CHAPTER-1 WHAT IS MULTINATIONAL CORPORATION?

A multinational corporation (MNC) or enterprise (MNE), is a or an enterprise that manages production or delivers services more than one country. It can also be referred to as an international corporation. The International Labour Organisation (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. The Dutch East India Company was the second multinational corporation in the world (the first, the British East India Company, was founded two years earlier) and the first company to issue stock, and it was the largest of the early multinational companies. It was also arguably the world's first megacorporation, possessing quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money, and establish colonies. 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 relations and globalisation.

CHAPTER-2 Features of multinational corporations

1. Market imperfections
It may seem strange that a corporation can decide to do business in a different country, where it does not know the laws, local customs or business practices. Why is it not more efficient to combine assets of value overseas with local factors of production at lower costs by renting or selling them to local investors? One reason is that the use of the market for coordinating the behaviour of agents located in different countries is less efficient than coordinating them by a multinational enterprise as an institution. The additional costs caused by the entrance in foreign markets are of less interest for the local enterprise. According to Hymer, Kindleberger and Caves, the existence of MNCs is reasoned by structural market imperfections for final products. In Hymer's example, there are considered two firms as monopolists in their own market and isolated from competition by transportation costs and other tariff and non-tariff barriers. If these costs decrease, both are forced to competition; which will reduce their profits. The firms can maximize their joint income by a merger or acquisition, which will lower the competition in the shared market. Due to the transformation of two separated companies into one MNc the pecuniary externalities are going to be internalized. However, this does not mean that there is an improvement for the society. This could also be the case if there are few substitutes or limited licenses in a foreign market.The consolidation is often established by acquisition, merger or the vertical integration of the potential licensee into overseas manufacturing.This makes it easy for the MNE to enforce price discrimination schemes in various countries.Therefore Hymer considered the emergence of multinational firms as "an (negative) instrument for restraining competition between firms of different nations".Market imperfections had been considered by Hymer as structural and caused by the deviations from perfect competition in the final product markets. Further

reasons are originated from the control of proprietary technology and distribution systems, scale economies, privileged access to inputs and product differentiation. In the absence of these factors, market are fully efficient. The transaction costs theories of MNEs had been developed simultaneously and independently by McManus (1972), Buckley & Casson (1976) Brown (1976) and Hennart (1977, 1982). All these authors claimed that market imperfections are inherent conditions in markets and MNEs are institutions that try to bypass these imperfections. The imperfections in markets are natural as the neoclasical assumptions like full knowledge and enforcement do not exist in real markets.

2. International power
 Tax competition Multinational corporations are important factors in processes of globalisation. National and local governments often compete against one another to attract MNC facilities, with the expectation of increased tax revenue, employment, and economic activity. To compete, political entities may offer MNCs incentives such as tax breaks, pledges of governmental assistance or subsidized infrastructure, or lax international and labor regulations. These ways of attracting foreign investment may be criticized as a race to the bottom, a push towards greater autonomy for corporations, or both. On the other hand, economist Jagdish Bhagwati has argued that in countries with comparatively low labor costs and weak environmental and social protection, multinationals actually bring about a 'race to the top.' While multinationals will certainly see a low tax burden or low labor costs as an element of comparative advantage, Bhagwati disputes the existence of evidence suggesting that MNCs deliberately avail themselves of lax environmental regulation or poor labor standards. As Bhagwati has pointed out, MNC profits are tied to operational efficiency, which includes a high degree of standardisation. Thus, MNCs are likely to adapt production processes in many of their operations to conform to the standards of the

most rigorous jurisdiction in which they operate (this tends to be either the USA, Japan, or the EU). As for labor costs, while MNCs clearly pay workers in developing countries far below levels in countries where labor productivity is high (and accordingly, will adopt more labor-intensive production processes), they also tend to pay a premium over local labor rates of 10 to 100 percent. Finally, depending on the nature of the MNC, investment in any country reflects a desire for a medium- to long-term return, as establishing plant, training workers, etc., can be costly. Once established in a jurisdiction, therefore, MNCs are potentially vulnerable to arbitrary government intervention such as expropriation, sudden contract renegotiation, the arbitrary withdrawal or compulsory purchase of licenses, etc. Thus, both the negotiating power of MNCs and the 'race to the bottom' critique may be overstated, while understating the benefits (besides tax revenue) of MNCs becoming established in a jurisdiction.  Market withdrawal Because of their size, multinationals can have a significant impact on government policy, primarily through the threat of market withdrawal. For example, in an effort to reduce health care costs, some countries have tried to force pharmaceutical companies to license their patented drugs to local competitors for a very low fee, thereby artificially lowering the price. When faced with that threat, multinational pharmaceutical firms have simply withdrawn from the market, which often leads to limited availability of advanced drugs. In these cases, governments have been forced to back down from their efforts. Similar corporate and government confrontations have occurred when governments tried to force MNCs to make their intellectual property public in an effort to gain technology for local entrepreneurs. When companies are faced with the option of losing a core competitive technological advantage or withdrawing from a national market, they may choose the latter. This withdrawal often causes governments to change policy. Countries that have been the most successful in this type of confrontation with multinational corporations are large countries such as United States and Brazil, which have viable indigenous market competitors.

 Lobbying Multinational corporate lobbying is directed at a range of issues of interest to businesses, from tariff structures to environmental regulations. There is no unified MNC perspective on any of these issues. Companies that have invested heavily in pollution control mechanisms may lobby for very tough environmental standards in an effort to force non-compliant competitors into a weaker position. Corporations lobby tariffs to restrict competition of foreign industries. For every tariff category that one multinational wants to have reduced, there is another multinational that wants the tariff raised. Even within the U.S. auto industry, the fraction of a company's imported components will vary, so some firms favor tighter import restrictions, while others favor looser ones. Multinational corporations such as Wal-mart and McDonaldsbenefit from government zoning laws, to create barriers to entry Many industries such as General Electric and Boeing lobby the government to receive subsidies to preserve their monopoly.  Patents Many multinational corporations hold patents to prevent competitors from arising. For example, Adidas holds patents on shoe designs,Siemens A.G. holds many patents on equipment and infrastructure and Microsoft benefits from software patents. The pharmaceutical companies lobby international agreements to enforce patent laws on others.

CHAPTER-3 Culture-An Important Element for Multinational corporations

Culture is the set of values and beliefs shared by a group. This includes groups as small as social groups, and as large as a whole country. Since multinational companies operate in more than one country, they are exposed to many different cultures. Each culture has its own beliefs and values. To be successful in these foreign countries, multinational companies must have a global mindset, and be able to recognize and adapt to the differences.

Different methods of communication across different cultures

Communication is the process of conveying messages. Successful communication in the international business environment requires not only an understanding of language, but also the nonverbal aspects of communication that are part of any community. Different countries are going to have different ways of communicating. If certain executives of a company want to do business with people from different countries, they need to understand how to communicate clearly with them, without mistakenly doing something wrong. The most obvious way of communicating with different people is with words, and therefore, some executives learn how to speak the language spoken in the foreign country. This act can show that the executive is truly dedicated to the work, and that he is willing to do anything to complete the deal. Greeting rituals are sometimes overlooked, but they shouldnt be because they are more important in some parts of the world than others. In Japan, failure to show respect by exchanging business cards can get negotiations off to a very

bad start While in France, greetings are highly personal and individualas workers expect to be greeted individually(Schneider and Barsoux) Another form of communicating is through hand gestures. Often goes unnoticed, hand gestures are as important as words themselves because they too have meaning behind them. Cultures located in southern Europe and the Middle East employ a wide variety of gestures frequently with purposefulness. Some hand gestures have different meanings in different countries. For example, the hand gesture where the index finger and thumb touch and create a zero can mean different things in different places. In the US and UK, it means ok. In Russia it means zero. In Japan it refers to money. While in Brazil, it is viewed as an insult. Time is another communication system. In western cultures, people like to get to the point of the matter in business meetings and conversations. However, in other countries like Saudi Arabia and Russia, it is customary to converse first about unrelated matters before starting the business discussions for which the meeting was arranged. Barging straight into the business issue, without informal small talk at the beginning, may make them very uncomfortable and may ruin the negotiations. Seven Methods of managing across cultures (1) Hierarchy: "This refers to the way people view how much they defer to people in authority, whether they feel entitled to express themselves and how empowered they feel to take the initiative on matters before them. For example, Canada believes in egalitarianism, while nations like India, Japan, China, Germany, Mexico are highly hierarchical." (2) Group focus: This refers to whether people consider that accomplishment and responsibility are achieved through individual or group effort, and whether they tend to identify themselves as individuals or members of a group. Canadians are individualists while Brazilians, Chinese, Mexicans and Japanese are group-focused. (3) Relationships: This is about whether trust and relationships are viewed as a prerequisite for working with someone. Canadians focus primarily on the transaction, rushing to deal, while the Chinese, Italians, and Spaniards, for example, focus on nurturing relationships first.

(4) Communication styles: This covers matters like verbal and nonverbal expression, how directly or indirectly people speak, and whether brevity or detail is valued in communication. Israel, Denmark, Germany and Sweden use a direct style, while indirect communication styles are the norm in China, United Arab Emirates, and Japan 5) Time orientation: This refers to the degree to which people believe adhere to schedules. United States, Germany, Denmark and Switzerland follow schedules while countries like Saudi Arabia, Spain, Thailand, and the United Arab Emirates are unconcerned about schedules and deadlines. (6) Change tolerance: How people are comfortable with change, risktaking and innovation. Along with Australians, Canadians are the most tolerant of change, while Saudi Arabia, Indonesia, Mexico and Russia are change-averse. (7) Motivation: work/life balance: This characteristic examines whether people work to live or live to work. Canadians are driven by work and the status it provides although not as much as people in China, Japan, and the U.S. while in Norway, Saudi Arabia, United Arab Emirates, India and Mexico, family-work balance is treasured.

Advertisement in different countries

Another way for multinational companies to prove that they understand the specific market is through advertisement. Advertising products in different countries requires the companies to use specific methods of advertisement that is allowed by the tradition and culture of the country. For example, in western countries, sex appeal is used a lot in advertising many different products. It is used to grab attention of customers and is used to boost sales. This strategy however wont be successful in countries that are very religious like most Arabic countries where the dominant religion is Islam. In those countries people, especially girls, are mostly covered and so wont be wearing very revealing clothes. Therefore, ads that use sex appeal, like girls in bikinis for example, wont be used. One company that used proper advertisement was Procter and Gamble. Companies adjust advertisements to the nationality of their clients. The Japanese prefers to buy shampoo which uses Japanese girls in its advertisements. Russian housewives

prefer washing powder that uses Russian housewives instead of American housewives in its advertisements.

CHAPTER-4 Adaptation To Foreign Market By Multinational Corporations

 Companies that adapted to foreign market successfully
Just because a large company is very successful in one country, it doesnt mean that it will be successful in another country, especially if that country has a completely different culture. McDonalds is one of the largest companies in the world. However, it has adapted to the different cultures to make sure it is successful. In France, McDonald's added tablecloths and candles to improve the ambience at some eateries and introduced waiter service at certain outlets because they found that most Europeans prefer leisurely rather than fast food dining .In addition to space, McDonalds has changed its menus from one country to another, offering food that locals usually eat: in France, a burger has mustard and ciabatta rolls instead of regular buns. In Japan, fried egg burgers were offered.

 Companies that failed to adapt to foreign culture

In many occasions, a lot of the larger companies think that because they are a large corporation, they can succeed anywhere without changing anything. This tactic proved wrong, as many companies have failed and were forced to shutdown foreign branches. The biggest example was When Wal-Mart expanded in Germany in 1997, it hoped that Germans, like Americans, would scoop up its low-priced items. By July 2006, WalMart had closed its German operations and absorbed $1 billion in losses. This was because they didnt adjust to the German culture where people preferred frequently specialty stores, not one-stop shops .Another example is Daimler AG, it failed in its acquisition of Chrysler because its disciplined, buttoned-down executives could never meld with their more freewheeling American counterparts.

Chapter-5 Types of Multinational Corporations

 Transnational Corporations
A Transnational Corporation (TNC) differs from a traditional MNC in that it does not identify itself with one national home. Whilst traditional MNCs are national companies with foreign subsidiaries, TNCs spread out their operations in many countries sustaining high levels of local responsiveness. An example of a TNC is Nestl who employ senior executives from many countries and try to make decisions from a global perspective rather than from one centralised headquarters. However, the terms TNC and MNC are often used interchangeably. A study of Dutch multi-national corporations showed that foreign expansions best unfold sequentionally, consistent with the notions of organizational learning. Firms ought to diversify first into culturally (and less so geographically) nearby countries before they venture farther away. They do so more successfully if they also follow a learning process by mode ( e.g, greenfield based expansion versus acquisitions or equity joint ventures) or by level of ownership.

 Micro-multinationals
Enabled by Internet based communication tools, a new breed of multinational companies is growing in numbers. These multinationals start operating in different countries from the very early stages. These companies are being called micro-multinationals. What differentiates micromultinationals from the large MNCs is the fact that they are small businesses. Some of these micro-multinationals, particularly software development companies, have been hiring employees in multiple countries

from the beginning of the Internet era. But more and more micromultinationals are actively starting to market their products and services in various countries. Internet tools like Google, Yahoo, MSN, Ebay and Amazon make it easier for the micro-multinationals to reach potential customers in other countries. Service sector micro-multinationals, like Facebook, Alibaba etc. started as dispersed virtual businesses with employees, clients and resources located in various countries. Their rapid growth is a direct result of being able to use the internet, cheaper telephony and lower traveling costs to create unique business opportunities. Low cost SaaS (Software As A Service) suites make it easier for these companies to operate without a physical office. Hal Varian, Chief Economist at Google and a professor of information economics at U.C.Berkeley , said in April 2010, "Immigration today, thanks to the Web, means something very different than it used to mean. There's no longer a brain drain but brain circulation. People now doing startups understand what opportunities are available to them around the world and work to harness it from a distance rather than move people from one place to another."

CHAPTER-6 Role Of Multinational Corporations

Multinational corporations (MNCs) are huge industrial organizations having a wide network of branches and subsidiaries spread over a number of countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies. Such a company may enter into joint venture with a company in another country. There may be agreement among companies of different countries in respect of division of production, market, etc. These companies are to be found in almost all the advanced countries, with the USA perhaps the biggest amongst them. Their operations extend beyond their own countries, and cover not only the advanced countries but also the LDCs. Many MNCs have annual sales volume in excess of the entire GNPs of the developing countries in which they operate. MNCs have great impact on the development process of the Underdeveloped countries. Let us discuss the arguments for and against the operation of MNCs in underdeveloped countries.

Arguments for MNCs(The positive role): The MNCs play an important role in the economic development of underdeveloped countries. 1. Filling Savings Gap: The first important contribution of MNCs is its role in filling the resource gap between targeted or desired investment and domestically mobilized savings. For example, to achieve a 7% growth rate of national output if the required rate of saving is 21% but if the savings that can be domestically mobilised is only 16% then there is a saving gap of 5%. If the country can fill this gap with foreign direct investments from the MNCs, it will be in a better position to achieve its target rate of economic growth. 2. Filling Trade Gap: The second contribution relates to filling the foreign exchange or trade gap. An inflow of foreign capital can reduce or even remove the deficit in the balance of payments if the MNCs can generate a net positive flow of export earnings. 3. Filling Revenue Gap: The third important role of MNCs is filling the gap between targeted governmental tax revenues and locally raised taxes. By taxing MNC profits, LDC governments are able to mobilize public financial resources for development projects. 4. Filling Management/Technological Gap: Fourthly, Multinationals not only provide financial resources but they also supply a package of needed resources including management experience, entrepreneurial abilities, and technological skills. These can be transferred to their local counterparts by means of training programs and the process of learning by doing. Moreover, MNCs bring with them the most sophisticated technological knowledge about production processes while transferring modern machinery and equipment to capital poor LDCs. Such transfers of knowledge, skills, and technology are assumed to be both desirable and productive for the recipient country. 5.Other Beneficial Roles: The MNCs also bring several other benefits to the host country. (a) The domestic labour may benefit in the form of higher real wages. (b) The consumers benefits by way of lower prices and better quality products.

(c) Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to feed the main industries of the MNCs (d) MNCs expenditures on research and development(R&D), although limited is bound to benefit the host country. Apart from these there are indirect gains through the realization of external economies.

Arguments Against MNCs(The negative role): There are several arguments against MNCs which are discuss below. 1. Although MNCs provide capital, they may lower domestic savings and investment rates by stifling competition through exclusive production agreements with the host governments. MNCs often fail to reinvest much of their profits and also they may inhibit the expansion of indigenous firms. 2. Although the initial impact of MNC investment is to improve the foreign exchange position of the recipient nation, its long-run impact may reduce foreign exchange earnings on both current and capital accounts. The current account may deteriorate as a result of substantial importation of intermediate and capital goods while the capital account may worsen because of the overseas repatriation of profits, interest, royalties, etc. 3. While MNCs do contribute to public revenue in the form of corporate taxes, their contribution is considerably less than it should be as a result of liberal tax concessions, excessive investment allowances, subsidies and tariff protection provided by the host government. 4. The management, entrepreneurial skills, technology, and overseas contacts provided by the MNCs may have little impact on developing local

skills and resources. In fact, the development of these local skills may be inhibited by the MNCs by stifling the growth of indigenous entrepreneurship as a result of the MNCs dominance of local markets. 5. MNCs impact on development is very uneven. In many situations MNC activities reinforce dualistic economic structures and widens income inequalities. They tend to promote the interests of some few modern-sector workers only. They also divert resources away from the production of consumer goods by producing luxurious goods demanded by the local elites. 6. MNCs typically produce inappropriate products and stimulate inappropriate consumption patterns through advertising and their monopolistic market power. Production is done with capital-intensive technique which is not useful for labour surplus economies. This would aggravate the unemployment problem in the host country. 7. The behaviour pattern of MNCs reveals that they do not engage in R & D activities in underdeveloped countries. However, these LDCs have to bear the bulk of their costs. 8. MNCs often use their economic power to influence government policies in directions unfavorable to development. The host government has to provide them special economic and political concessions in the form of excessive protection, lower tax, subsidized inputs, cheap provision of factory sites. As a result, the private profits of MNCs may exceed social benefits. 9. Multinationals may damage the host countries by suppressing domestic entrepreneurship through their superior knowledge, worldwide contacts, and advertising skills. They drive out local competitors and inhibit the emergence of small-scale enterprises.

CHAPTER-7 INDIAN SCENARIO

MNCs are such companies or institutions that meet out the services and the productions to many countries and there institutions. They serve the customers and the institution best and simultaneously the magnetic chemistry between the country and the foreign MNCs has shown some fruitful results too. Off late the scope of international's performance in India has widened and these influxes in the flourishing on the varied scope are due to the talent and the cost factor that brings the MNCs here. These are not the sole prior causes of the Nokia, Vodafone, Fiat, Ford Motors and as the list moves on- to flourish in India. As the basic economic data suggest that after the liberalization in 1991, it has brought in hosts of foreign companies in India and the share of U.S shows the highest. They account about 37% of the turnover from top 20 companies that function in India. Keeping the 'Big Boss' apart there are certain other companies hailing from Britain, France, Netherlands, Italy, Germany, Belgium and Finland that have made a strong footing in India too. They are well flourishing and earning there share of maximum profit too.

CHAPTER-8
Why are Multinational Companies In India?
There are a number of reasons why the multinational companies are coming down to India. India has got a huge market. It has also got one of the fastest growing economies in the world. Besides, the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market. However, the scenario changed during the financial liberalization of the country, especially after 1991. Government, nowadays, makes continuous efforts to attract foreign investments by relaxing many of its policies. As a result, a number of multinational companies have shown interest in Indian market.

 Profit of MNC in India

It is too specify that the companies come and settle in India to earn profit. A company enlarges its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and such is the case of the MNCs that have flourished here. More over India has wide market for different and new goods and services due to the ever increasing population and the varying consumer taste. The government FDI policies have some how benefited them and drawn their attention too. The restrictive policies that stopped the company's inflow are however withdrawn and the country has shown much interest to bring in foreign investment here. Besides the foreign directive policies the labour competitive market, market competition and the macro-economic stability are some of the key factors that magnetise the foreign mnc here.

Following are the reasons why multinational companies consider India as a preferred destination for business: Huge market potential of the country FDI attractiveness Labor competitiveness Macro-economic stability


y y y y

Advantages of the growing MNCs in India

There are certain advantages that the underdeveloped countries like and the developing countries like India derive from the foreign MNCs that establishes. They are as under: Initiating a higher level of investment. Reducing the technological gap The natural resources are utilized in true sense. The foreign exchange gap is reduced Boosts up the basic economic structure.

y y y y y

CHAPTER-9 Top MNCs in India

The country has got many M. N. C.s operating here. Following are names of some of the most famous multinational companies, who have their headquarters of operational branches based in the nation: 1. IBM- IBM India Private Limited, a part of IBM has been operating from this country since the year 1992. This global company is known for invention and integration of software, hardware as well as services, which assist forward thinking institutions, enterprises and people, who build a smart planet. The net income of this company post completion of the financial year end of 2010 was $14.8 billion with a net profit margin of 14.9 %. With innovative technology and solutions, this company is making a constant progress in India. Present in more than 200 cities, this company is making constant progress in global markets to maintain its leading position. 2. Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of the U. S. (United States) based Microsoft Corporation, one of the software giants has got their headquarter in New Delhi. Starting its operation in the country from 1990, this company has got the following business units: a. Microsoft Corporation India (Pvt.) Limited (Marketing Division) b. Microsoft Global Services India c. Microsoft Global Technical Support Centre d. Microsoft India Development Center e. Microsoft IT f. Microsoft Research India

The net income of Microsoft Corporation grew from $ 14, 569 million in 2009 to $ 18, 760 million in 2010. Working in close association with all the stakeholders including the Government of India, the company is committed towards the development of the Indian software as well as I. T. (Information Technology) industry. 3.Nokia Corporation: Nokia Corporation was started in the year 1865. Being one of the leading mobile companies in India, their stylish product range includes Normal mobile handsets , Smartphones, Touch screen phones, Dual sim phones,Business phone. The net sales of the company increased by 4 % in the last financial year with sales of EUR 42.4 billion as compared to 2009's EUR 41 billion. Over the past few years, this company in India has been acquiring companies, which have got new and interesting competencies and technologies so as to enhance their ability of creating the mobile world. Besides new developments to fight against mineral conflicts, they are even to set up Bridge Centers in the country for supporting re-employment. Their first onsite for the installation of renewable power generation are already in place. 4. PepsiCo: PepsiCo. Inc. entered the Indian market with the name of PepsiCo India from the year 1989. Within a short time span of 20 years, this company has emerged as one of the fast growing as well as largest beverage and food manufacturer. As per the annual report of the company in the last business year, the net revenue of PepsiCo grew by 33 %. By the year 2020, this food manufacturing company intends to triple their portfolio of enjoyable and wholesome offerings. The expansion of their Good-ForYou portfolio is believed to be assisting the company in attaining the competitive advantage of the growing packaged nutrition market in the world, which is presently valued at $ 500 billion. 5.Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited, one of the biggest pharmaceutical companies in India, started their business in the country from the year 1961. The company made its public appearance in 1973 though. Headquartered in this nation, this international, research based, integrated pharmaceutical company is the producer of a huge range of affordable cum quality medicines that are trusted by both patients and healthcare professionals all over the world. In the business year 2010, the registered global sales of the company was US $ 1, 868 Mn. Successful

development of business forms the key component of their trading strategy. Apart from overseas acquisitions, this company is making a continuous endeavor to enter the new global markets, which have got high potential. For this, they are offering value adding products as well. 6.Reebok International Limited: This global brand is a famous name in the field of sports as well as lifestyle products. Reebok International Limited, a subsidiary of Adidas AG, is based in U. S. A. (United States of America) started its operation in 1890s. During the last financial year, Adidas's currency neutralized group sales increased by 9 %. Apart from their alliance with CrossFit that is among the largest contemporary fitness movements, in the current year, Reebok's announcement of its partnership with artist, designer and producer Swizz Beatz reflects its long term future growth. 7.Sony: Sony India is a part of the renowned brand name Sony Corporation, which started their business operation in the year 1946 in Japan. Established in India in November 1994, this company has captured one of the leading positions in the field of consumer electronics goods. By the end of the business year 2010 on 31st March, 2011, the company showed a remarkable increase in the share related to numerous categories. Sony India is planning to invest around INR. 150 crore for the marketing of the activities related to ATL and BTL. As far as Bravia TVs are concerned, they are looking forward to hold their market share of 30 %. In between the last and the current financial year, the number of their outlets in the country increased by 1, 000. 8.Tata Consultancy Services: Commonly known as T. C. S., this multinational company is a famous name in the field of I. T. (Information Technology) services, Business Process Outsourcing (B. P. O.) as well as business solutions. This company is a subsidiary of the Tata Group. The first center for software researching was established in the country in 1981 in the city of Pune. Tata Consultancy earned a growth of 8.9 % during the latest quarter of this financial year, which ended on 30th September, 2011. This renowned company is presently looking forward to the 10 big deals that they have received besides the Credit Union Australia's contract as well as Government of Karnataka's INR. 94 crore deal for a total period of 6 years. In this current business year, they are about to employ 60, 000 people to meet their business requirement.

9.Vodafone: Vodafone Group Plc is an international telecommunication company, which has got it's headquarter based in London in the United Kingdom (U. K.). Earlier known as Vodafone Essar and Hutchison Essar, Vodafone India is among the largest operators of mobile networking in the country. The parent company Hutchison started its business in the year 1992 along with the Max Group, which was its business partner in India. Much later in 2011, Vodafone Group Plc decided to buy out mobile operating business of Essar Group, its partner. The turnover of the Vodafone Group Plc after the completion of the last financial year grew to 44, 472 m from 41, 017 m that was the turnover of the business year 2009. 10.Tata Motors Limited: The biggest automobile company in India, Tata Motors Limited, is among the leading commercial vehicles manufacturer in the country. They are one of the top 3 passenger vehicle manufacturers. Established in the year 1945, this company, a part of the famous Tata Group, has got its manufacturing units located in different parts of the nation. Some of their well known products of the company are categorized in the following heads:

a. b. c. d.
e.

Commercial Vehicles Defence Security Vehicles Homeland Security Vehicles Passenger Vehicles Post completion of the financial year 2010 to 2011, the global sales of the company grew by 24.2 % with sales crossing INR. 1 million.

CHAPTER-10 MNCs and Globalisation

 The flourishing of multinationals spark by global trends
Today, multi-companies and corporations are expanding their business in the global markets. The increasing demand of expanding business outlets in various countries is inarguably phenomenal. The rapid movement of businesses brought about by the increase of demands by consumers surfaced all sides of the globe. The demand for supplies of any goods beyond necessity highlighted the definitive mindset and behavior of the people. Consumerism and materialism aborted peoples inclination to spirituality and dogmatism. The fast-paced developments of the world due to industrial and scientific revolutions made multinationals took risks to bargain and trade their products considering the slim chance of survival. However, as it moves forward, multinationals obtained multiple bonds of profit. In dealing with business, one may not be able to survive and stay longer in such industry if one is not really equip with enough resources, material and non-material. In order to understand the rule of business, rigorous studies and researches must be held. Anyone who is accountable for any damage or loss of ones business is regarded insufficient and incapable.

As the world stepped-in for a new millennium, progressed advanced, not only in technology and science but at the same time, the advances on researches and studies. We may ask ourselves, how come this or that corporation become successful in their business ventures? Why such global company as McDonald is loved by Asians? How would they manage to successfully influence and penetrate the weltanschauung of a community with diversified culture? These prevailing questions can lead us realize something more important as to the role and effects of multinational companies to the economic growth of any countries. The emergence of globalization and technological innovation lead international businesses venture into various investment and business domains categorize them as multinational and transnational corporations. The widespread business ventures of various MNCs significantly summon for grand capital investment and marketing researches. However, on one hand, MNCs may have varied products and business strategies to invoke and culture to practice in order to conform and maintain its income or profit generating status, yet on the other hand, MNCs contribute significant development and growth to the national economy. Here, we are not only talking about the growth of MNCs in different regions but the role it plays in the economic status of different regions or countries. Of course, constraints are all magnified based on the context and regulatory laws of different regions and countries, but, invoking effective strategy can minimize constraints affecting the business itself. Now, after trailing the causal relationship between globalization and the evolution of business, let us look at into the causal effect of strong established multinational corporations to the growth and development of economy.

 Effects of MNCs to the Economy There are three different fields of capital in a society, the politics, economic and social fields. The interplay of these fields posits the inseparability of connections between each field. This can go without saying that what affects a certain field reverberates to other fields. Hence, MNcs effects to economy can be also relegated to the rest societal fields. However, let us not focus deeply in the two remaining fields but let us fix our gaze to the economic field wherein the most obvious is perceived. There are five major effects MNCs possibly contribute to the growth of economy. First, MNCs bring bonds of revenues to the government. Second, MNCs provide employment to the local citizens. Third, MNCs plays a vital role in government economic programs. Fourth, MNCs are primary players in the worlds most dynamic industries and the driving force behind the global economy. Lastly, MNCs overpower local markets or business. Let us elaborate the five major concerns. First, multinational corporations bring bonds of revenues to the government in which in turn used it to subsidize and allocate sufficient budget to various agencies and institutions to implement programs and services. Under governments economic regulations and policies, each business establishment must adhere to its responsibility of paying taxes. In this sense, multi companies covered by governmental economic policies and regulations should abide and are obliged to pay its taxes. Moreover, since multi companies are considered to be international some considerations are being upheld, like giving them higher payment on taxes and other billing compared to local business outlets and markets.

Second, MNCs provide employment jobs to the countries citizens. Due to the overflowing jobs in various multi companies, citizens of a certain region or country have given the opportunities to work and find their way to be self-sufficient and progressive. This effect contributes to the growth of economy since it boosts the countries labor empowerment. Less number of unemployed and underemployed of people the higher the level of economic gains and stability of the country. One important element in stabilizing the economy and gains much income, is the opening of a country or other regions to the transnational or multi companies business ventures. Third, MNCs played a vital role in governments economic programs. Multinationals interest and enthusiasm to help strengthens the governments economic programs is novel. We always see these corporations engaged in various projects that would basically make the economy strong. For example, in many third world countries, one very important in which MNCs assumed is its support to give good opportunities to the citizens, allowing them to find and give jobs suitable to their expertise, abilities and skills. Moreover, other opportunities like providing financial assistance and business programs to local interested parties that plan to establish a local business establishment are some of MNCs economic support and thus it affects a regions or countrys economic status. Fourth, MNCs are primary players in the worlds most dynamic industries and the driving force beyond the global economy. This ascribed status of MNCs purportedly affects countrys economy. As being dynamic and highly competitive industries drive countrys economic in both polarities. This could be a harm and beneficial in both polarities. However, let us consider the fact that although MNCs looks into the development of the global economy, the way it will reach the pinnacle of such status, can be only through taking a step by step method. In order that a global

economy can gain power and stability, MNCs should look into the smaller parts that composed the global economy. Such proposition, we can infer in one way or the other that MNCs undoubtedly aims to bolster not only its economic and business interests to gain profits but of the economy of the region itself. Nowhere can MNCs find its ground to push up the global economy unless regions are strong enough to hold and support the global sphere. Lastly, MNCs overpower the local business or markets. Obviously, although MNCs brought significant effects to the economy of a country, we cannot sideline the fact that local markets world is getting smaller and smaller because of MNCs domination. However, MNCs are not totally cruel and egotistic with regards to gaining profits, in fact, help local and small business to gain more knowledge and expertise in management in order to progress. Nevertheless, the fact that it overpowers local business units, we can sure how long small business will continue to exist.

 Conclusion Hence, due to globalization and dramatic changes in technology, various business groups expands its business in a larger scale and we labeled them as Multinational Corporations (MNC) or transnational firms. Moreover, because these MNCs venture to a larger scope of business, it gives considerable effects and changes to the economy of the target region or country where it hopes to invest and establish business structures and operations. At the end, whether the effects are positive or negative, it does significantly affect countrys economy.