Multinational Corporation

A multinational corporation (MNC) or

multinational enterprise (MNE) is a
corporation or an enterprise that manages
production or delivers services in more than
one country. It can also be referred to as an
international corporation.
• The ILO has defined an MNC as a corporation
that has its management headquarters in one
country, known as the home country, and
operates in several other countries, known as
host countries.
Some multinational corporations are very big,
with budgets that exceed some nations‘ GDPs
Multinational corporations can have a
powerful influence in local economies, and
even the world economy, and play an
important role in international relation and
globalisation
 Global Corporations
It produces in home country or in a single
country and focuses on marketing these
products globally or produces the products
globally and focuses on marketing these
products domestically.
 International Corporations
International corporations conduct the
operations in one or more foreign countries
with domestic orientation.
This company believes that the practice
adopted in domestic business is superior to
those of other countries.
It extends the domestic products, domestic
price, promotion and other practices to the
foreign markets.
 Multinational Corporations

It responds to the specific needs of different

country, markets regarding products, price,
promotion etc. It operates in more than one
country but operates like a domestic company
to meet the specific needs of the specific
markets.
 Transnational Corporation

It produces, markets, invests and operates

across the world.
 Reasons to become MNC’s:
• To protect themselves from the uncertainties
and risk of business cycle, political policies and
social uncertainties of domestic country.
• To tap the growing global market for various
goods and services.
• To increase market share.
• To reduce production costs.
• To overcome tariffs.
• To have technological advantage.
• To utilise the available resources effectively
Factors Contributed for the growth of
MNC’s.
 Expansion of market territory:

• Growth of various economies

• Growth of GDP, Per capita income
• Improvement in Standard of Living
 Market superiorities

• Availability of more reliable up to date

information
• Superiority in market
• Less difficulty in marketing the products
• More effective advertising and sales
promotion techniques.
 Financial Superiorities
• Huge financial resources at the disposal of
MNC’s.
• Easy access to external financial market.
 Technological Superiorities

• Opportunities in developing countries.

• Continuous R & D
• Product Innovation

• Global Trade Laws/ Globalisation of markets:

WTO,
IMF,
World Bank,
Regional trade Blocks etc.
 Global Financial Crisis
• Diversion of business to developing nations
• Scope for development in the developing
nations
• Acquisition of loss making business in the
financially troubled nations
 Advantages of MNC’s to the Host Countries.

• Increase economic and industrial activity

• Increase employment and income level
• Domestic industries get latest technology.
• Domestic industries get sophisticated
management technology
• Domestic input suppliers get more business.
• Improves the competiveness of domestic
companies due to competition.
• Domestic business uses outcome of MNC’s
R&D efforts.

• Advantage of foreign culture through cultural

transformation.
• Reduction of imports and favourable effects
on BOP.
• More choice available to the domestic
customers.
• MNC’s earn foreign exchanges by exporting
the goods and services to the neighbouring
countries.
• Effective utilisation of host countries
resources.
 Disadvantages of MNC’s to the Host Countries.

• Technology developed by the MNC’s may not suit

the requirements of host countries.
• MNC’s may operate within national autonomy
and sovereignty.
• Monopolistic practices of MNC’s may kill the
domestic industry.
• MNC’s may adopt ethnocentric approach in
staffing.
• Over utilisation of natural resources.
• Large outflow of money in the form of
dividends and interest.
• MNC’s normally concentrate on consumer
goods and not on capital goods and
infrastructure development.
• MNC’s may interfere in the political activities
of the host countries.
• MNC’s normally provide outdated technology
to the host country industry.
• Pollute the environment of the hoist country.
 Advantages of MNC’s to the Home Countries.

• Creates demand for home country products

and services
• Boost up the industrial activity of the home
country.
• Creates employment opportunities for home
country.
• Earns foreign exchanges
• Gets the benefits of foreign culture.
• Produce the products required by the domestic
consumers in foreign market with foreign
resources.
• Saves the domestic county from environmental
pollution.
• Finds the customer/ users for the country
outdated technology.
• Optimum utilisation of natural resources and
conservation the country’s scares recourses like.
• Generates and accumulates capital for home
countries.
 Disadvantages of MNC’s to the Home Countries.
• Transfer of capital to other countries cause
unfavourable BOP
• May not create employment opportunities.
• It may neglect the industrial development of
the home country.
• May cause erosion of the domestic culture.
• May exploits the natural resources.
• Decline in the growth of economic activities.
 Outsourcing

Outsourcing began in the early eighties when

organizations started delegating their non-
core functions to an external organization that
was specialized in providing a particular
service, function or product. In outsourcing,
the external organization would take on the
management of the outsourced function.
• Most organizations choose outsourcing
because outsourcing offers a lot of
advantages.
• When organizations outsource to countries
like India, they benefit from lower costs and
high-quality services.
• Organizations can concentrate more on core
functions once they outsource their non-core
functions.
• Outsourcing can also help organizations make
better use of their resources, time and
infrastructure.
Most organizations are opting to outsource
because outsourcing enables organizations to
access intellectual capital, focus on core
competencies, shorten the delivery cycle time
and reduce costs significantly.

Organizations feel outsourcing is an effective

business strategy to help improve their
business.
Importance of Outsourcing
Rapid and Sustainable Cost Reduction
India has historically been the offshore
location of choice, serving as the pricing
benchmark for outsourced services.
With its large, low-cost, English-speaking
laboUr pool, India still dominates the scene,
especially for organizations that value price
and English fluency.
 Strategic Flexibility
• Strategic flexibility means more than just a choice
of lower cost locations. Companies streamlining
their Operations with us have the flexibility to:
• Rely on a highly qualified labor pool with access
to some of the best trained resources in the
market.
• Leverage an operating model with a truly variable
cost base that’s easily scalable to grow with
business requirements.
• Manage the scope of what is outsourced and
when, by addressing traditional processes first
and broadening to core business processes at
the desired time.
• Offload and improve transaction-based,
repeatable processes so Finance can expand
its role to handle more strategic, value added
activities that contribute to the profitability
and growth of the business.
 Compliance and Control
Regulators are watching to ensure that
standards of compliance and governance are
maintained, particularly as outsourcing pushes
into higher value-add areas that are more
critical to business continuity and where
concerns over client confidentiality and data
protection loom large.
One of the key issues under discussion is
whether to use one or multiple centers. This
issue has become more prevalent as clients
require outsource higher value processes.
 Service Quality
While cost is always important, BPO in
financial services provides the opportunity to
generate additional value.
 The Benefits of Outsourcing

• Take advantage of the cost-advantages!:

• See an increase in your business
• Save Big
• Get access to specialized services
• Concentrate more on your core business
• Make faster deliveries to customers
• Improved customer satisfaction
• Benefit from time zone advantages
• Increased efficiency
• Give your business a competitive edge
• Outsourcing countries also benefit from
outsourcing
• Outsourcing helps generation of quality jobs in
developing countries
• People in the developing countries can
improve their standards of living
• Customers in developed nations get better
service/products at cheaper rates
• Small companies in developed nations can cut
costs and acquire customers
• Development of newer and high paying jobs in
developed nations
• Outsourcing helps improve globalization
 The Disadvantages of Outsourcing

• While outsourcing services such as payroll

processing services and tax preparation
services, your outsourcing provider will be
able to see your company’s confidential
information and hence there is a threat to
security and confidentiality in outsourcing
• When you begin to outsource your business
processes, you might find it difficult to
manage the offshore provider when compared
to managing processes within your
organization
• Offshoring can create potential redundancies
for your organization

• In case, your offshore service provider

becomes bankrupt or goes out of business,
your organization will have to immediately
move your business processes in-house or find
another outsourcing provider
• The employees in your organization might not
like the idea of you outsourcing your
processes and they might express lack of
interest or lack of quality at work
• Your outsourcing provider might not be only
providing services for your organization. Since
your provider might be catering to the needs
of several companies, there might be not be
complete devotion to you and your company
• By outsourcing, you might forget to cater to
the needs of your valuable customers as your
focus will be on the business process that is
outsourced

• In outsourcing, you may lose your control over

the process that is outsourced
• Outsourcing, though cost-effective, might
have hidden costs, such as the legal costs
incurred while signing a contract between
companies. You might also have to spend a lot
of time and effort in getting the contract
signed

• With outsourcing, your organization might

suffer from a lack of customer focus
There can be several disadvantages in
outsourcing, such as, renewing contracts,
misunderstanding of the contract, lack of
communication, poor quality and delayed
services amongst others.
Why Outsource to India?
• Cost-effective services
• High-quality services
• Time Zone Advantages
• India's stable government
• The Indian Advantage
• Global organizations' most preferred choice
• Faster and Better Communication
• The "New" India
• The "English" Advantage
• Booming IT industry, with IT strengths
recognized all over the world
• The largest English-speaking population after
the USA.
• Cost-effective manpower
• Government supportive of such activities
• Excellent training infrastructure
• Excellent Telecom infrastructure in major cities
 Why Outsource to O2I?

• High-quality and cost-effective services

• High-end technology and best-of-breed infrastructure
• Skilled, talented and experienced professionals
• Wide range of experience in providing outsourcing
solutions
• Wide range of services
• Save on time, effort and infrastructure by outsourcing
• Maximize revenue and minimize expenses
• Quick turnaround time
• Latest software and technologies
 Indian Competitiveness

• Cost effective services

• Improved efficiency
• Better productivity
• Shared risk
• Low operating costs
• Better quality
• Better services
• Sufficient time to focus on core competencies
• Low labour cost
• Improvement in infrastructure
• Qualified human resources
• Favourable economic environment.
• Good and growing capital market.
• Stable government.