Multinational companies

1. MULTINATIONAL COMPANIES

2. MULTINATIONAL CORPORATIONS Multinational corporation refers to a corporate giant business firm having extended its productive activity in many nations besides its home country. “Corporations which have their home in one country but operate and live under the laws and customs of other countries as well is termed as MNCs” - D avid E. L iliental

3. Multinational Corporations MNCs : Also called Trans national companies (TNC) Head Quarters located in one country and variety of international offices in different countries Centralized ownership and control Registered in more than one country Facilities and assets in at least one country other than its home country

4. Indian MNCs abroad

5. Examples of MNCs

6. Examples of MNCs (cont..)

7. History of MNCs Multinationals in the form of trading companies started in the 17 th and 18 th centuries. The Hudson Bay Company, the East India Company & the French Lenant company were the major transnational companies established in those days. In the early 20 th century British Petroleum, Standard Oil, Ana Conda Copper and International Nickel were the major MNCs investing mainly in mining and petroleum industries.

8. 1901 – the U.S. had 47 firms with overseas manufacturing subsidiaries 1950 – the number of companies operating overseas had grown to 988 1959 – the number climbed to 1,891 1967 – there were 3,646 U.S. companies operating overseas 1991 – over 10,000 American companies had manufacturing subsidiaries abroad MNC perspective - a U.S. Ford executive once stated: “It is our goal to be in every single country there is. We at Ford Motor Company look at a world map without any boundaries.”

9. Phases in the growth of MNCs There are three phases in the growth of MNCs : First phase lasted upto the 1 st World War. The field was captured mostly by the European companies such as Imperial Tobacco, Dunlop, P hilips etc. During the second phase, covering the decades of 50’s &60’s , American MNC’s such as General Motors , Ford M otors and IBM emerged on the world scene . The third phase of the growth of MNC’s began since 1970s . This new era belonged to the European, German and Japanese MNC’s.

10. Phases ( contd …) In recent years, MNCs have also emerged from developing countries such as India, Malaysia, Hong Kong, Singapore, South Korea, Indonesia etc.

11. Impact of MNCs on I ndian markets MNCs have both positive and negative impact on Indian markets and Indian economy. At the time of Independence, most of our industries were concerned with consum er goods . Barring two steel plants, we had hardly any capi tal g oods or intermediate goods industries. Today the industrial scene is dominated by petroleum refining, chemicals and pharmaceuticals, light and heavy engineering, steel, man-made fiber manufacture and several other industries .

12. Impact of MNCs on Indian markets (contd..) On the other hand, these include transfer of obsolete technol­ogy, heavy remittances abroad, adverse effect on the balance of payments, myth of Indianisation , damage to indigenous industries etc .

13. Impact of MNCs on Indian markets (contd..) Some other positive and negative impacts of MNCs are : Positive Impact: Capital transfer Technology transfer R&D Implemented new innovations Marketing facilities

14. Impact of MNCs on Indian markets (contd..) Negative impact : Bad business ethics Underestimate local culture Harmful to producers and consumers

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