ROLE OF MULTI-

NATIONAL CORPORATES
WHAT IS MNC
A multinational corporation is usually a large
corporation which produces or sells goods or
services in various countries.
Importing and exporting goods and services
Making significant investments in a foreign country
Buying and selling licenses in foreign markets
Engaging in contract manufacturingpermitting a
local manufacturer in a foreign country to produce
their products
Opening manufacturing facilities or assembly
operations in foreign countries
 DEFINITION
Acorporation that has its facilities and
other assets in at least one country other
than its home country is called a
Multinational corporate.
An enterprise which owns,controls and

manages value adding activities in more

than one country and engages in production
activities and so on.
 The rise of Multinational corporates in the
past three decades has played a critical role
in the growth of international trade and
investment activities by producing most of
the well known products we consume.
They are often viewed as agents responsible

for the changing world economic,political

and social order.
 FOCUS OF MULTINATIONAL
CORPORATES
MNCs have a number of advantages over
local companies. Their size provides them
with the opportunity to achieve vast
economies of scale in manufacturing and
product development.
Their global presence also exposes them to

new ideas and opportunities regardless of

where they occur.
 STRATEGY ALTERNATIVES
Once a firm has decided to enter the
international arena it must make a choice
regarding the appropriate mode for
organizing its foreign business activities.
Choice of entry modes can be fruitfully

divided into the following:

Non equity mode
Equity mode
NON EQUITY MODES
Exporting is a relatively low-risk entry
strategy as it involves little investment and
exit is unproblematic. As such, it is an
obvious alternative for firms lacking in
capital resources.
Licensing is another low investment, low-

risk alternative that is a particularly useful

option in countries where regulations limit
market entry or where tariffs and quotas
make export a non-viable strategy.
NON EQUITY MODES
Franchising is similar to licensing but more
comprehensive. For a fee and royalty
payments the franchisee receives a
complete package comprising the
franchisers trademark, products and
services, and a complete set of operating
principles thereby creating the illusion of a
worldwide company.
 ROLE OF MNCS IN FOREIGN
INVESTMENT
Multinational corporations are those large
firms which are incorporated in one country
but which own, control or manage
production and distribution facilities in
several countries. Therefore, these
multinational corporations are also known
as transnational corporations.
 ROLE OF MNCS IN FOREIGN
INVESTMENT
They transact business in a large number of countries
and often operate in diversified business activities. The
movements of private foreign capital take place
through the medium of these foreign direct investment
(FDI).

The important question about multinational

corporations is why they exist. The multinational
corporations exist because they are highly efficient.
Their efficiencies in production and distribution of
goods and services arise from internalizing certain
activities rather than contracting them out to other
forms.
ROLE OF MNCS
Transfer of technology
Improve quality of labor
Necessary capital
Generation of income and employment
Reduce Monopoly power
Encourage competition

LIST OF MNCS
ABN AMRO
Accenture
Adidas
Aditya Birla Group
Apple
Bacardi
British Airways
HCL Technologies
Nike