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Multinational Corporation (MNC)

Multinational corporations (MNCs) operate production or services in multiple countries. The first MNC was the Dutch East India Company in 1602. Today there are about 62,000 MNCs with 900,000 affiliates globally. MNCs fill capital, trade, revenue, management, and technological gaps in developing countries. They create jobs, tax revenues, and external benefits like real wage increases and lower consumer prices. While MNCs can create monopolies and deplete resources, they also boost investment, technology transfer, employment, and economic development overall. Defining success for MNCs in India includes capturing the domestic market and leveraging India's strengths in areas like R&D

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Vinoth Sekar
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66 views18 pages

Multinational Corporation (MNC)

Multinational corporations (MNCs) operate production or services in multiple countries. The first MNC was the Dutch East India Company in 1602. Today there are about 62,000 MNCs with 900,000 affiliates globally. MNCs fill capital, trade, revenue, management, and technological gaps in developing countries. They create jobs, tax revenues, and external benefits like real wage increases and lower consumer prices. While MNCs can create monopolies and deplete resources, they also boost investment, technology transfer, employment, and economic development overall. Defining success for MNCs in India includes capturing the domestic market and leveraging India's strengths in areas like R&D

Uploaded by

Vinoth Sekar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Multinational Corporation (MNC)

By.
INTRODUCTION
A multinational corporation
(MNC) or transnational corporation
(TNC), also called multinational
enterprise (MNE), is a corporation or
enterprise that manages production
or delivers services in more than one
country. It can also be referred to as
an international corporation.
• First MNC was Dutch East India Co (1602), granted
monopoly in colonial trade. Today, UN estimates about
62,000 MNCs with 900,000 affiliates.
ROLE OF MNC

 The economic role of multinational


corporations (MNCs) is simply to channel
physical and financial capital to countries with
capital shortages.
 Wealth is created, which yields new jobs
directly and through “crowding-in” effects.
 New tax revenues arise from MNC generated
income, allowing developing countries to
improve their infrastructures and to
strengthen their human capital.
 MNCs reduce world poverty levels and
provide a positive externality that is consistent
with the United Nations.
The economic
development
• Filling Savings Gap.
• Filling Trade Gap.
• Filling Revenue Gap.
• Filling Management/Technological Gap.
• Other Beneficial Roles like:-
a) The domestic labour may benefit in the
form of higher real wages.
  b) The consumers benefits by way of lower
prices and better quality products.
Contd.,
• c) Investments by MNCs will also induce more
domestic investment. For example, ancillary
units can be set up to ‘feed’ the main
industries of the MNCs.
• d) MNCs expenditures on research and
development(R&D), although limited is bound
to benefit the host country.
IMPACT ON COUNTRIES
• A large amount of tax collected through
MNC’s .
• Foreign currency maintenance and dealing
efficiency increased.
• Increased revenue.
• Economic health improved .
• Employment increased.
• Foreign relation increased.
• Market sentiments improved.
• Demand supply scenario balanced.
• Available resources used effectively
• Generate income for countries and
other domestic companies.
• Import export policies implemented
effectively and export increased so
country benefited in dual mode.
Patents

• Many multinational corporations hold patents


to prevent competitors from arising.
• e.g.. Adidas holds patents on shoe designs
• Microsoft benefits from software patents.
• The pharmaceutical companies lobby
international agreements to enforce patent
laws on others.
Need of MNC in
underdeveloped countries…
• Sustaining a high level of Investment.
• Technological gap.
• Exploitation of natural resources.
• Undertaking the initial risk.
• Development of basic economic
infrastructure.
• Foreign exchange gap.
Reasons For the Growth of
MNC’s
• Expansion of market territory.
• Marketing superiorities.
• Financial Superiorities.
• Technological Superiorities.
• Product Innovations.
Advantages of MNC’s

• MNC’s have become vehicles of technology to


the developing countries
• Greater employment and career opportunities
are provided by these MNC’s.
• MNC’s make commendable contribution to
inventions and innovations in the host
country.
• Practice of MNC’s bring to the host country,
the latest technique in the field of
management.
• Varity of goods and services produced for
local customers
Disadvantages of MNC’s
• MNC’s create monopolies in the market
and eliminate local competitors.
• MNC’s may create depletion of resources
due to its continues use by these
overseas companies.
• MNC’s generally carry out their R&D in
their home country and supply to the
host country.
• MNC’s generally import huge raw
materials due to its continuous use by
these overseas companies
Defining success for MNCs in
India
• Capturing the Domestic Market
Opportunity

• Leveraging India’s resource base


to derive additional value for the
corporation R&D /
Manufacturing / Sourcing / BPO .
Example of MNC in india
Conclusion

A MNC gives many advantages to domestic


companies through purchasing of raw material
and resources. a country benefited in term of
employment and economic health help to reforms
. a new company uses MNC’s network to expand
their business. Industrial growth and GDP Effected
so, MNC’ s become a milestone in developing
and under developed countries.

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