Program Semester Subject Code Subject Name Unit number

: MBA : IV : MB0052 : Strategic Management & Business Policy : 10

Unit Title
Lecture Number Lecture Title

: Strategies For Multinational Corporations

: 10 : 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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

Tools to Manage Markets contd..

Contract manufacturing

Is a method used by firms to enter foreign market

MNC sets contract with local firm & provides services Helps in expanding supply or production at minimum cost Can face extreme fluctuations in market

Licensing: Firms grant rights to a patent, programme, to a foreign

entity Direct investments: A firm directly invests within foreign boundaries making a commitment of its capital, personnel & assets beyond

domestic frames

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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

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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Unit-10 Strategies for Multinational Corporations

Activity

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.

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