MNCs

Business unit which operates in different parts of the

world.
In some cases, the MNC HAS MANUFACTURING UNIT
IN ONE COUNTRY WHILE MARKETING MAY BE IN
OTHER COUNTRIES.
In other cases all business operations are carried out in
different countries, with the strategic head quarters in any
part of the world.
E.g Sony which is into Consumer Electronic products is
a MNC with headquarters based in Japan
Similarly Colgate Palmolive which manufactures and
markets dental care, health care , skin care and hair care
products is a MNC with headquarters in Manhattan , USA

 The strategic nerve is the companys

headquarters where major decisions are taken.
The main role of a typical multinational at
headquarters are :
1) Strategic role: It is a policy making entity for
operations worldwide
2) Execution: Decisions on implementation of
policies , methods and means of operation in
different countries.
3) Control: Since the operations are vast it is
necessary to maintain control global strategies ,
costs, systems and operations

Classification of MNCs
A) depending upon the relationship between the
headquarters and subsidiaries :
1) Pyramidal Model :
Indicates a broad bottom and a narrow top.
It has strong headquarters and weak
subsidiaries
All decisions are made at the headquarters and
imposed on the subsidiaries.
e.g Philips

 2) Umbrella Model : Here the headquarters acts

as a facilitator. Such MNCs believe in
Mutual exchange of knowledge and technology
Constant motivtion of subsidiaries
Building an image for both headquarters and the
subsidiary
High respect for the sovereignty of the country
where they operate.
Invite representatives from subsidiaries to the
headquarters for strategic decisions
E.g Unilever

 3) Inter-conglomerate MNCs:
High profit motivation
They donot restrict themselves to their
core competency
A hire and fire policy is very common

 B) Depending upon their origin

1) Ethnocentric : Such MNCs concentrate more on their
place of origin.
Since they understand their own socio-cultural
background they focus more in their home country.
They slowly move abroad with few changes in the
product and mode of functioning.
e.g Amul, Dabur , Siemens, Philips

 2) Regio-centric:
Some MNCs focus their activities only in a
particular region like South East Asia or the Gulf
region.
There are certain practices that are uniform in
nature in a specific region and hence they
succeed. A region covers many nations and
hence these companies on focus on a particular
region becomes a MNC.
E.g Aramco in Gulf .

3) Continental:

MNCs who are successful in a particular continent .

There are many MNCs doing exceedingly well only in Europe , but are not
able to face cross-cultural challenges in other continents.

4) Polycentric:
Many MNCs have to simultaneously enter different countries.

Once a company invests in an innovation , it has to spread its

actiities everywhere otherwise it will lose the opportunity and competitors will
step into get the business.

P & G, Unillever, Sony, Henkel etc. are present in almost every part of the
world.