You are on page 1of 2


Multinational Corporation (MNCs):

Meaning:MNC means the company which operate in more than one country. Global company view world as one market, minimize the importance of nation boundaries and earn more profit.

Characteristics of MNCs:1. Company located in different plots of the global but linked by common ownership and common pools money, information trade name and control system. Common strategy. Product present in different market of world. Human resources contain diversity. 5. Transaction involving properties like copy right patent and product technology across the global.

2. 3. 4.

Example of MNCs: Pepsi, Coca-Cola, Reliance, Tata, Birla Group, Nestle, Hindustam lever Limited, HYUBDAI, COCA COLA, CITI BANK, ORACLE, gsk ( Gloxosmith klion ), IBM, HSBC (the worlds local bank), LG, SAMSUNG, CIBA.

Benefits of MNCs:1. Survives: East countries are reach in only one or few resources. In this countries organisation are bound to do business in end with other countries to survive. Every organisation of big countries and bound to look out for a new market foe their products to cheap resources to remain competitive and to survive. 2. Growth Of Overseas Market Scales: This has been the biggest reason for more companies to expand overseas. In last 20 year many economies have open their doors for the world. This resulted in a big opportunity in terms of market. 3. Diversification: No organisation with to keep all its eggs in one basket. Every organisation wants to keep diversity its risk & international is a good manner to do that along with to its old business. There are two type of diversification: Related Diversification: Expand business in same industry. Unrelated Diversification: Expand business in different industry. 4. Resources: In todays thought competition cost cutting is the key to success. The only thing which can be manipulated to increase profit is cost. 5. Technology Expertise: One reason for becoming an MNCs is to take advantage of technological expertise by manufacturing goods directly. Rather than allowing others to do it under a licensing.


Impact of MNCs:Impact On The Trade Balance: Many companies try to produce at central location with large economies of scale & supply in several countries is a core strata of many manufacturing MNCs. They frequency export more than domestic firm but also import their large size of inputs. Impact On Small Scale Enterprise: Generally MNCs have strong finance back ground & better technology so that it may be possible that the product produce by MNCs is good in quality at loss cost. So, that it is badly affected to the business of our country. Knowledge Transfer: By entering MNCs to host country can get the advantage of new technology, new product & production system. Forward & Backward Linkages: It production company tie ups with suppliers then its called backward integration. If production company tie ups with distributes then its called forward integration. Increase Employment: MNCs generate new opportunity of employment in the host country. Benefit To Customers Of Host Country: By entering MNCs competition will increase & the benefit goes to customers in terms of better quality at less price.

Demerits of MNCs:Cash Out Flow: MNC brings capital of host country to home country & due to this supply of capital will reduce in host country. Adverse Effect To Small Scale Industry Of Host Country: It will become difficult to for small business until to compete with MNCs in terms of investment, quality, productivity & cost.

Merger & Acquisition Activities By MNCs: After enter by MNCs they will try to cover the more market of the host country sometime its creating monopoly. Loss Of Job In Home Country: MNC may be source of employment for host country but they are responsible for cutting of jobs in the home country.