata, Essar, Reliance and Infosys were amongst the biggest acquirers in the
U.S.

• Tata Group remained at the forefront with their total deal values worth
$2.13 billion in steel, hospitality and automotive sector.

• Aditya Birla took over Utkal Alumina International.

• South America and African region remained low on the acquisition radar.

• North America and Asia are the favorite hunting grounds of Indian Inc. on
global acquisition as the take over deals touched $7 billion and $4.2 billion.

• The Indian companies have made their presence felt in Italy and Spain.
 References
• http://
www.economicsdiscussion.net/multinational-corporations/role-of-multinati
onal-corporations-in-the-indian-economy/10917

• https://en.wikipedia.org/wiki/Multinational_corporation

• http://
www.preservearticles.com/business/what-are-the-different-forms-of-multin
ational-corporations/17526

• https://www.moneycontrol.com/

• https://
www.businesstoday.in/magazine/cover-story/bt500-top-five-companies-in-
different-sectors/story/189204.html

• Book of Business Environment by Rosy Joshi, Sangam Kapoor, Priya

Mahajan.