WHAT IS MNC ???

When a company operating in a home nation establishes its subsidiary in other nations (host nations), it becomes an MNC and there starts the process of globalization wherein a local company serves the entire world with its products and services. The advent of Internet and the ensuing "new economy" has opened up a plethora of new business opportunities - and an "inevitable" number of business casualties. **MNCs consider opportunities throughout the Globe though they do business in a few Countries. **MNCs invest considerable portion of their assets internationally **MNCs produces Globally by operating plants in different Countries **MNCs have managerial control over the functioning of all its Subsidiaries. Why Companies become MNCs 1. To protect themselves against uncertainties/risks 2. To tap the growing opportunities Globally 3. To increase the Market share 4. To reduce the costs by having economies of scale 5. To overcome tariffs 6. To have the Technological advantage 7. To compete with the close competitor 8. To effectively make use of all resources 9. To maximize the wealth of the organization WHAT IS INDIAN MNC ? Thus if an Indian Company operating within the country establishes its subsidiaries in foreign soil, then it becomes an Indian MNC. The age of Indian MNC has finally dawned. Mr. Aditya Birla of Aditya Birla group first looked beyond India 30 years ago. Indian companies are using all the tricks of the trade to go global: Mergers & Acquisitions, Organic expansions, Green field investments, and Joint Ventures. The scale and the business share may not be significant today, but Indian businesses are slowly but surely establishing themselves abroad. REALITY FACTS: According to the latest World Investment Report 2007 (WIR 07), Indias outward FDI was the second highest at US$ 20.4 billion after Brazil at US$ 28 billion. In 2007, India Inc spent US$ 33 billion on overseas mergers and acquisitions (M&As), compared to the US$ 15 billion spent by foreign firms for acquisitions in India. Tata Motors takeover of Jaguar and Land Rover (JLR) for US$ 2-2.5 billion is an excellent example set by an INDIAN MNC towards this glory.

Consequent to this surging FDI outflows, there has been an increase in the overseas earnings (in terms of dividend, royalty, license and technical fee and other inward remother inward remittances) of Indian companies. In fact, 2006 will be remembered in Indias corporate history as a year when Indian companies covered a lot of new ground. They went shopping across the globe and acquired a number of strategically significant companies. This comprised 60 per cent of the total mergers and acquisitions (M&A) activity in India in 2006. And almost 99 per cent of acquisitions were made with cash payments.

Features of MNCs 1. MNCs have managerial head quarters in Home Countries, whole they carry out operations in a number of other (Host) Countries 2. A large part of the Capital assets of the parent company is owned by the citizens of the companys home country 3. The absolute majority of the members of the Board of Directors are citizens of the Home Country 4. Decisions on new investment and objectives are taken by the parent company 5. MNCs are predominantly large sized and exercise a great degree of economic dominance 6. MNCs control production activity with large foreign direct investment in more than one developed and developing countries 7. MNCs are digopolistic in nature : it is sustained by modern technologies, managerial skills, product differentiation, and enormous product promotion. 8. MNCs are not just participants in export trade they are the exporters of Capital, Technology, Production and Managerial skills. MERITS OF MNC 1. MNCs create employment opportunities in the host countries. It helps to create a pool of managerial talent in the host country. 2. Helps removal of monopoly and improve the quality of domestic made products. 3. Promotes exports and reduce imports by raising domestic productions. 4. Goods are made available at cheaper price due to economies of scale. 5. Job and career opportunities at home and abroad in connection with overseas operations. 6. Encourages the world unity and all resulting in world harmony DEMERITS OF MNC 1. The host county is likely to lose its economic sovereignty 2. The host nation may also experience some loss of control over its own economy 3. Drainage of Natural Resources 4. Feeling that labour is being exploited by the MNC/ Outsourcing 5. Strain on Foreign Exchange Reserves 6. Lost of cultural moorings 7. Creation of Monopolies 8. The problem of Dumping CONCLUSION Due to these MNCs, competition increase and more employment opportunities are available & there will be reduction in inequalities