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Growth of Mnc's in India

Growth of Mnc's in India

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Published by: Nidhi Singh on Feb 23, 2012
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GROWTH OF MNCS IN INDIA FROM 2000 TO 2010
1
 
INTRODUCTION
 
Generally, any company or group that derives a quarter of its revenue from operations outsideof its home country is considered a multinational corporation.
y
 
MNC
must have substantial direct investment in foreign countries
y
 
MNC
must be engaged in the active management of these overseas assets
y
 
MNC
is also involved in the management integration of operations located in differentcountriesIt is a corporation/business or entity/enterprise that manages production establishments or delivers services in at least two countries.
MNC¶S
is an enterprise that manage production odelivers services more than one country can also be referred to as international corporation.The term µ
M
ultinational
is widely used all over the world to denote large companies havingvast financial, managerial and marketing resources.
MNC
s are like holding companies havingits head office in one country and business activities spread within the country of origin andother countries.
M
ultinational corporations play an important role in
globalization
someargue that a new form of 
MNC
is evolving in response to globalization the 'globallyintegrated enterprise.First
MNC
was Dutch East India
C
o (1602), granted monopoly in colonial trade. Today, U
 N
 estimates about 62,000
MNC
s with 900,000 affiliates.
MNC¶
s have existed since 1602, inwhich year the first
MNC
, the Dutch East India
C
ompany, was established.Germany, Belgium and Finland that have made a strong footing in India too. They are wellflourishing and earning their share of maximum profit too.
According to
ILO
report
(i.e. International Labour Organisation) ³The essential nature of 
 
the multinational enterprises lies in the fact that its managerial headquarters are located in onecountry, while the enterprise carries out operations in number of other countries
.
MNCS
will have a demand for many services such as meals, transport, raw materials,maintenance services that will be provided by domestic businesses, indirectly increasingemployment. Wages should increase as
MNC¶S
will want the best people that the country hasto offer.
 
GROWTH OF MNCS IN INDIA FROM 2000 TO 2010
2
 
Wages may be lower on international standards but should be higher than the local standard,as logically the business will pay its workers more in order to motivate them.  Often
MNC¶S
 are criticised for their wage policies but recent research and statistics prove this wrong.
Th
ere are four categories of multinational corporations:
(1) A multinational, decentralized corporation with strong home country presence,(2) A global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available,(3) A
 N
international company that builds on the parent corporation's technology or R&D,(4) A transnational enterprise that combines the previous three approaches. According to U
 N
 data, some 35,000 companies have direct investment in foreign countries, and the largest 100of them control about 40 per cent of world trade.
Th
e M
NC
:
Th
e
I
nternalization Process
 
Foreign involvement
 
export via agent or distributor 
 
export through sales rep or subsidiary
 
Local packaging or assembly
 
FDI
 
License
 
Time
 
GROWTH OF MNCS IN INDIA FROM 2000 TO 2010
3
 
WH
A
T
 
IS
M
ULTIN
A
TION
A
L
 
ORG
A
NIS
A
TION
 
An
MNC
(
M
ultinational
C
orporation) is a corporation that has its management headquartersin one country, known as the
home country
, and operates in several other countries, knownas
host countries
.As the name implies, a multinational corporation is a business concern with operations inmore than one country. These operations outside the company's home country may be linkedto the parent by merger, operated as subsidiaries, or have considerable autonomy.
M
ultinational corporations are sometimes perceived as large, utilitarian enterprises with littleor no regard for the social and economic well-being of the countries in which they operate, but the reality of their situation is more complicated.When a company operates in a home nation established its subsidiary inother nation it becomes an
MNC
and there starts the process of globalization where in a local companyserves the entire worlds with itsproducts and services.India has experienced a dramaticincrease in the presence of 
M
ultinational
C
orporation having a tremendous expansion in theamount of foreign direct investment inflows to the Indian economy. Internet tools likeGoogle, Yahoo,
MSN
, E-Bay,
S
kype, and Amazon makeit easier for the
MNC
s to reach their  potential customers in the countryThere are over 40,000 multinational corporations currently operating in the global economy,in addition to approximately 250,000 overseas affiliates running cross-continental businesses.In 1995, the top 200 multinational corporations had combined sales of $7.1 trillion, which isequivalent to 28.3 per cent of the world's
gross domestic product
. The top multinationalcorporations are headquartered in the United
S
tates, Western Europe, and Japan; they havethe capacity to shape global trade, production, and financial transactions.
M
ultinationalcorporations are viewed by many as favouring their home operations when making difficulteconomic decisions, but this tendency is declining as companies are forced to respond toincreasing global competition.The modern multinational corporation is not necessarily headquartered in a wealthy nation.
M
any countries that were recently classified as part of the developing world, includingBrazil, Taiwan, Kuwait, and Venezuela, are now home to large multinational concerns. Thedays of corporate colonization seem to be nearing an end.

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