“Achievers”

1-Hurriya Saeed Rana

2-Ameera Sohail

3-Alvina Ashique

4-Afia Abrar

Topics:

What is MNC & MNE?

Definition & History

Characteristics of MNC

Reasons for becoming MNC

Advantages of MNC

Disadvantages of MNC for Home Country

How local companies keep MNC at bay?

“HURRIYA”

Topics:

Introduction

Features of MNC

What is MNC & MNE?

MNC MNE

“Multi-National “ Multi-National

Corporation” Enterprise”

Definition:

According to ILO (International Labor Organization):

“MNC is any corporation that has its

management head quarters in one country

i.e. (Home Country)

&

operates in several other countries i.e.

(Host Country).”

History

The MNC’s originated in the 20th century

The first multinational business organization

was the Knights Templar, founded in 1120.

After that came the British East India

Company in 1600

Origin:

The “Dutch East India”

company was the 1st MNC

in the world to issue stock

founded March 20, 1602 .

Characteristics of MNC

Large size:

The firms are large in size means their

resources & capital are very huge.

Example: PC

Multi-country Operations:

MNC operates in

several countries other than home country.

Example: McDonalds'

Characteristics of MNC

Multiple Environments:

MNC operates in

different countries and face various

environments.

Profit back to HQ:

The revenue generated in

host countries is ultimately dragged back to

home countries.

(2)

“AMEERA”

MUGHALTopics:

Reasons for becoming MNC

Advantages OF MNC

Reasons for becoming MNC

Increase Market Share

Secure cheaper premises & labor

Avoid Tax & Trade barriers

Enhance profitability

Advantages

• To diversify themselves against the risks and uncertainties of the domestic business cycle.

• In response to foreign competition MNC move toward the less competitive Countries.

• To Capture more potential Customers .A company may have reached a plateau satisfying domestic demand, which is not growing. Looking for new markets.

Advantages

• To reduce costs, like cheap labor e.g. United Fruit has established banana-producing facilities in Honduras.

• Take advantage of local low cost & avoid middle man.

• To avoid transportation cost, because transportation costs are like tariffs in that they are barriers which raise consumer prices. e.g. Toyota

(3)

“ALVINA”

ASHIQUE

Topic:

Disadvantages of MNC

Disadvantages of MNC

• Interference in the Economic dominion of the Host Country :MNCs affect the independence of any country.

Example: An East India company came in India for business but it made India slave for 200 years

• Cultural Loss:This is the one of biggest drawback of MNCs that it is risky for our cultural loss.

Example: Indian culture is vegetarian but many MNCs employees eat meat and chicken.

Disadvantages of MNC

• III-effects of Advertisements:The MNCs spend large amount on competitive advertisements which in effect may lead to high prices of the products, manipulation of demand and wastages of economic resources.

• Minimum Transfer of Technology:It has been observed that the MNCs generally do not transfer their advanced technology to the host county. They carry out their research and development in the home country only.

Disadvantages of MNC

• Creation of Monopolies:

MNCs with high advertising and other ways, these MNCs do not live domestic companies. After this, they increase prices and then get high profit by exploiting consumers.

• Drain of Resources for Profit Maximization:

The basic objective of a MNC is profit maximization through" exploitation of host country's resources. It is least concerned with development.

(4)

“AFIA”

ABRAR

Topic:

6 Strategies

Globalization

Since the late “1970s” the winds of

global competition blow.

Policy makers lowered tariff barriers and

permitted foreign investments.

How local companies

keep MNC at bay?

Create customized products or services:

Develop business models to overcome key

obstacles:

Deploy the latest technologies:

Take advantage of low-cost labor, and train

staff in-house:

Scale up quickly:

Invest in talent to sustain rapid growth:

1-Create customized products or

services:

Simple customization techniques, based on intimate knowledge of local consumers, have sparked major success for homegrown champions.

Example:

Goodbaby Group of china.

(The largest manufacturers and supplier of infants & children's product.)

2-Develop business models to

overcome key obstacles:

Adapt at identifying the key challenges i.e.

lack of distribution channel, infrastructure

hurdles, limited telecom width.

Sharpen their first mover advantage.

Example:

Shanda Games (Chinese) vs. Microsoft

3-Deploy the latest

technologiesInnovative technologies keep operating on low

cost but deliver good quality products.

New technologies can help older companies get a second wind after economic liberalization.

Example:

GCMMF( Gujarat cooperative milk marketing federation)

*India's largest dairy company, manufactures wide range of products under brand Amul.

4-Take advantage of low-cost

labor, and train staff in-house:

“Many local champions have at their core a

business model that taps a pool of low cost

labor instead of relying on automation.”

Example:

Apollo Hospital India

5-Scale up quickly:

Go national as soon as possible.

Scale up quickly.

(Expansions by mergers & acquisition)

Create regional entities to speed up organic

growth

Strike local distribution

Open new point of presence quickly

6-Invest in talent to sustain

rapid growth: Domestic strength

Enterprenual zeal

Great local managers

Management depth and capability

Not need to negotiate headquarters.

Strategy to maintain rapid growth

How to achieve competitive

advantage in local markets??

• Low-Cost Leadership

• Differentiation

• Niche Strategies

• Operational Effectiveness

• Innovation

Outcomes of Local business

Community Well-Being

Keeping Dollars in the Local Economy

Job and Wages

Public Benefits and Costs

Environmental Sustainability

Product Diversity