INTRODUCTION

Multinational companies are the enterprises or organizations that manage production or offer services in more than one country. India has been the home to a number of multinational companies. Indeed, since the financial liberalization in the country in 1991, the number of multinational companies in India has increased noticeably. Although majority of the multinational companies in India are from the U.S., however one can also find companies from other countries as well. Multinational companies in India are taking their toll on family businesses. They are not only destroying the household economies for small business people but also leading to the cultural uniformity of the global brands in the market place in India. There are many 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 the most important role in attracting the multinational companies in India. For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market. However, the scenario changed during the economic liberalization of the country, especially later 1991 .

Government, nowadays, makes constant efforts to attract foreign investments by relaxing several of its policies. As a result, a number of multinational companies have shown interest in the Indian market.

Meaning-Multinational

companies

are

those

enterprises

whose

management,ownership and controls are spread in more than one foreign country.

DEFINITION-According to an ILO report,The essential nature of the multinational enterprises lies in the fact that its managerial headquarters are located in one country while the enterprise carries out operations in a number of other countries as well.

LIST OF MULTINATIONAL COMPANIES IN INDIA

The list of multinational companies in India is ever-growing as a number of MNCs are coming down to this country now and then. Following are some of the major multinational companies operating their businesses in India: List of Major MNCs in India British Petroleum Vodafone Ford Motors LG Samsung Hyundai Accenture Reebok Skoda Motors ABN Amro Bank

WHY IS INDIA ATTRACTING THE MULTINATIONAL COMPANIES? India is one of the fastest growing economies of our times. The country has a huge market for goods and services due to its vast population and consumer power. The policy of the government towards foreign direct investment contributed immensely to attracting the multinational corporations to India. In the past, before the boom of foreign investments, India had strict policy of terms in FDI. Thus, there were fewer companies interested in investing in India until in the year 1991 when the policy was changed to start attracting FDI. More and more companies find their way to India now and then. Some of the notable multinational companies that are currently operating in India include British Petroleum, LG, Skoda Motors, Hyundai, Samsung, Vodafone, Ford Motors, Reebok and Accenture among others. A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It can also be referred to as an international corporation. They play an important role in globalization. The first multinational corporation was the Dutch East India Company, founded March 20, 1602.

Strategies Corporations may make a foreign direct investment. Foreign direct investment is direct investment into one country by a company in production located in another country either by buying a company in the country or by expanding operations of an existing business in the country.

A subsidiary or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. A corporation may choose to locate in a special economic zone, which is a geographical region that has economic and other laws that are more free-marketoriented than a country's typical or national laws.

COMMUNICATION BETWEEN DIFFERENT CULTURES Multinational corporations need to deal with different cultures of their employees, partners, suppliers and customers. Cross-cultural communication (frequently referred to as intercultural

communication) is a field of study that looks at how people from differing cultural backgrounds communicate, in similar and different ways among themselves, and how they end eavour to communicate across cultures. Intercultural competence is the ability of successful communication with people of other cultures. A person who is interculturally competent captures and understands, in interaction with people from foreign cultures, their specific concepts in perception, thinking, feeling and acting. Earlier experiences are considered, free from prejudices; there is an interest and motivation to continue learning.

CONFLICT OF LAWS Conflict of laws is a set of procedural rules that determines which legal system and which jurisdiction's applies to a given dispute. The term conflict of laws itself originates from situations where the ultimate outcome of a legal dispute depended upon which law applied, and the common law courts manner of resolving the conflict between those laws. In civil law, lawyers and legal scholars refer to conflict of laws as private international law. Private international law has no real connection with public international law, and is instead a feature of local law which varies from country to country.

The three branches of conflict of laws are Jurisdiction whether the forum court has the power to resolve the dispute at hand Choice of law the law which is being applied to resolve the dispute Foreign judgments the ability to recognize and enforce a judgment from an external forum within the jurisdiction of the adjudicating forum Globalization Multinational corporations are important factors in the processes of globalization. National and local governments often compete against one another to attract MNC facilities, with the expectation of increased tax revenue, employment, and economic activity. To compete, political entities may offer MNCs incentives such as tax breaks, pledges of governmental assistance or subsidized infrastructure, or lax environmental and labor regulations. These ways of attracting foreign investment may be criticized as a race to the bottom, a push towards greater autonomy for corporations, or both. MNCs play an important role in developing the economies of developing countries like investing in these countries provide market to the MNC but provide employment, choice of multi goods etc. On the other hand, economist Jagdish Bhagwati has argued that in countries with comparatively low labor costs and weak environmental and social protection, multinationals actually bring about a 'race to the top.' While multinationals will certainly see a low tax burden or low labor costs as an element of comparative advantage, Bhagwati disputes the existence of evidence suggesting that MNCs deliberately avail themselves of lax environmental regulation or poor labor standards. As Bhagwati has pointed out, MNC profits are tied to operational efficiency, which includes a high degree of standardisation. Thus, MNCs are likely

to adapt production processes in many of their operations to conform to the standards of the most rigorous jurisdiction in which they operate (this tends to be either the USA, Japan, or the EU). As for labor costs, while MNCs clearly pay workers in developing countries far below levels in countries where labor productivity is high (and accordingly, will adopt more labor-intensive production processes), they also tend to pay a premium over local labor rates of 10 to 100 percent.[8] Finally, depending on the nature of the MNC, investment in any country reflects a desire for a medium- to long-term return, as establishing plant, training workers, etc., can be costly. Once established in a jurisdiction, therefore, MNCs are potentially vulnerable to arbitrary government intervention such as expropriation, sudden contract renegotiation, the arbitrary withdrawal or compulsory purchase of licenses, etc. Thus, both the negotiating power of MNCs and the 'race to the bottom' critique may be overstated, while understating the benefits (besides tax revenue) of MNCs becoming established in a jurisdiction.

TRANSNATIONAL CORPORATIONS
A Transnational Corporation (TNC) differs from a traditional MNC in that it does not identify itself with one national home. Whilst traditional MNCs are national companies with foreign subsidiaries,[9] TNCs spread out their operations in many countries sustaining high levels of local responsiveness.[10] An example of a TNC is Nestl who employ senior executives from many countries and try to make decisions from a global perspective rather than from one centralized headquarters.[11] However, the terms TNC and MNC are often used interchangeably.

CRITICISM OF MULTINATIONALS Main articles: Anti-globalization and Anti-corporate activism Anti-corporate advocates criticize multinational corporations for entering countries that have low human rights or environmental standards.[12] They claim that multinationals give rise to huge merged conglomerations that reduce competition and free enterprise, raise capital in host countries but export the profits, exploit countries for their natural resources, limit workers' wages, erode traditional cultures, and challenge national sovereignty.

FEATURES OF MULTINATIONAL CORPORATIONS (MNCS)

The multinational corporations have certain characteristics which may be discussed below : (1) Giant Size : The most important feature of these MNCs is their gigantic size. Their assets and sales run into billions of dollars and they also make supernormal profits. According to one definition an MNC is one with a sales turnover of f 100 million. The MNCs are also super powerful organisations. In 1971 out of the top ninety producers of wealth, as many as 29 were MNCs, and the rest, nations. Besides the operations, most of these multinationals are spread in a vast number of countries. For instance, in 1973 out of a total of (,000 firms identified nearly 45 per cent had affiliates in more than 20 countries. (2) International Operation : A Fundamental feature of a multinational corporation is that in such a corporation, control resides in the hands of a single institution. But its interests and operations sprawl across national boundaries. The Pepsi Cola company of the U.S operates in 114 countries. An MNC operates through a parent corporation in the home country. It may assume the form or a subsidiary in the host country. If it is a branch, it acts for the parent corporation without any local capital or management assistance. If it is a subsidiary, the majority control is still exercised by the foreign parent company, although it is " incorporated in the host country. The foreign control may range anywhere between the minimum of 51 per cent to the full, 100 per cent. An MNC thus combines ownership with control. The branches and subsidiaries of MNCs operate under the unified control of the parent company.

(3) Oligopolistic Structure : Through the process of merger and takeover, etc., in course of time an MNC comes to assume awesome power. This coupled with its giant size makes it oligopolistic in character. So it enjoys a huge amount of profit. This oligopolistic structure has been the cause of a number of evils of the multinational corporations. (4) Spontaneous Evolution : One thing to be observed in the case of the MNCs is that they have usually grown in a spontaneous and unconscious manner. Very often they developed through "Creeping incrementalism." Many firms become multinationals by accident. Sometimes a firm established a subsidiary abroad due to wage differentials and better opportunity prevailing in the host country. (5) Collective Transfer of Resources : An MNC facilitates multilateral transfer of resources Usually this transfer takes place in the form of a "package" which includes technical know-how, equipment's and machinery, materials, finished products, managerial services, and soon, "MNCs are composed of a complex of widely varied modern technology ranging from production and marketing to management and financing. B.N. Ganguly has remarked in the case of an MNG "resources are transferred, but not traded in, according to the traditional norms and practices of international trade."

(6) American dominance : Another important feature of the world of multinationals is the American dominance. In 1971, out of the top 25 MNCs, as many as 18 were of U.S. origin. In that year the U.S. held 52 per cent of the total stock of direct foreign private investment. The U.E. has assumed more of the role of a foreign investor than the traditional exporter of home products. (7) Operations in several countries: These corporations operate in a number of countries.The parent corporation is in home country and production and marketing activities are carried on in a number of host countries.These corporations operate through subsidiaries or branches set up in different countries. (8) Centralised Management: The management of MNCs is centralized.The plans and policies are framed in the parent country and subsidiaries and branches in host countries only implement them.The MNCs have controlling equities in subsidiary companies and implement their main policies everywhere (9) Professional Management: Since multinationals have large financial resources at their command,they appoint professional managers to undertake various activities.The specialists in the fields of finance,production,marketing etc.are appointed to look after various functions.

SIGNIFICANCE OF MULTINATIONAL CORPORATIONS (MNCS): The multinational corporations today have a revolutionary effect on the international economic system. It is so because the growth of international transactions of the multinationals has affected the more traditional forms of capital flows and international trade for many economies. Today they constitute a powerful force in the world economy. The value of the products sold by the MNCs in 1971 was more than $ 500 billion which was about one-fifth of the GNP of the entire world, excepting that of socialist economies. In the host countries, the volume of their production was about $ 330 billion. The present growth rate of their output in the host countries is a spectacular 10 per cent per annum which is almost double the growth rate of the world GNP. In the field of international trade and international finance, the multinational firms have come to exercise enormous power. In early seventies the MNCs accounted for about one-eighth of all international trade- From the nature of their growth it may be presumed that in the early eighties their share will rise to one-fourth. Among the developing countries only India had an annual income twice that of General Motors, which is the biggest multinational corporation. Otherwise the annual income of the other less developed countries is much less than that of the giant MNCs. By their sheer size the MNGs can disrupt the economies of the less developed countries, and may even threaten their political sovereignty.

We may comprehend the relative economic power of the MNCs vis-a-vis the nation-states by ranking them together according to gross annual sales and gross national product respectively. As Lester R. Brown has shown, out of 100 entries in the merged list 56 were nation-states and as many as 44 were MNCs. According to one estimate by early eighties some 300 large MNCs will come to control 75 per cent of the world's manufacturing assets.

METHODS OF OPERATIONS 1 . Franchising In this form, multinational corporation grants firms in foreign countries the right to use its trade marks, patents, brand names etc. The firms get the right or licence to operate their business as per the terms and conditions of franchise agreement. They pay royalty or licence fee to multinational corporations. In case the firm holding franchise violate the terms and conditions of the agreement, the licence may be cancelled. This system is popular for products which enjoy good demand in host countries. 2. Branches In this system multinational corporation opens branches in different countries. These branches work under the direction and control of head office. The headquarters frames policies to be followed by the branches. Every branch follows laws and regulations of the head office and host countries. In this way multinational companies operate through branches. 3. Subsidiaries A multinational corporation may establish wholly owned subsidiaries m foreign countries. In case of partly owned subsidiaries people in the host countries also own shares. The subsidiaries in foreign countries follow the polices laid down by holding company (Parent company). A multinational company can expand its business operations though subsidiaries all over the world.

4. Joint Venture In this system a multinational corporation establishes a company in foreign country in partnership with local firms. The multinational and foreign firm share the ownership and control of the business. Generally, the multinational provides technology and managerial skill and the day to day management is left to the local partner. For example, in Maruti Udyog the Government of India and Suzuki of Japan have jointly supplied capital. Suzuki supplies technology and the day to day management lies with the Government of India. 5. Turn Key Projects In this method, the multinational corporation undertakes a project in foreign country. The multinational constructs and operates the industrial plant by itself. It provides training to the staff in the operation of plant. It may also guarantee the quality and quantity of production over a long period of time.

ADVANTAGES OF MNC'S FOR THE HOST COUNTRY

Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. According to ILO report "for some, the multinational companies are an invaluable dynamic force and instrument for wider distribution of capital, technology and employment; for others they are monsters which our present institutions, national or international, cannot adequately control, a law to themselves with no reasonable concept, the public interest or social policy can accept. MNC's directly and indirectly help both the home country and the host country. MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The industries of host country get latest technology from foreign countries through MNC's. 3. The host country's business also gets management expertise from MNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. 5. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of MNC's.

7. The host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of MNC's in the host country. Advantages of MNC's for the home country MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people of home country both at home and abroad. 3. It gives a boost to the industrial activities of home country. 4. MNC's help to maintain favourable balance of payment of the home country in the long run. 5. Home country can also get the benefit of foreign culture brought by MNC's. Disadvantages of MNC's for the host country 1. MNC's may transfer technology which has become outdated in the home country. 2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monpolising the host country's market.

4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty. Disadvantages of MNC's for the home country 1. MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development.

APPLICABILITY TO PARTICULAR BUSINESS

MNC's is suitable in the following cases. 1. Where the Government wants to avail of foreign technology and foreign capital e.g. Maruti Udyog Limited, Hind lever, Philips, HP, Honeywell etc. 2. Where it is desirable in the national interest to increase employment opportunities in the country e.g., Hindustan Lever. 3. Where foreign management expertise is needed e.g. Honeywell, Samsung, LG Electronics etc. 4. Where it is desirable to diversify activities into untapped and priority areas like core and infrastructure industries, e.g. ITC is more acceptable to Indians L&T etc. 5. Pharmaceutical industries e.g. Glaxo, Bayer etc.

IMPACT OF MNC Industrial societies are changing at an unprecedented speed, influenced mainly by globalisation or rather by global interdependence. They are also influenced by technology, education, commerce, and .social networking In the heart of these changes are businesses which have continued to grow unhindered even in the midst of all sorts of adversities. The more they grow the more they build immunity around them to prevent failures. As they grow, they acquired enormous political clout and power. They go into mergers and acquisition and some of those M&A are hostile. They enter host countries in different ways and different strategies. Some enter by exporting their products to test the market and to find whether their existing products can gain sizeable market share. For such firms, they rely on export agents. These foreign sales branches or assembly operations are established to save transport costs because there is a limit to what foreign exports can achieve for a firm owing mainly to tariff barriers and quotas and also owing to logistics or cost of transportation. Most of the firms are encouraged by the low wage rates and other environmental factors.

To meet the growing demands in the foreign countries, the firm considers other options such as licensing or foreign direct investment which are critical steps. Some continue with export even when they have settled for the FDI option. Every step takes strategic planning and is motivated by profit through sales growth. For instance, a company may have reached its limits in satisfying domestic demand and would look for new markets.

FDI, which connotes finding a way around protective instruments in the importing country, is one of the ways to expand. Typically, investment flows from regions of low profit to those of anticipated high returns.

These businesses that opt for foreign production eventually grow into corporations and into multinational and transnational corporations. The size of some corporations is larger than the size of most developing countries.

These multinational corporations have also learnt to live peaceable with their host governments and host communities through the concept of Corporate Social Responsibility. They are compelled to behave by laws governing their operations and activities.

They are, indeed, change agents. Every country needs them and to have them, the country concerned must create an enabling environment that will attract them and keep them. The reality of the changing world has dawned on everybody and there is nowhere to hide.

The influence of the big businesses is so pervasive that even if you dont want them, you may find that sooner than later their products would find you. This is influenced by the convergence of ideologies, tastes, technologies, free and easy movement of people and capital, and international political cooperation. Young people nowadays identify more with products more than with countries. Coca-Cola

products are in every nook and cranny of the planet. The same can be said of many other products such as Jeans, Nike, Red Bull, Power Horse, Levi and other designers dresses and fashion accessories. Apple products like computers, iPad, iPod, and so on are in high demand everywhere in the world. Sony playstations are equally in high demand. Blackberry is all over and young people identify with all their series. HP, HPCompaq, Sony, Dell and Acer Computers and their components are all over the world and nobody really bothers where they are made any more and who really owns them.

This phenomenon brings rise to the growing belief that traditional nation state would inescapably lose influence over individuals. Consequently, the question being asked is whether globalisation would bring about the end to the traditional nation state as societies tend to use technology to connect with global partners and achieve goals once realised at the local level.

Similarly, trade and commerce in one country have become dependent on trade and commerce in many other states. In all of these, Nigeria has had a good taste of multinational corporations defined as companies that implement business strategies in production, marketing, R&D, financing and staffing that transcend national boundaries. In other words, multinational corporation is a parent company that engages in foreign production through its affiliates located in several countries.

SUMMARY:
The dependence of countries on each other for both capital and consumer goods has created an international market.The multinational corporations of developed countries are entering under-developed and developing countries to participate in their business activities. MNC plays an significant role in the growth and development of the host country.It supplies capital to the host country.It also transfer technology which help in production of goods and services at lower cost.MNC creates employment opportunities for the people of host country. Inspite of so many benefits MNC have some drawbacks also like it follows bad business ethics to earn money.MNC are harmful for local producer because they have money power and they dominate local producer and overtake them.they tries to create monopoly of their product in the market.They also exploit consumer by producing low quality product at higher prices. After examining all the merits and demerits of MNC,it can be concluded that MMNC plays an significant role in the growth and development of the host as well as home country.Some regulations must be imposed by the government on the MNC so that they are not able to exploit the consumer and are not harmful for local producers.