PROJECT REPORT

ON

MULTINATIONAL CORPORATION (TCS)

MASTER OF COMMERCE (ACCOUNTANCY)

PART-1 (SEMESTER-II)
(2015-2016)
INTERNAL ASSESSMENT
ECONOMICS OF GLOBAL TRADE AND FINANCE
Submitted To:Prof. KOEL ROY CHOUDHURY
Submitted By:GAURI DATTATRAY DUKARE
ROLL NO:-12
S.I.E.S. (NERUL) COLLEGE OF ARTS, SCIENCE &
COMMERCE

AFFILIATED TO UNIVERSITY OF MUMBAI

S.I.E.S (NERUL) COLLEGE OF ARTS, SCIENCE &

COMMERCE

CERTIFICATE
(2015-2016)

This is to certify that the project entitled MULTINATIONAL CORPORATION

(TCS) is a project work done by GAURI DATTATRAY DUKARE, ROLL NO-12 in
fulfilment of the requirements for the M.COM in ACCOUNTANCY (PART-1)
(SEMESTER-II) during the academic year 2015-2016 is the original work done of
the candidate and completed under guidance of Prof. KOEL ROY CHOUDHURY.

Date:Place:-

..

Internal Examiner

(Prof. Koel Roy Choudhury)

MCOM Coordinator

..
External Examiner

( Dr. Rita Basu )

Principal

DECLARATION BY STUDENTS

I, GAURI DATTATRAY DUKARE, ROLL NO:- 12 , the student of M.COM in

ACCOUNTANCY (Part-1) (Semester-II) (2015-2016) hereby declares that I have
completed the project on MULTINATIONAL COPORATION (TCS) under the
supervision of the internal guidance of Prof. KOEL ROY CHOUDHURY.

Thank you,

Yours faithfully,

GAURI DUKARE

ROLL NO:-12

ACKNOWLEDGEMENT

I would like to thank all the people who helped me in undertaking the study and
completing the project, by imparting me with valuable information and guidance that
was required at every stage of my project work.
I would like thank to our principal, Dr. Rita Basu and M.COM Co-ordinators for giving
me an opportunity and encouragement to prepare the project.
Last but not the least, I would like to thanks my project guide for guiding and
helping me throughout the preparation of my project, right from selection of the topic
till its completion.

Gauri Dukare

Roll No: 12

INDEX:-

CHAPTER
NO

CHAPTER NAME

PAGE
NO

Multinational Corporation

I.

2.

Introduction, History, Overview, Meaning and Definition of

Multinational Corporation
Types , Characteristics, Aims and Criticisms of MNC

8 to 13

3.

Advantages and Disadvantages of MNC

14 to 17

4.

Strategic Approach to Multinationals and methods of reducing

country risk and control
Reasons for the growth of MNC, New Industrial Policy 1991 &
MNC

18 to 20

1.

5.

1 to 7

21 to 24

TATA Consultancy Services (TCS)

II.
1.

Introduction and History of TCS

2.

Mission, value and objective of TCS

3.

Achievements, product & services of TCS

30 to 33

4.

How Tata Consultancy Services became an Indian multinational

company
TCS Advantages, Revenue & Innovation of TCS

34 to 35

5.

26 to 28
29

36 to 38

III.

Conclusion

39

IV.

References

40

I.

MULTINATIONAL CORPORATION

1. Introduction,

History,

Overview,

Meaning

and

Definition

of

Multinational Corporation :(i) Introduction:Multinational Corporations (MNCs) or Transnational Corporation (TNC), or Multinational
Enterprise (MNE) is a business unit which operates simultaneously in different countries of
the world. In some cases the manufacturing unit may be in one country, while the marketing
and investment may be in other country.
In other cases all the business operations are carried out in different countries, with the
strategic head quarters in any part the world. The MNCs are huge business organization
which extend their business operations beyond the country of origin through a network of
industries and marketing operations.
They are multi-process and multi-product enterprises. The few examples of MNCs, are, Sony
of Japan, IBM of USA, Siemens of Germany, Videocon and ITC of India, etc. There are over
40,000 MNCs with over 2, 50,000 overseas affiliates. The top 300 MNCs control over 25
percent of the world economy.
Previously American based multinationals ruled the world, but today, many Japanese,
Korean, European and Indian multinational companies have spread their wings in many parts
of the world. Before entering into any country, at the headquarters of MNCs, experts from
various fields such as political science, economics, commerce international trade and
diplomacy are analyzing the business environment of a country and advising the top
management.
A multinational corporation (MNC) or enterprise (MNE),is a corporation or an enterprise
that manages production or delivers services in more than one country. It can also be referred
to as an international corporation. The International Labour Organisation (ILO) has

~1~
defined an MNC as a corporation that has its management headquarters in one country,
known as the home country, and operates in several other countries, known as host countries.
The Dutch East India Company was the first multinational corporation in the world and the
first

company

to

issue

stock. It

was

also

arguably

the

world's

first

megacorporation, possessing quasi-governmental powers, including the ability to wage war,

negotiate treaties, coin money, and establish colonies.
The first modern multinational corporation is generally thought to be the East India
Company. Many corporations have offices, branches or manufacturing plants in different
countries from where their original and main headquarters is located.
Some multinational corporations are very big, with budgets that exceed some nations'
GDPs Multinational corporations can have a powerful influence in local economies, and even
the world economy, and play an important role in international relations and globalisation.

(ii) History:The history of multinational corporations is closely intertwined with the history of
colonialism, with the first multinational corporations founded to undertake colonial
expeditions at the behest of their European monarchical patrons. Prior to the era of New
Imperialism, a majority European colonies not held by the Spanish and Portuguese crowns
were administered by chartered multinational corporations. Examples of such corporations
include the British East India Company, the Swedish Africa Company, and the Hudsons Bay
Company. These early corporations facilitated colonialism by engaging in international trade
and exploration, and creating colonial trading posts Many of these corporations, such as the
South Australia Company and the Virginia Company, played a direct role in formal
colonization by creating and maintaining settler colonies. Without exception these early
corporations created differential economic outcomes between their home country and their
colonies via a process of exploiting colonial resources and labour, and investing the resultant
profits and net gain in the home country. The end result of this process was the enrichment of
the colonizer and the impoverishment of the colonized. Some multinational corporations,
such as the Royal African Company, were also responsible for the logistical component of

~2~
the Atlantic Slave Trade, maintaining the ships and ports required for this vast enterprise.
During the 19th century formal corporate rule over colonial holdings largely gave way to
state-controlled colonies, however corporate control over colonial economic affairs persisted
in a majority of colonies.
During the process of decolonization the European colonial charter companies were
disbanded, with the final colonial corporation, the Mozambique Company, dissolving in
1972. However the economic impact of corporate colonial exploitation has proved to be
lasting and far reaching, with some commentators asserting that this impact is among the
chief causes of contemporary global income inequality.
Contemporary critics of multinational corporations have charged that some present day
multinational corporations follow the pattern of exploitation and differential wealth
distribution established by the now defunct colonial charter corporations, particularly with
regards to corporations based in the developed world that operate resource extraction
enterprises in the developing world, such as Royal Dutch Shell, and Barrick Gold. Some of
these critics argue that the operations of multinational corporations in the developing world
take place within the broader context of neocolonialism.
However, multinational corporations from emerging markets are playing an ever greater role,
increasingly impacting the global economy.

~3~

(iii)Overview:A multinational corporation (MNC) or multinational enterprise is an organization that

owns or controls production of goods or services in one or more countries other than their
home

country.

It

can

also

be

referred

as

an international

corporation,

"transnational corporation", or a stateless corporation.

A multinational corporation is usually a large corporation which produces or sells goods or
services in various countries.

Importing and exporting goods and services

Making significant investments in a foreign country

Buying and selling licenses in foreign markets

Engaging in contract manufacturingpermitting a local manufacturer in a foreign

country to produce their products

Opening manufacturing facilities or assembly operations in foreign countries

The problem of moral and legal constraints upon the behaviour of multinational corporations,
given that they are effectively "stateless" actors, is one of several urgent global
socioeconomic problems that emerged during the late twentieth century.
One of the first multinational business organizations, the East India Company, arose in 1600.
After East India Company, came the Dutch East India Company, founded March 20, 1602,
which would become the largest company in the world for nearly 200 years.

~4~

iv)Meaning:Multinational corporations (MNCs) are huge industrial organizations having a wide network
of branches and subsidiaries spread over a number of countries. The two main characteristics
of MNCs are their large size and the fact that their worldwide activities are centrally
controlled by the parent companies. A multinational corporation (MNC) or multinational
enterprise is an organization that owns or controls production of goods or services in one or
more countries other than their home country. It can also be referred as an international
corporation, a "transnational corporation", or a stateless corporation
Multinational corporation is also known as transational corporation, any corporation that is
registered and operates in more than one country at a time. Generally the corporation has its
headquarters in one country and operates wholly or partially owned subsidiaries in other
countries. Its subsidiaries report to the corporations central headquarters.
In economic terms, a firms advantages in establishing a multinational corporation include
both vertical and horizontal economies of scale (i.e., reductions in cost that result from an
expanded level of output and a consolidation of management) and an increased market share.
Although cultural barriers can create unpredictable obstacles as companies establish offices
and production plants around the world, a firms technical expertise, experienced personnel,
and proven strategies usually can be transferred from country to country.
Critics of the multinational corporation usually view it as an economic and, often, political
means of foreign domination. Developing countries, with a narrow range of exports (often of
primary goods) as their economic base, are particularly vulnerable to economic exploitation.
Monopolistic practices, human-rights abuses, and disruption of more-traditional means of
economic growth are among the risks that face host countries.
Multinational firms arise because capital is much more mobile than labor. Since cheap labor
and raw material inputs are located in other countries, multinational firms establish
subsidiaries there. They are often criticized as being runaway corporations.

Economists are not in agreement as to how multinational or transnational corporations should

be defined.
~5~
Multinational corporations have many dimensions and can be viewed from several
perspectives (ownership, management, strategy and structural, etc.)
The multinational corporation is also known as multinational enterprise, transnational
corporation, international firm, global firm and so on. Many academic prefer to use the term
multinational enterprise because not every multinational firm is a `corporation` and term
`enterprise` has a greater and more useful application in the analysis of international business
since it include firm which may be owned privately or by the state, or whose ownership may
be a mixture of the two.
Transnational corporation which are enterprises which own or control production or service
facilities outside the country in which they are based.
A multinational corporation/company is an organisation doing business in more than one
country. 'In other words it is an organisation or enterprise carrying on business in not only the
country where it is registered but also in several other countries. It may also be termed as
international corporation, global giant and transnational corporation.

~6~

(v) Definition:1) An enterprise operating in several countries but managed from one (home) country.
Generally,

any

company

or group that

derives

quarter

of

its revenue from operations outside of its home country is considered a multinational
corporation.
There are four categories of multinational corporations:

A multinational, decentralized corporation with strong home country presence,

A global, centralized corporation that acquires cost advantage through
centralized production wherever cheaper resources are available,
An international company that builds on the parent corporation's technology or
R&D, or
A transnational enterprise that combines the previous three approaches.

2) 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. Very
large multinationals have budgets that

exceed

those

of

many

small

countries.

3) MNC' 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.

4) An enterprise that controls and manages production establishments located in at least

two countries.
5) Transnational corporation which are enterprises which own or control production or
service facilities outside the country in which they are based.

~7~

2. Types , Characteristics, Aims and Criticisms of MNC:(i)Types of MNC:

Raw material seekers:-

These are the earliest forms of multinational companies. These multinational

companies spread in different parts of the world in search of raw materials. They
purchased the best raw materials from local markets in the cheapest price, processed
the raw material locally and delivered them in their home country for production of
finished products. In the colonial era, multinational companies of Western European
countries exploited maximum raw materials found in many overseas countries. The
present multinational companies involves in raw material dealing are crude oil, gas
and mining companies. These companies purchase raw materials from the
international market and deliver them to their home country for processing.

Market seekers:These are common types of present day multinational companies. They enter the
foreign market to produce and sell their products. The main motive of such
multinational companies is to expand their business at international level. Import
restriction policy of some countries also encourages multinational companies to
operate production and selling activities in those countries. At present many
multinational companies of the USA, Japan and other developed countries have
started investing in India and China by considering the huge market.

Cost Minimizer:These multinational companies seek to invest in countries where the production cost
is low. The main motive of such companies is to minimize cost of produce and
service. They install plants in the countries where labor and energy cost is low. This
helps to meet the purchasing power of customers of host countries. For examples,
many Japanese companies like Sony, Toyota, National Panasonic, Honda, Suzuki etc.
have established their production plants in China, India, Malaysia, Singapore, Taiwan,
Thailand etc. This is helpful in minimizing cost of Japanese branded products because
comparatively these countries have low labor and energy cost.
~8~

(ii) Characteristics of Multinational Company:Following are the important features or characteristics of Multinational corporation:
1. Large scale operation:-

Large scale operation in the most important feature of a Multinational company. It performs
large scale business operation by investing a huge capital. And it also performs activities in
large scale, like production, distribution, organization, employees and promotional activities.
The large scale production minimizes per unit cost and helps to face competition in the
market.
2. Advanced Technology:Advancement in modern science and technology is one of the major features of a
multinational company. Multinational companies establish research and development
departments for the research and invention of new technology in production, distribution and
for promotion of business activities. Monopoly is new scientific technology is one of the
main reasons for the development of some multinational companies. Such multinational
companies can get easy entry in developing countries. They also transfer new technology in
to developing countries through their branches and subsidiaries which are helpful for
industrialization
3. International operations:One of the important features of a multinational company is its operation in two or more
countries. It performs production and distribution activities at the international level through
its branches or subsidiaries. Examples companies are coca cola, IBM, National Panasonic,
Toyota, Pepsi Cola etc.
4. Efficient management:Efficient management is one of the main reasons for the successful operation of a
multinational company. It hires efficient and skilled manpower. It has the capacity to hire
~9~
professional by paying high remuneration. It also blends technology and manpower to give
better management. It is thus essential for their successful operation.
5. Ownership and control:The ownership of multinational companies remains both with the parent company and the
subsidiary company. However, major shares of the subsidiary companies established in

various countries are contributed by the parent company. Therefore, the parent company
plays a major role in the management and control of the subsidiary companies.
6. Productive organization:Multinational companies are known as productive organizations. They produce goods and
services of a specific nature both in the parent company and the subsidiary companies in
various countries. This is done to spread their products at the international level. The parent
company uses its own technology, brand, trademark and method of production.
7. Monopolistic market:The product specialization and efficient management system of multinational companies
contribute to developing their monopoly power even in a competitive market. The use of
latest technology, own trade mark, goodwill, along with better distribution system and
promotional network are the main components of multinational companies.
8. Size:A large number of MNC are large corporate entities with substantial and

technological

resources which they use to gain power and influence in the market in which they operate.
According to the UN year book 1995, the world multinational enterprise population includes
some 40,000 parent firms and some 25000 foreign affiliates.

~10~
9.

Geographical diversity:-

They operate in two or more countries in addition to its own. The number of countries in
which MNC operate varies depending on the product range, competition and marketing
requirements. Since world war II MNC have more active in manufacturing and related
activities requiring them to be close not only to raw material but also their major market. This
has led to further expansion in the number of locations in which they operate.

10. Revenue:A large part of MNC revenue come from its activities outside its home country. The
proportion of the firm total revenue generated from outside its home country may vary from
50 percent to 75 percent. A significant proportion of foreign earnings of MNC come from the
activities of its subsidiaries and affiliates, including the royalties earned through licensing and
franchising agreements.
11. Net Working:The geographical diversity enables the MNC to engage in inter-firm trade whereby they
supply component equipment and raw or semi-finished raw materials to other manufacturers.
It also provide scope for inter-firm or intra-group trade which takes place between the MNC
subsidiaries. In this way, the parent company is able to create a series of network to take
advantage of locational opportunities.
12. Ownership:Another important characteristics of MNC is with regards ownership. The primary aim of
ownership is to have control over decision-making in key operational areas. The extent of
control a MNC is able to exercise depends upon the type of ownership. In the case of wholly
owned subsidiaries the MNC has complete control over all strategic and operational aspects
of its subsidiaries. In a joint venture, the ownership is shared between the MNC and the local
partner.
~11~

(iii)Aims
Multinational companies make investments in different countries with the following aims.
(a) To take tax benefits in host countries;
(b) To exploit the natural resources of the host country;
(c) To take advantage of Government concessions in host country;

(d) To mitigate the impact of regulations in the home country;

(e) To reduce cost of production by making use of cheap labour and low transportation
expenses in the host country.
(f) To gain dominance in foreign markets;
(g) To expand activities vertically.

(iv)Criticisms against MNCs in India:Anti-corporate advocates criticize multinational corporations for entering countries that have
low human rights or environmental standards.

In the world economy facilitated by

multinational corporations, capital will increasingly be able to play workers, communities,

and nations off against one another as they demand tax, regulation and wage concessions
while threatening to move. In other words, increased mobility of multinational corporations
benefit capital while workers and communities lose.
Some negative outcomes generated by multinational corporations include increased
inequality, unemployment, and wage stagnation.
The aggressive use of tax avoidance schemes allows multinational corporations to gain
competitive advantages over small and medium-sized enterprises. Organizations such as the
Tax Justice Network criticize governments for allowing multinational organizations to escape
tax since less money can be spent for public services.
~12~
The operations of MNCs in India have been opposed on the following grounds:
(i) They are interested more on mergers and acquisitions and not on fresh projects.
(ii) They have raised very large part of their financial resources from within the country.
(iii) They supply second hand plant and machinery declared obsolete in their country.
(iv) They are mainly profit oriented and have short term focus on quick profits. National
interests and problems are generally ignored.

(v) They use expatriate management and personnel rather than competitive Indian
Management.
(vi) Though they collect most of the capital from within the country, they have repatriated
huge profits to their mother country.
(vii) They make no effort to adopt an appropriate technology suitable to the needs. Moreover,
transfer of technology proves very costly.
(viii) Once an MNC gains foothold in a venture, it tries to increase its holding in order to
become a majority shareholder.
(ix) Further, once financial liberalizations are in place and free movement is allowed, MNCs
can estabilise the economy.
(x) They prefer to participate in the production of mass consumption and non-essential items.

~13~

3. Advantages and Disadvantages of MNC:(i)Advantages of MNCs:The advantages or importance of multinational company are as follows:(1) Marketing Opportunity:Multinational company have big market available in different countries. They have the
necessary skill and expertise to sell their products at international level. Any company can
enter into a joint venture with a foreign company to sell its products in the international
market.
(2) Research and Development:The resources and experience of multinational companies in the field of research enable the
host country to establish efficient research and development system. This helps host country
to produce quality products at least possible cost.
(3) Export Promotion:Multinational company helps developing countries in earning foreign exchanges. These
companies can supply necessary raw materials, technology, technicians and foreign exchange
to promote exports and reduce imports.
(4) Growth of Industry:Multinational company are specialized, fast growing and dynamic, so they offer growth
opportunities for domestic industries. These companies assist local producers to enter the
global markets through their well established international network of production and
marketing.
(5) Give Latest Technology:Technology plays an important role in bringing down cost of production and produce quality
goods on a large scale. Multinational company is technologically rich. They can be of great
help to bridge the technological gap between developed and developing countries.

~14~
(6) Optimum Utilization of Resources:These companies ensures optimum utilization of natural and other resources of the home
country. The home country refers to the country in which this multinational company has its
head office. Thus, the growth of these companies is beneficial to home country.
(7) Help to Local Industries:Multinational companies provide a ready made market to domestic suppliers of raw material
or semi-finished products. In recent years many multinational company have opened their
production units in India, and most of their requirement in respect of spare parts, raw
materials, etc. are being met by local suppliers.
(8) Management Opportunities:These company opens management opportunities to the management students of the host
country. They can be appointed as professional managers by multinational company and can
earn handsome salary and build reputation for the country.
(9 National Development:Multinational company assist developing countries to increase efficiency and productivity
through transfer of technology and foreign investment. It helps developing countries by
providing the required financial, technical and other resources in exchange for economic
gains.
(10) Control over Monopolies:When multinational company enters in to the domestic market they compete with existing
competitors and breaks the monopoly of selected few domestic companies.
(11) improve balanced payment:MNC may also help to improve the host country balance of payment by producing goods that
used to be imported and by exporting their goods.

~15~

(ii)Disadvantages of MNCs for the Host Country:Following are the disadvantages of Multinational Corporation for the host company:

Laws
One of the major Disadvantages is the strict and stringent laws applicable in the country.
MNCs are subject to more laws and regulations than other companies. It is seen that
certain countries do not allow companies to run its operations as it has been doing in other
countries, which result in a conflict within the country and results in problems in the
organization.

Intellectual Property
Intellectual property is the most important disadvantages of Multinational Corporation for
the host company. Multinational companies also face issues pertaining to the intellectual
property that is not always applicable in case of purely domestic firms

Political Risks
As the Operations of the MNCs is wide spread across national boundaries of several
countries they may result in a threat to the economic and political sovereignty of host
countries.

Loss to Local Businesses

MNCs products sometimes lead to the killing of the domestic company operations. The
MNCs establishes their monopoly in the country where they operate thus killing the local
businesses which exists in the country. It is the disadvantages of the multinational
corporation for the host company.

Loss of Natural Resources

MNCs use natural resources of the home country in order to make huge profit which
results in the depletion of the resources thus causing a loss of natural resources for the
economy.

~16~

Money flows
As MNCs operate in different countries a large sum of money flows to foreign countries
as payment towards profit which results in less efficiency for the host country where the
MNCs operations are based.

Transfer of capital
Takes place from the home country to the foreign ground which is unfavourable for the
economy. Transfer of capital is the disadvantages of the multinational corporation for the
host company.

Technological dependency:The transfer of technology of MNC may leads to technological dependency by the host
country, a fall in R&D tied import and decline in employment

Transmit culture changes:By introducing new technology and work practices and challenging management
philosophies MNC may transmit cultural changes into the host country.

Retard growth of employment:MNC may retard growth of employment in the host countries.

Price manipulation:The MNC may pre-empt local savings by overpricing the imports and underpricing the
exports of the host countries.

Depletion of non-renewable resources :MNC may cause fast depletion of some of the non-renewable national resources in the
LDCs

~17

4. Strategic Approach to Multinationals and methods of reducing country

risk and control :-

(i)strategic approaches to multinational :To run a new and potentially profitable project, a good understanding of multinational
strategies is necessary.
The three broad categories of multinationals and their associated strategies are
explained below:
A. Innovation Based Multinationals:Companies such as IBM, Philips and Sony create barriers to entry for others, by continually
introducing new products and differentiating existing ones. Both domestically and
international companies in this category spend large amounts on R&D and have a high ratio
of technical to factory personnel. Their products are typically designed to fill a need
perceived locally that often exists abroad as well.
B. The Mature Multinationals:The primary approach in such companies is the presence of economies of scale. It exists
whenever there is an increase in the scale of production, marketing and distribution costs
could be increased in order to retain the existing position or more aggressive.
The existence of economics of scale means there are inherent costs advantages of being large.
The more significant these economies of scale are, the greater will be the costs disadvantage
faced by a new entrant in the same field in a given market.
(i) Reduction in Promotion Costs:Some companies like Coca-Cola and Proctor and Gamble take advantage of the facts that
potential entrants are wary of the high costs involved in advertising and marketing a new
product. Such firms are able to exploit the premium associated with their strong brand names.
MNCs can use single campaign and visual aspects in all the countries simultaneously with
different languages like Nestles Nescafe.

~18~
(ii) Cost Advantage through Multiple Activities:Other companies take advantage of economics of scope. Economies of scope exists whenever
the some investment can support multi-profitable activities, which are less expensive.

Examples abound of the cost advantages of producing and selling multiple products related to
common technology, production facilities and distribution network. For example, Honda has
increased its investment in small engine technology in the automobile, motorcycle, marine
engine, and generator business.
C. The Senescent Multinationals:There are some product lines where the competitive advantage is very fast.
The strategies followed in such cases are given below:1. One possibility is to enter new markets where little competition currently exists. For
example Crown Cork & Seal, the Philadelphia-based maker of bottle tops and cans, reacted to
the slowing of growth and heightened competition in business in the United States by
expanding overseas, its set up subsidiaries in such countries as Thailand, Malaysia, and Peru,
estimating correctly that in these developing and urbanizing societies, people would
eventually switch from home grown produce to food in cans and drinks in bottles.
2. Another strategy often followed when senescence sets in is to use the firms global
scanning capability to seek out lower cost production sites. Costs can then be minimized by
integration of the firms manufacturing facilities worldwide. Many electronics and textile
firm in the United States (US) shifted their production facilities to Asian locations such as
Taiwan and Hong-Kong to take advantage of the lower labour costs.

~19~

(ii) Methods of Reducing Country Risk and Control:1. Controlling Crucial Elements of Corporate Operations:

Most of the MNCs try to prevent operations in developing countries by other local entities
without their cooperation. This can be achieved if the company maintains control of an
element of operations.
For example, food and soft drink manufacturers keep their special ingredients secret.
Automobile companies may produce vital parts such as engines in some other country and
refuse to supply these parts if their operations are seized.
2. Programmed Stages of Planned Disinvestment:
There is an alternative technique to handover ownership and control to local people in future.
This is sometimes a requirement of the host government. There is a calculated move to
involve themselves in stages.
3. Joint Ventures:
Instead of promising shared ownership in future, an alternative technique for reducing the
risk of expropriation is to share ownership with private or official partners in the host country
from the very beginning.
Such shared ownerships, known as joint ventures rely on the reluctance of local partners, if
private, to accept the interference of their own Government as a means of reducing
expropriation.
When the partner is the government itself, the disincentive to expropriation is concerned over
the loss of future investments. Multiple joint ventures in different countries reduce the risk of
expropriation, even if there is no local participation. If the government of one country does
expropriate the business, it faces the risk of being isolated simultaneously by numerous
foreign powers.

~20~

5. Reasons for the growth of MNC, New Industrial Policy 1991 & MNC:-_
(i)Reasons for the Growth of MNCs:Following are the reason for the growth of industry:

(i) Non-Transferable Knowledge:It is often possible for an MNC to sell its knowledge in the form of patent rights and to
licence foreign producer. This relieves the MNC of the need to make foreign direct
investment.
However, sometimes an MNC that has a Production Process or Product Patent can make a
larger profit by carrying out the production in a foreign country itself. The reason for this is
that some kinds of knowledge cannot be sold and which are the result of years of experience.
(ii) Exploiting Reputations:In some situation, MNCs invest to exploit their reputation rather than protect their reputation.
This motive is of particular importance in the case of foreign direct investment by banks
because in the banking business an international reputation can attract deposits.
If the goodwill is established the bank can expand and build a strong customer base. Quality
service to a large number of customers is bound to ensure success. This probably explains the
tremendous growth of foreign banks such as Citibank, Grind-lays and Standard Chartered in
India.
(iii) Protecting Reputations:Normally, products, develop a good or bad name, which transcends international boundaries.
It would be very difficult for an MNC to protect in reputation if a foreign licensee does an
inferior job.
Therefore, MNCs prefer to invest in a country rather than licensing and transfer expertise, to
ensure the maintenance of their good name.

~21~
(iv) Protecting Secrecy:MNCs prefer direct investment, rather than granting a license to a foreign company if
protecting the secrecy of the product is important. While it may be true that a license will take

precautions to protect patent rights, it is equally true that it may be less conscientious than the
original owner of the patent.
(v) Availability of Capital:The fact that MNCs have access to capital markets has been advocated as another reason why
firms themselves moved abroad. A firm operating in only one country does not have the same
access to cheaper funds as a larger firm. However, this argument, which has been put forward
for the growth of MNCs has been rejected by many critics.
(vi) Product Life Cycle Hypothesis:It has been argued that opportunities for further gains at home eventually dry up. To maintain
the growth of profits, a corporation must venture abroad where markets are not so well
penetrated and where there is perhaps less competition.
This hypothesis perfectly explains the growth of American MNCs in other countries where
they can fully exploit all the stages of the life cycle of a product. A prime example would be
Gillette, which has revolutionized the shaving systems industry.
(vii) Avoiding Tariffs and Quotas:MNCs prefer to invest directly in a country in order to avoid import tariffs and quotas that the
firm may have to face if it produces the goods at home and ship them. For example, a number
of foreign automobile and truck producers opened plants in the US to avoid restrictions onselling foreign made cars.
Automobile giants like. Fiat, Volkswagen, Honda and Mazda are entering different countries
not with the products but with technology and money.
(viii) Strategic FDI:The strategic motive for making investments has been advocated as another reason for the
growth of MNCs. MNCs enters foreign markets to protect their market share when this is
~22~
being threatened by the potential entry of indigenous firms or multinationals from other
countries.

(ix) Symbiotic Relationships:Some firms have followed clients who have made direct investment. This is especially true in
the case of accountancy and consulting firms. Large US accounting firms, which know the
parent companies special needs and practices have opened offices in countries where their
clients have opened subsidiaries.
These US accounting firms have an advantage over local firms because of their knowledge of
the parent company and because the client may prefer to engage only one firm in order to
reduce the number of people with access to sensitive information. Templeton, Goldman Sachs
and Earnest and Young are moving with their clients even to small countries like Sri Lanka,
Panama and Mauritius.

~23~

ii) New Industrial Policy 1991 and Multinational Corporations:-

The New Industrial Policy 1991, removed the restrictions of entry to MNCs through various
concessions. The amendment of FERA in 1993 provided further concession to MNCs in
India.
At present MNCs in India can(i) Increase foreign equity up to 51 percent by remittances in foreign exchange in specified
high priority areas. Subsequently MNCs are free to own a majority share in equity in most
products.
(ii) Borrow money or accept deposit without the permission of Reserve Bank of India.
(iii) Transfer shares from one non-resident to another non-resident.
(iv) Disinvest equity at market rates on stock exchanges.
(v) Go for 100 percent foreign equity through the automatic route in Specified sectors.
(vi) Deal in immovable properties in India.
(vii) Carry on in India any activity of trading, commercial or industrial except a very small
negative list.
Thus, MNCs have been placed at par with Indian Companies and would not be subjected to
any special restrictions under FERA.

~24~

Following are the worlds Top 10 MNCs:-

Microsoft

Nokia

Toyota

Intel

Coca-Cola

Sony

IBM

General Electric

Nike

Citigroup

~25~

I.

TATA CONSULTANCY SERVICES (TCS)

1. Introduction and History of TCS:(i)Introduction:Tata

Consultancy

Services

Limited (TCS)

is

an Indian multinational information

technology (IT) service, The company headquartered in Mumbai, Maharashtra. TCS operates
in 46 countries.
It is a subsidiary of the Tata Group and is listed on theBombay Stock Exchange and
the National Stock Exchange of India. TCS is one of the largest Indian companies by market
capitalization ($80 billion)
TCS is the largest India-based IT services company by 2013 revenues. TCS is now placed
among the Big 4 most valuable IT services brands worldwide. In 2015, TCS is ranked 64th
overall in the Forbes World's Most Innovative Companies ranking, making it both the
highest-ranked IT services company and the first Indian company. It is the world's 10th
largest IT services provider, measured by the revenues.
Tata Consultancy Services Limited (TCS) is an information technology (IT) services,
consulting and business solutions organization. TCS offers a consulting-led, integrated
portfolio of IT, Business Process Services (BPS), infrastructure, engineering and assurance
services.
It services portfolio comprises assurance services, business intelligence (BI) and performance
management, business process services, consulting, digital enterprise, engineering and
industrial services, enterprise security and risk management, enterprise solutions, iON
business, IT infrastructure services, IT services, platform solutions and supply chain
management, among others.
TCS offers software, including Digital Software and Solutions, TCS BaNCS, TCS Master
Craft and TCS Technology Products. It serves various industries, including Banking and
Financial Services, Energy, Government, Healthcare, High Tech, Insurance, Life Sciences,
Resources, Retail and Consumer Products, Telecom, Travel, and Utilities.

~26~

(ii)History:_

1968 to 2000
Tata Consultancy Services Limited was founded in 1968 by a division of Tata Sons
Limited. Its early contracts included punched card services to sister company TISCO
(now Tata Steel), working on an Inter-Branch Reconciliation System for the Central Bank of
India and providing bureau services to Unit Trust of India.
In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore. The recruits
comprised 12 Indian Institutes of Technology graduates and three IISc graduates, who
became the first TCS employees to enter a formal graduate trainee programme.
In 1979, TCS delivered an electronic depository and trading system called SECOM for
the Swiss company SIS Sega Inter Settle (deutsch). TCS followed this up with System X for
the Canadian Depository System and automating the Johannesburg Stock Exchange. TCS
associated with a Swiss partner, TKS Teknosoft, which it later acquired.
In 1981, TCS established India's first dedicated software research and development centre,
the Tata Research Development and Design Centre (TRDDC) in Pune.
In 1985, TCS established India's first client-dedicated offshore development centre, set up for
clients Tandem. TCS later (1993) partnered with Canada-based software factory Integrity
Software Corp, which TCS later acquired.
In early the Indian IT outsourcing industry grew rapidly due to the Y2K bug and the launch
of a unified European currency, Euro. Tata Consultancy Services created the factory
model for Y2K conversion and developed software tools which automated the conversion
process and enabled third-party developer and client implementation.
2000 to present
On 25 August 2004, TCS became a publicly listed company.

In 2005, TCS became the first India-based IT services company to enter

the bioinformatics market.
In 2006, TCS designed an ERP system for the Indian Railway Catering and Tourism
Corporation.
~27~

In 2008, TCS's e-business activities were generating over US$500 million in annual
revenues.

In 2008, TCS undertook an internal restructuring exercise which aimed to increase the
company's agility.
TCS entered the small and medium enterprises market for the first time in 2011,
with cloud-based offerings.
On the last trading day of 2011, TCS overtook RIL to achieve the highest market
capitalisation of any India-based company.
In the 2011/12 fiscal year, TCS achieved annual revenues of over US$10 billion for
the first time.
In May 2013, TCS was awarded a six-year contract worth over 1100 crores to
provide services to the Indian Department of Posts.
In 2013, TCS moved from the 13th position to 10th position in the League of top 10
global IT services companies
In July 2014, TCS became the first Indian company to cross the Rs 5 lakh crore mark
in market capitalization. In Jan 2015, TCS ends RIL's 23-year run as most profitable
firm

~28~

2. Mission, value and objective of TCS:-

(i)Mission:-

There mission is to maximise the business success of our customers through the
installation, maintenance, and support of superior financial management software

solutions.
To help customers achieve their business objectives by providing innovative, best-in-

class consulting, IT solutions and services.

To make it a joy for all stakeholders to work with us.

(ii)Values:Leading change, Integrity, Respect for the individual, Excellence, Learning and
sharing.

(iii) Objectives:We have set a number of strategic and tactical objectives that reflect our mission, aim and
collective goals:

To establish the company as the best global organization for large-scale deployment
of financial management software solutions on the Cach platform.

To establish a fully object-oriented component based application, which will enable

us to deliver robust software quicker and more efficiently than any competitor.

To ensure that customers can operate their business software solutions on

infrastructures that match their needs.

~29~

3. Achievements, product & services of TCS:(i)Achievements/ recognition:-

In 2014 TCS was Honored by Lumity as the 2014 Community Corps Corporate
Champion

TCS Wins Prestigious Association of Management Consulting Firms Award

TCS recognized as world?s fastest growing global IT Services brand

TCS UK wins Gold Award for ?Innovation in Learning?

TCS is the only IT services organization to be a part of ISO 15926 real time
interoperability network grid (iRING) Version 1.0.0

TCS achieves Gold status in Business in the Community's (BitC) Corporate

Responsibility Index (CRI) 200708.

Largest IT services firm in Asia.

They are the world?s first organization to achieve an enterprisewide Maturity Level
5 on both CMMI and PCMM, using the most rigorous assessment methodology
SCAMPISM.

TCS? Integrated Quality Management System (iQMS?) integrates process, people and
technology maturity through various established frameworks and practices including IEEE,
ISO 9001:2000, CMMI, SWCMM, PCMM and 6Sigma.

TCS tops the Data Quest DQTop20 list of IT Services providers in India for 2008

TCS ranked among Top 25 in Business Week's 2007 Information Technology 100

TCS awarded top position in 2007 'Global Services' 100 ?Top 10 Best Performing IT
Services providers? category

TCS was awarded the Business Process Outsourcing Service Provider 2011 at the
Frost & Sullivan Asia Pacific ICT Awards ceremony hosted in Singapore.

~30~

(ii)Products and services offered by the company:Technology Products

Exegenix Intelligent Document Conversion Solutions

Support Central Business Social Productivity Platform

TCS Digital Certification Services / Public Key Infrastructure (PKI) Suite

TCS Tax Mantra Integrated Tax Solution

TCS Data Cleansing Framework

TCS Business Rules Engine

TCS Experience Based KM (Knowledge Management)

TCS Call Management Solution

TCS Certificate Validation Server

TCS File Authentication Solution

TCS eLearning Effectiveness Measurement Solution

TCS Code Generator Framework

TCS Saakshi (Time Stamping Solution)

TCS Form Authentication Solution

TCS eVOLv Multimedia Authoring Solution

TCS Direct Metal Deposition CAM

TCS Stand Alone Post Processor

TCS WebFACTORe (Webenabled Plant Maintenance Management Tool)

TCS Enterprise Integration and Control Environment

TCS SmartBox (Next Generation Industrial Controller Development Framework)

TCS Sevak Self Service Terminals

TCS Rapid Sigma (Six Sigma Solution for Continuous Improvement)

TCS Teamcenter for Medical Devices

~31~
Other Products

TCS Cline2e

TCS Hospital Management Solution

TCS Silicone Ambulatory ECG Device and Solution

TCS Enterprise Integration and Control Environment Solution/ Energy and Utilities

TCS Bioinformatics Solution

Services:

IT Services

Custom Application Development

Application Management

Migration & Reengineering

System Integration

Testing

Performance Engineering
Infrastructure Services

Infrastructure Readiness Assessment

IT Service Desk

Data Center Management

End User Computing Services

Database Services

Application Management Services

Command Center Services

Managed Security Services

~32~

Engineering & Industrial Services

New Product Development Solutions

Product Lifecycle Management

Plant Solutions & Services

Geospatial Technology Solutions

Industryspecific Offerings

~33~

4. How Tata Consultancy Services became an Indian multinational

company:-

Tata

Consultancy Services (TCS) did not become an Indian multinational

company overnight. The company embraced certain critical qualities that have made its
journey so far very transformational. J. Rajagopal , executive vice-president & global
head, consulting, TCS reveals what these qualities are:
1. Growth:In TCS, less than 25 per cent growth is not considered good enough. In the last 10 years,
barring a few instances, the company has delivered high levels of growth almost every
quarter.
"To sustain this growth, we recruit 30,000 to 40,000 employees every year by visiting
500 engineering colleges," Rajagopal said. The company's growth does not just come
from USA or Europe. It has also ventured into other markets. It has 11,000 employees in
Latin America and 11 offices across 11 cities. Of late, it has enhanced its focus on
emerging markets.
2. Customer focus: "We will do anything for our customers . When GE wanted us to move to China we did.
Same is the case with Latin America. One of our customers requested and we obliged,"
said Rajagopal . The company also constantly moves up the value chain in line with
customer needs.
3. Innovation:TCS was the first IT company to set up research laboratories. It struck alliances with
various universities across the world. It also reached out to start-ups to set up coinnovation networks globally. This has enabled it embrace innovation when it comes to
business models, processes etc.
~34~

4. Quality:With India not known for its manufacturing prowess, TCS from the beginning instilled a
high level of rigour when it came to quality.
"There are over 25 metrics that we use to evaluate our performance ," Rajagopal said.
5. Learning:Learning is a continuous process within the company . " We never shy away from
learning, especially from our global customers. We learnt a lot from GE," he added.
6. Culture:The culture across TCS has always been entrepreneurial. This helped it retain talent. The
culture involved being flexible to customer needs, maintaining a high level of ethics and
execution to perfection.
It is these characteristics that helped the company widen its lead when it came to the
leadership position among its Indian peers and will help TCS as it takes on global giants
such as IBM and Accenture.

~35~

5. TCS Advantages, Revenue & Innovation of TCS:(i)TCS Advantages:True certainty of success comes from working with a partner you trust to provide the insight,
support and expertise that will propel your business forward. Experience the TCS advantage.

Customer-Centric Engagement Model:Our deep-set commitment to our customers defines how we do business, and our
years of experience working across industries underpin the vast array of services we
offer. We build our teams around your domain and technology requirements, offering
specialized services and solutions that meet the distinct needs of your business. Learn
more about Customer-centric Engagement Model.

Global Network Delivery Model (GNDM):Our unique global engagement model allows you to choose the sourcing strategy best
suited to your business needs. We take a follow-the-sun approach, meaning that no
matter where your business is located, we help you keep it running 24/7, while
providing a seamless experience across all operations. Learn more about Global
Network Delivery Model (GNDM).

Full Services Portfolio:Our full services portfolio combines traditional IT and Remote Infrastructure services
with knowledge-based services such as Consulting and Business Process Outsourcing.
This enables us to provide integrated solutions that help you recognize value quickly
by reducing costs and improving business agility. Learn more about our Full Services
Portfolio.

Innovation Labs And Co-Innovation Network (COIN):We help you achieve and maintain a competitive advantage through our TCS
Innovation Labs and Co-innovation Network. We offer research-based solutions in
advanced technologies that help support your business objectives. Learn more
about our Innovation Labs and Co-innovation Network (COIN).
~36~

(ii)REVENUE:FY 2016
FY 2015

FY 2014

Revenue*
273,640.00
271,655.00
256,681.00
242,198.00
245,011.00
238,165.00
221,110.00
215,511.00
212,940.00
209,772.00
179,871.00

Dec
Sep
Jun
Mar '15
Dec
Sep
Jun
Mar '14
Dec
Sep
Jun

~37~
(iii)Innovation:-

They help you achieve and maintain a competitive advantage through our TCS Innovation
Labs and Co-innovation Network. They offer research-based solutions in advanced
technologies that help support your business objectives.
There global network of Innovation Labs provides an environment for sophisticated IT
research in leading-edge technologies, as well as in various domains. In collaboration with
technology partners and universities, we are researching key emerging trends, including
mobility, cloud computing, business analytics and social networking to develop new,
practical, powerful applications and to deliver strong business results.
There Innovation offerings address your IT expectations, support your business objectives
and social concerns: Innovation Themes and some samples of our offerings:

Analyse Understand customers and markets: SaaS platforms, Agile enterprise

architecture, Decision Support Systems

Digitise Deliver digital experience: Virtualization, Cloud Computing, Managed

Evolution of Infrastructure

Optimize Elevate business performance: Smart Cards, Copyright protection offerings,

Surface Computing, Unified Communications and Multimedia Gateway solutions

De-risk Safeguard the enterprise: Content Management Systems Offerings and

Enterprise Social Networking

Sustain- Build sustainable enterprises and community: Knowledge Portals and Mobile
Based Advisory systems, Life Sciences and Green IT solutions and consulting

~38~

II.

CONCLUSION

A multinational corporation (MNC) or enterprise (MNE), is a corporation or an enterprise

that manages production or delivers services in more than one country. It can also be referred
to as an international corporation. The International Labour Organisation (ILO) has
defined an MNC as a corporation that has its management headquarters in one country,
known as the home country, and operates in several other countries, known as host countries.
Multinational Corporations (MNCs) or Transnational Corporation (TNC), or Multinational
Enterprise (MNE) is a business unit which operates simultaneously in different countries of
the world. A multinational corporation (MNC) or multinational enterprise is an organization
that owns or controls production of goods or services in one or more countries other than
their home country. It can also be referred as an international corporation, a
"transnational corporation", or a stateless corporation.
Tata

Consultancy

Services

Limited (TCS)

is

an Indian multinational information

technology (IT) service, The company headquartered in Mumbai, Maharashtra. TCS operates
in 46 countries. TCS is the largest India-based IT services company by 2013 revenues. It is a
subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National
Stock Exchange of India. TCS is one of the largest Indian companies by market
capitalization ($80 billion). TCS is now placed among the Big 4 most valuable IT services
brands worldwide. In 2015, TCS is ranked 64th overall in the Forbes World's Most
Innovative Companies ranking, making it both the highest-ranked IT services company and
the first Indian company. It is the world's 10th largest IT services provider, measured by the
revenues.

~39~

III. REFERENCES

www.investipedia.com
www.investword.com
www.britannica.com
businessfinance.blurtit.com
beta.tutorzu.net
www.enotes.com
www.petragrade.com
www.mbaskool.com
www.tcs.com

~40~