PRESENTATION OF: BUSINESS ORGNISATION AND SKILLS

Presented by: Mohit Lohia Class: B.B.A. (sem. 1) Guided by: Mrs. Anupama mam

Topic: Multinational corporations (MNC)

Acknowledgement.
I Mohit Lohia of b.b.a. semester 1 is presenting the Assignment which has been given by our respected Teacher Mrs. Anupama mam on the topic multinational company or corporation I would clearly like to thank my teacher Mrs. Anupama mam , my parents and my friend Anurika and all who helped me in making this assignment. I would not be able to complete this assigned assignment. Hope this assignment which I am presenting before you is up to your expectation

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Thanking you Mohit Lohia

Certificate

This is to certified that my student Mohit Lohia of B.B.A semester 1 has completed his assignment assigned by me on the date.and has presented his assignment up to my expectation

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CONTENTS
TOPICS:
1. What is mncs. 2. Types of mncs. 3. Emergence of mncs in India. 4. advantages of mncs in home & host country 5. disadvantages of mncs in home & host country 6. conclusion

What is Multinational corporations ?(MNC)

Multinational corporations are business entities that operate in more than one country. The typical multinational corporation or MNC normally functions with a headquarters that is based in one country, while other facilities are based in locations in other countries. In some circles, a multinational corporation is referred to as a multinational enterprise (MBE) or a transnational corporation (TNC). The exact model for an MNC may vary slightly. One common model is for the multinational corporation is the positioning of the executive headquarters in one nation, while production facilities are located in one or more other countries. This model often allows the company to take advantage of benefits of incorporating in a given locality, while also being able to produce goods and services in areas where the cost of production is lower. structural model for a multinational organization or MNO is to base the parent company in one nation and operate subsidiaries in other countries around the world. With this model, just about all the functions of the parent are based in the country of origin. The subsidiaries more or less function independently, outside of a few basic ties to the parent. A third approach to the setup of an MNC involves the establishment of a headquarters in one country that oversees a diverse conglomeration that stretches to many different countries and industries. With this model, the MNC includes affiliates, subsidiaries and possibly even some facilities that report directly to the headquarters. The idea of a multinational corporation has been around for centuries. Some trace the origins of the concept back to the Dutch East India Company of the 17th century, as the corporate structure involved a presence in more than one country. During the 19th and 20th centuries, the idea of a company that functioned in more

than one nation became increasingly common. In the 21st century, this business model continues to be highly desirable. There are several ways that an MNC can come into existence. One approach is to intentionally establish a new company with headquarters in one country while producing goods and services in facilities located elsewhere. In other instances, the multinational corporation comes about due to mergers between two or more companies based in different countries. Acquisitions and hostile takeovers also sometimes result in the creation of multinational corporations. In a world that continues to become more interconnected each day, a multinational corporation sometimes has a greater ability to adapt to economic and political shifts that corporations that function in a single nation. Along with decreasing costs associated with producing core products, this business model also opens the door for diversification, which often makes it possible for a company to remain solvent even when one division or subsidiary is posting a temporary loss.

Types of Multinational corporations ? (MNC)

1. Franchising
In this form, Multinational Corporation grants firms in foreign countries the right to use its trade marks, patents, brand names etc. The firms get the right or licence to operate their business as per the terms and conditions of franchise agreement. They pay royalty or license fee to multinational corporations. In case the firm holding franchises violate the terms and conditions of the agreement, the licence may be cancelled. This system is popular for products which enjoy good demand in host countries.

2. Branches
In this system Multinational Corporation opens branches in different countries. These branches work under the direction and control of head office. The headquarters frames policies to be followed by the branches. Every branch follows laws and regulations of the head office and host countries. In this way multinational companies operate through branches.

3. Subsidiaries
A multinational corporation may establish wholly owned subsidiaries m foreign countries. In case of partly owned subsidiaries people in the host countries also own shares. The subsidiaries in foreign countries follow the polices laid down by holding company (Parent company). A multinational company can expand its business operations though subsidiaries all over the world.

4. Joint Venture
In this system a multinational corporation establishes a company in foreign country in partnership with local firms. The multinational and foreign firm shares

the ownership and control of the business. Generally, the multinational provides today management lies with the Government of India.

5. Turn Key Projects

In this method, the multinational corporation undertakes a project in foreign country. The multinational constructs and operates the industrial plant by itself. It provides training to the staff in the operation of plant. It may also guarantee the quality and quantity of production over a long period of time.

Emergence of multinational companies in India

(The East India Company)

The multinational companies that we are familiar with today are quite different than the ones that originated long ago. The emergence of multinational companies began in the early 1600s, with the founding of The East India Company in Britain. Queen Elizabeth I granted the company a royal charter and permission to seek trade in the Indian Ocean. The company began to open up factories, a majority of them being in India, and eventually held a monopoly on trade. It is most interesting to think about the end of the first, and one of the most powerful, multinational companies. The companys demise came when the British parliament eventually intervened and passed the East India Stock Dividend Redemption Act of 1873. Articles that appeared in major publications (such as the Chicago Tribune) in 1873, discussed the significance of The East India Company, especially as it was nearing the date of its closing (June of 1874). Some articles even suggested that the company helped to introduce and foster the idea of globalization and the possibility of businesses operating in numerous countries at the same time.

What are the Advantages and Disadvantages of Multinational Corporations?

Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. According to ILO report "for some, the multinational companies are an invaluable dynamic force and instrument for wider distribution of capital, technology and employment; for others they are monsters which our present institutions, national or international, cannot adequately control, a law to themselves with no reasonable concept, the public interest or social policy can accept. MNC's directly and indirectly help both the home country and the host country.

Advantages of MNC's for the host country

MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The industries of host country get latest technology from foreign countries through MNC's. 3. The host country's business also gets management expertise from MNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. 5. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of MNC's. 7. The host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment.

8. Level of industrial and economic development increases due to the growth of MNC's in the host country.

Advantages of MNC's for the home country

MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people of home country both at home and abroad. 3. It gives a boost to the industrial activities of home country. 4. MNC's help to maintain favorable balance of payment of the home country in the long run. 5. Home country can also get the benefit of foreign culture brought by MNC's.

Disadvantages of MNC's for the host country

1. MNC's may transfer technology which has become outdated in the home country. 2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monpolising the host country's market. 4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty.

Disadvantages of MNC's for the home country

1. MNC's transfer the capital from the home country to various host countries causing unfavorable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development

Applicability to particular business

MNC's is suitable in the following cases. 1. Where the Government wants to avail of foreign technology and foreign capital e.g. Maruti Udyog Limited, Hind lever, Philips, HP, Honeywell etc. 2. Where it is desirable in the national interest to increase employment opportunities in the country e.g., Hindustan Lever. 3. Where foreign management expertise is needed e.g. Honeywell, Samsung, LG Electronics etc. 4. Where it is desirable to diversify activities into untapped and priority areas like core and infrastructure industries, e.g. ITC is more acceptable to Indians L&T etc. 5. Pharmaceutical industries e.g. Glaxo, Bayer etc.

Conclusion
Multinational companies are not disadvantage to our country. India needs MNCs to become developed country. But employees of these companies should not take responsibility for overloaded work just for high salary. So that, there can have fulfillment of passion and also fulfillment of personal life.

THANKING YOU !!