MNCs / its features / essential features of MNCs
Meaning of Multinational Companies (MNCs)
A multinational company is one which is incorporated in one country (called the home country); but whose operations extend beyond the home country and which carries on business in other countries (called the host countries) in addition to the home country. It must be emphasized that the headquarters of a multinational company are located in the home country.
Neil H. Jacoby defines a multinational company as follows: “A multinational corporation owns and manages business in two or more countries.” In simple words, A multinational corporation is known by various names such as: global enterprise, international enterprise, world enterprise, transnational corporation etc.
Some popular examples of multinationals are given below
Foreign Multinational Bata Corporation
Cadbury Coca-Cola Corporation
Unilever Timex
Colgate Palmolive Pepsi Corporation
Philips Indian Affiliate/Subsidiary
Cadbury India Bata India Coca Cola India Timex Watches Pepsi India
Hindustan Lever Colgate India
Philips India Sony Corporation
Suzuki GBC
Sony India Maruti Suzuki ABB
GEC Alsthom ABB India
Features of Multinational Corporations (MNCs)- Following are the salient features of MNCs:
(i) Huge. Assets and Turnover: Because of operations on a global basis, MNCs have huge physical and financial assets. This also results in huge turnover (sales) of MNCs. In fact, in terms of assets and turnover, many MNCs are bigger than national economies of several countries.
(ii) International Operations Through a Network of Branches: MNCs have production and marketing operations in several countries; operating through a network of branches, subsidiaries and affiliates in host countries.
(iii) Unity of Control: MNCs are characterised by unity of control MNCs control business-activities of their branches in foreign countries through head office located in the home country. Managements of branches operate within the policy framework of the parent corporation.
(iv) Mighty Economic Power: MNCs are powerful economic entities. They keep on adding to their economic power through constant mergers and acquisitions of companies, in host countries. has at
(v) Advanced and Sophisticated Technology: Generally, a MNC its command advanced and sophisticated technology. It employs capital intensive technology in manufacturing and marketing.
(vi) Professional Management: A MNC employs professionally trained managers to handle huge funds, advanced technology and international business operations.
(vii) Aggressive Advertising and Marketing: MNCs spend huge sums of money on advertising and marketing to secure international business. This is, perhaps, the biggest strategy of success of MNCs. Because of this strategy. they are able to sell whatever products/services. they produce/ generate.
(viii) Better Quality of Products: A MNC has to complete on the world level. It, therefore, has to pay special attention to the quality of its products.
Features of MNCs at a glance
1. Huge assets and turnover
2 International operations through a network of branches
3. Unity of control
4. Mighty economic power
5. Advanced and sophisticated technology
6. Professional management
7. Aggressive advertising and marketing
8. Better quality of products
