MULTINATIONAL COMPANIES

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” - David E. Liliental

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

Indian MNCs abroad

Paints

Asian Paints

Auto & Components

TATA Motors and Bharat Forge

Chemicals

TATA chemicals and United Phosphorus

Metals

TATA Steels, Sterlite Industries and TISCO

Packaging

Essel

Oil & Gas

ONCG

Pharmaceuticals

Ranbaxy, Wackhardt, Sun, DRL

Examples of MNCs

GOODYEAR 1822

HUL 1888

CITIBANK 1902

GE

1902

SEIMENS 1867

STANCHART 1858

HSBC 1860

CASTROL 1910

BNP PARIBS

1860

Examples of MNCs (cont..)

NESTLE 1912

PHILIPS ELECTRONICS 1930

ALFA LAVAL

1937

BATA 1931

GLAXO SMITHLINE

1919

COLGATE PALMOLI

VE 1937

RECKITT BENCKISER

1911

INGERSOLL RAND 1922

SKF 1923

History of MNCs

• Multinationals in the form of trading companies started in the 17th and 18th 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 20th century British Petroleum, Standard Oil, Ana Conda Copper and International Nickel were the major MNCs investing mainly in mining and petroleum industries.

• 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.”

Phases in the growth of MNCs

There are three phases in the growth of MNCs :

1. First phase lasted upto the 1st World War. The field was captured mostly by the European companies such as Imperial Tobacco, Dunlop, Philips etc.

2. During the second phase, covering the decades of 50’s &60’s , American MNC’s such as General Motors , Ford Motors and IBM emerged on the world scene .

3. The third phase of the growth of MNC’s began since 1970s. This new era belonged to the European, German and Japanese MNC’s.

Phases (contd…)

In recent years, MNCs have also emerged from developing countries such as India, Malaysia, Hong Kong, Singapore, South Korea, Indonesia etc.

Impact of MNCs on Indian 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 consumer goods. Barring two steel plants, we had hardly any capital goods 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.

Impact of MNCs on Indian markets (contd..)

• On the other hand, these include transfer of obsolete technol ogy, heavy remittances abroad, adverse effect on the balance of payments, myth of Indianisation, damage to indigenous industries etc.

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

Impact of MNCs on Indian markets (contd..)

Negative impact:

Bad business ethics Underestimate local culture Harmful to producers and consumers

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