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WHAT IS FDI ?
• FOREIGN DIRECT INVESTMENT (FDI) IS INVESTMENT
MADE BY A TRANSNATIONAL CORPORATION TO
INCREASE ITS INTERNATIONAL BUSINESS.IT GENERALLY
INVOLVS THE ESTABLISHMENT OF NEW PRODUCTION
FACILITIES IN FOREIGN COUNTRIES TO EARN EXTRA
RETURNS.
• THE IMF DEFINES FOREIGN INVESTMENTS AS FDI WHEN
THE INVESTOR HOLDS 10% OR MORE OF THE EQUITY
OF AN ENTERPRISE.
GOVERNMENT’S MOTIVATION TO
ENGAGE IN FDI
• A JOINT VENTURE
• MERGERS AND ACQUIZITIONS / CROSS BORDER
ACQUIZITIONS
• LICENSING
• FRANCHISING
MNC’S
MULTINATIONAL
CORPORATIONS
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Contents
1. What is MNC
2. Features of MNC
3. Indian MNC
4. Reality facts
5. Growth of Indian MNC
6. Merits of MNC
7. Demerits of MNC
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WHAT IS MNC ???
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Features of MNC
1. Big size
2. Huge intellectual capital
3. Operates in many countries
4. Large number of customer
5. Large number of competitors
6. Structured way of decision making
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WHAT IS INDIAN
MNC ?
• Thus if an Indian Company operating within the country
establishes its subsidiaries which is involved in production or
providing services in foreign soil, then it becomes an Indian
MNC.
• The age of Indian MNC has finally dawned. Mr. Aditya Birla of
Aditya Birla group first looked beyond India 30 years ago. Indian
companies are using all the tricks of the trade to go global:
Mergers & Acquisitions, Organic expansions, Green field
investments, and Joint Ventures. The scale and the business share
may not be significant today, but Indian businesses are slowly but
surely establishing themselves abroad.
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REALITY FACTS:
•According to the latest World Investment Report
2007 (WIR ’07), India’s outward FDI was the
second highest at US$ 20.4 billion after Brazil at
US$ 28 billion.
4 EXL BPO
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Indian MNC on the global platform
ON THE NEW YORK STOCK EXCHANGE
Sl. No. COMPANY SECTOR
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Initiator
TATA GROUP
WIPRO
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MERITS OF MNC
1. MNCs create employment opportunities in the
host countries. It helps to create a pool of
managerial talent in the host country.
2. Helps removal of monopoly and improve the
quality of domestic made products.
3. Promotes exports and reduce imports by
raising domestic productions.
4. Goods are made available at cheaper price
due to economies of scale.
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MERITS OF MNC
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DEMERITS OF MNC
1. The host county is likely to lose its
economic sovereignty
2. The host nation may also experience
some loss of control over its own
economy
3. Feeling that labour is being exploited by
the MNC/ Outsourcing
4. Lost of cultural moorings
5. The problem of Dumping
Example – Chinese products are priced low in indian
market.
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Thank you…
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