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Multi National Corporations

In India

Definition
Multinational corporation (MNC) is a
enterprise that manages production or
delivers services in more than one country
can also be referred to as an international
corporation.

Multinational corporate structure


Horizontally integrated multinational
corporations manage production establishments
located in different countries to produce the same or
similar products. (example: McDonald's)
Vertically integrated multinational corporations
manage production establishment in certain
country/countries to produce products that serve as
input to its production establishments in other
country/countries. (example: Adidas)

Multinational corporate structure


(Contd..)
Diversified multinational corporations
manage production establishments located in
different countries that are neither horizontally
nor vertically nor straight, nor non-straight
integrated. (example: Hilton Hotels)

SWOT Analysis
Strengths
Low Cost
Well Developed
Infrastructure
Opportunities
Leverage Government
Create the necessary
infrastructure
Attract new industries

Weakness
Location is often very distant
Lack of Transportation
facilities
Relative Inflexibility

Threats
Emergence of Private
companies
Establishment of monopoly

MNC In India
MNC in India are attracted
towards:
Indias large market potential
India presents a remarkable
business opportunity by virtue
of its sheer size and growth
Labor competiveness
FDI attractiveness

MNC In India(Contd)
Indias vast population is
increasing
its
purchasing
power

India is also emerging as the


manufacturing and sourcing
location of choice for various
industries

Trends Of MNCs In INDIA


First MNC in INDIA is EAST INDIA Co. in 1600.
American companies accounts for around 37% of the
turnover of the top 20 firms operating in India.
The scenario for 'MNC in India' has changed a lot in
recent years, since more and more firms from European
Union like Britain, Italy, France, Germany, Netherlands,
Finland, Belgium etc have outsourced their work to India.
Finnish mobile handset manufacturing giant Nokia is the
largest Multinational Corporation In India.

Trends Of MNCs In INDIA(Contd..)


A host of automobile companies like Fiat, Ford Motors,
Piaggio etc from Italy have opened shop in India with
R&D wing attached.
Oil companies, Infrastructure builders from Middle East
are also flocking in India to catch the boom.
South Korean electronics giants Samsung and LG
Electronics and small and mid-segment car major
Hyundai Motors are doing excellent business and using
India as a hub for global delivery.

Trends Of MNCs In INDIA(Contd..)


Companies like SingTel of Singapore and Malaysian
giant Salem Group are showing huge interest for
investment.
Also insurance companies like AIG and Max New York
Life Insurance doing business in India.

Success factors for MNCs operating in India

Commitment at global level


Raise the profile of India
Formulation of bold long term targets
Empowered local Management
More cost effective, enhances continuity, leverages
understanding of local environment
Localized product / market business models : create
customized products and services in response to
unique environment in India
Deliver the right product at the right price with right
positioning for India

MNC In India

MNC in India represent a diversified portfolio of companies representing


different nations.

The Indian MNCs


Paints Asian Paints
Auto & Components Tata Motors, Bharat
Forge
Chemicals Tata Chemicals, United
Phosphorus
Metals Sterlite Industries, TISCO
Packaging Essel
Pharmaceuticals Ranbaxy, Wockhardt, Sun,
DRL
Oil & Gas ONGC

Pros & Cons of MNC


Pros:
Increase investment level
Transferring the technology
It increase host country exports & reduce its
imports
Integrating national economy
Implement new innovations
Increase competition

Pros & Cons of MNC (cont.)


Cons:
May acquire monopoly power
Underestimate local culture
Think only about profit rather than host country
interest
Inflexibility in terms & conditions
Heavy use of non-renewable natural resources

Bottlenecks in India
Socio-economic challenges
Language
Culture
Autonomy to local managers how comfortable are
we?
Handling of potential liabilities related to Labour, IPR etc
Difficult operating environment
Weak infrastructure

And Patience !

Indias Big Dream


Harnessing the global trends by encouraging the MNCs
to engage in product innovation for local consumers
represents a big challenge in India.
Policy-makers, industry leaders and academic institutes
need to work together to create and disseminate a list of
"dream innovations" that will inspire people.
The development of Tata Motor's Rs 1 lakh car provides
a powerful example