SM_Unit 10_PPT

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C o n f i d e n t i a l

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Program : MBA

Semester : IV

Subject Code : MB0052

Subject Name : Strategic Management & Business Policy

Unit number : 10

Unit Title : Strategies For Multinational Corporations

Lecture Number : 10

Lecture Title : Strategies For Multinational Corporations

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Unit-10 Strategies for Multinational Corporations

Strategies for Multinational Corporations

Objectives:

The objectives of this lecture are to:

To define MNC and its features

To discuss benefits, limitations and business strategies of MNCs

To discuss the techniques used by MNC to manage markets

To differentiate between MNC, TNC and global companies

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Lecture Outline

Introduction and Features of MNC

Benefits of MNC

Limitations of MNC

Business Strategies of MNC

Tools to Manage Markets

TNC and Global Companies

Summary

Check Your Learning

Activity

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Introduction

A Multinational Corporation is a business organisation operating in

different countries to successfully manage production and deliver

products and services.

The features of MNC are:

Giant size & international operations

Varied activities and Multiple ownership

Centralised management and transfer of resources

Multinational management and huge financial resources

Advanced technology and marketing superiority

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Benefits of MNC

The benefits of MNCs are:

To the company:

Advanced technical knowledge and large size of economy

Low input costs due to large size

Ability to access production and raw materials overseas

Brand image and goodwill advantage

Information advantage

Managerial experience and expertise

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Benefits of MNC contd

To domestic nations:

Economic growth and employment

Skills, techniques and quality human capital

Availability of quality goods and services

Improved infrastructure

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Limitations of MNC

The limitations of MNCs are:

Business risks

Host country regulations

Direct legal systems

Political risks

Operational difficulties

Cultural differences

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Business Strategies of MNC

The strategies of MNCs are: Globalisation - Process of amalgamation of world community into

common social system.

Reduce geographical inequalities by providing job

opportunities

Provide business opportunities

Integration of cultural differences attaining competitive

advantage

Standardising and customising marketing mix elements

Enables customers to have similar need for products

Organisation can reach all customers worldwide

Integrate and coordinate activities across the border

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Business Strategies of MNC contd..

Domestic country scenario:

Firm identifies potential market

Firms locate resources and hire personnel's

Firm identifies retail outlets & develop market plans Control is decentralised

Decision making is performed at local levels

Strategies focus on domestic market

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Tools to Manage Markets

The different tools are:

Franchising

Grants franchisee permission to use name, trademark,

method or process

Franchiser has direct effect on quality of product

Examples like McDonalds, KFC and so on

Management contracting

Are contracts under which firm rents its knowledge to a

company Used in foreign markets when an operation is in trouble

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TNC and Global Companies

TNC (TransNational Corporation):

It is an enterprise in more than one country

It operates permitting rational policies & common

strategy

It helps in sharing knowledge & resources with others

It is active in more than one industrial sector

Global companies:

Are firms that plan activities on global basis

Benefits in savings, R&D, marketing and finance

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Summary

MNC is an enterprise operating in different countries, but managed

from home country.

The different advantages of MNC make it different from other private

organisations.

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Check Your Learning

1. What are MNCs ?

Ans. MNCs are organisations operating in different countries for business

to manage and deliver products.

2. Give four important features of MNC.

Ans. The features of MNC are its giant size, international operations,

centralised management and varied activities.

3. What is globalisation?

Ans. Globalisation is the process of integration of world community into a

common economic or social system.

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Activity

HOMEPREVIOUS

Refer http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/

and study the expansion strategy followed by Wal-Mart at a time when

other retail stores moved away from expanding their business.
http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/http://findarticles.com/p/articles/mi_m0FNP/is_12_40/ai_75831933/

SM_Unit 10_PPT

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