A ppt on multinational corporation

MNCs, also known as TNCs are huge industrial organizations which extend their industrial and marketing operations through a network of their branches or their majority owned foreign affiliates (MOFAs).

There are now 40,000 MNCs with 2,50,000 overseas affiliates throughout the world.

A multinational company can organize it’s operations in different countries either of the following five alternatives

Branches Subsidiary Companies Joint venture companies Franchise holders Turnkey Projects

REASONS FOR GROWTHThe manifold reasons are1. Expansion of market territory2. Marketing Superiorities3. Financial Superiorities4. Technological Superiorities5. Product Innovation

Expansion of market territory

As the operations of a large sized firm expand and as it’s international image builds up it seeks more and more extension of it’s activities beyond the physical boundaries of the country in which it is incorporated.

MARKETING SUPERIOROTIES It possesses a more reliable and up-to-

date market information system It enjoys market reputation and faces

less difficulty in selling it’s product It adopts more effective advertising and

sales promotion techniques

Financial Superiorities It has huge financial resources to turn

adverse situation in favor It maintain high level of fund utilization

by generating funds in one country and using them in another

It has easier access to external capital markets

OBJECTIVES OF MNCs To expand the business beyond the boundaries

of a home country Minimize cost of production, especially labor

cost Capture lucrative foreign market against

international competitors Make diversification internationally effective so

that a steady growth of business could be achieved

Make best use of technological advantages by setting up production facilities abroad

Counter regulatory measures in the parent country

BENEFITS RECEIVED FROM MNCs Investment, income and employment Transfer of technology Increase in export and decrease in import Equalizing cost of factor of production around the world Integration of national economy into the world economy Contribution to research and development Stimulation to domestic enterprise Quality improvement and reduced domestic monopoly Increased standard of living Professionalization of management in the host country Improve balance of payment position MNCs are profit making organizations which pay high

dividends, motivating resource mobilization among investors in host country

OPPOSITION LINES OF ARGUMENT It does not stand for social welfare, rather profit

maximization Misutilisation of power and flexibility MNCs can have unfavorable effect on the balance of

payment position of the country through outflow of large sums of money in the form of dividends, profits, royalties, interest, technical fees , and so on leading to an increasing volume of remittance which rose from 72.25 crore in 1969-70 to 813.5 crore in 1989.

MNCs can cause distraction and cause monopoly powers in the long run

A grave threat to sovereignty of the nations Direct and indirect interference in the political and

other strategic affairs depletion of nonrenewable natural resources