The MNC World

Learning Objectives
What is a Multi National Corporation ? What is globalization of business ? What is the role of MNCs in global economy ? What are Merits, Demerits and growth perspective of MNCs ? What is the role of multinationals in India ?

About MNCs
A multinational corporation (MNC) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation.

Features of MNCs
It operates in many countries at different levels of economic development. Its local subsidiaries are managed by locals. It maintains complete industrial organizations, including R&D and manufacturing facilities in several countries. It has a multinational central management. It has multinational stock ownership.

Dimensions of Globalization
Globalization refers to processes that increase world-wide exchanges of national and cultural resources. Doing or expanding business globally. Global sourcing of factors of production i.e. raw material, machinery and finance etc. where-ever available cheap. Global orientation of organizational structure and management culture.

Merits of MNCs
MNCs help increase the investment level and thereby the income and employment in host country. International corporations have become vehicles for the transfer of technology, especially for developing countries. They work to equalize the cost of factors of production around the world. They help increase competition and break domestic monopolies.

Demerits of MNCs
The MNCs technology is designed for world wide profit maximization, not development needs for poor countries. MNCs may destroy competition and acquire monopoly powers. MNCs retard growth of employment in home country. The transfer pricing enables MNCs to avoid taxes by manipulating prices of intra-company transactions.

Growth Perspective of MNCs

Increasing emphasis on market forces and growing role for the private sector in nearly all developing countries. Rapidly changing technologies that are transforming the nature of organization and location of international production. The globalization of firms and industries. Regional economic integration.

Multinational in India
In India the government policy confirmed the foreign investment to priority areas like high technology and heavy investment sectors of national importance and export sectors. Firms which had been established in non-priority areas prior to implementation of this policy have, however, been allowed to continue in those sectors. Since the economic liberalization ushered in 1991, many multinationals in different lines of business have entered Indian market.

Worlds Top 10 MNCs

1. Microsoft 2. General Electric 3. Nokia 4. McDonald's 5. IBM 6. Coca-Cola 7. Visa International 8. Intel 9. Walt Disney 10. Nestle