MNCs. also known as TNCs are huge industrial organizations which extend their industrial and marketing operations through a network of their branches or their majority owned foreign affiliates (MOFAs). There are now 40.50.000 MNCs with 2. .000 overseas affiliates throughout the world.

A multinational company can organize it’s operations in different countries either of the following five alternatives  Branches  Subsidiary Companies  Joint venture companies  Franchise holders  Turnkey Projects .

Marketing Superiorities 3.REASONS FOR GROWTH The manifold reasons are 1. Financial Superiorities 4. Expansion of market territory 2. Product Innovation . Technological Superiorities 5.

.Expansion of market territory As the operations of a large sized firm expand and as it’s international image builds up it seeks more and more extension of it’s activities beyond the physical boundaries of the country in which it is incorporated.

   MARKETING SUPERIOROTIES It possesses a more reliable and up-to-date market information system It enjoys market reputation and faces less difficulty in selling it’s product It adopts more effective advertising and sales promotion techniques .

Financial Superiorities    It has huge financial resources to turn adverse situation in favor It maintain high level of fund utilization by generating funds in one country and using them in another It has easier access to external capital markets .

especially labor cost Capture lucrative foreign market against international competitors Make diversification internationally effective so that a steady growth of business could be achieved Make best use of technological advantages by setting up production facilities abroad Counter regulatory measures in the parent country .OBJECTIVES OF MNCs       To expand the business beyond the boundaries of a home country Minimize cost of production.

motivating resource mobilization among investors in host country .BENEFITS RECEIVED FROM MNCs             Investment. income and employment Transfer of technology Increase in export and decrease in import Equalizing cost of factor of production around the world Integration of national economy into the world economy Contribution to research and development Stimulation to domestic enterprise Quality improvement and reduced domestic monopoly Increased standard of living Professionalization of management in the host country Improve balance of payment position MNCs are profit making organizations which pay high dividends.

profits.25 crore in 1969-70 to 813. interest. and so on leading to an increasing volume of remittance which rose from 72. MNCs can cause distraction and cause monopoly powers in the long run A grave threat to sovereignty of the nations Direct and indirect interference in the political and other strategic affairs depletion of nonrenewable natural resources .5 crore in 1989.       OPPOSITION LINES OF ARGUMENT It does not stand for social welfare. rather profit maximization Misutilisation of power and flexibility MNCs can have unfavorable effect on the balance of payment position of the country through outflow of large sums of money in the form of dividends. technical fees . royalties.

Sign up to vote on this title
UsefulNot useful