ECONOMICS

A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQIREMENTS FOR THE AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(MANAGEMENT)

SUBMITTED TO UNIVERSITY OF MUMBAI, LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY YASH MEHTA ROLL NO.636

SUPERVISED BY Prof. Janki Annanraj

FEBRUARY 2014

ECONOMICS
A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQIREMENTS FOR THE AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(MANAGEMENT)

SUBMITTED TO UNIVERSITY OF MUMBAI, LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY YASH MEHTA ROLL NO. 636

SUPERVISED BY Prof. Janki Annanraj

FEBRUARY 2014

AKNOWLEDGEMENT
I would like to place on record my deep sense of gratitude to Prof. Janki Annanraj, for her generous guidance, help and useful suggestions. I express my sincere gratitude to Prof. Janki Annanraj, for her stimulating guidance, continuous encouragement and supervision throughout the course of present work. I also wish to extend my thanks to Prof. Janki Annanraj and other colleagues for attending my seminars and for their insightful comments and constructive suggestions to improve the quality of this project work. I am extremely thankful to the Principal Neelam Arora, for providing me with infrastructural facilities to work in, without which this work would not have been possible.

SIGNATURE OF STUDENT

CERTIFICATE
I hereby certify that the work which is being presented in the M.Com Internal Project Report entitled Multinational Corporations (MNCS)., in partial fulfillment of the requirements for the award of the Master of Commerce in Management and submitted to the Lala Lajpatrai College of Commerce and Economics, Mahalaxmi, Mumbai 400034 is an authentic record of my own work carried out under the supervision of Dr. Suryakant Lasune. The matter presented in this Project Report has not been submitted by me for the award of any other degree elsewhere.

SIGNATURE OF STUDENT:

SIGNATURE OF SUPERVISOR:

INTERNAL EXAMINER:

EXTERNAL EXAMINER:

COLLEGE STAMP:

PRINCIPAL

TABLE OF CONTENTS
Introduction Definition & Concept F.D.I. Factors That Contributed for the Growth (MNC) Advantages & Disadvantages of MNCs MNCs in India Case Study : Nokia Conclusion Bibliography

LIST OF TABLES

SR No. 1 2 3 4 5 6 7 8 9

Title Introduction Definition & Concept F.D.I. Factors That Contributed for the Growth (MNC) Advantages & Disadvantages of MNCs MNCs in India Case Study : Nokia Conclusion Bibliography

Page No. 7-9 10 11-12 13-14 15-16 17-20 21-24 25 26

MULTINATIONAL CORPORATION
Introduction A multinational corporation/ company is an organization doing business in more than onecountry. Transnational company produces, markets, invests, and operates across the world. It is integratedglobal enterprise which links global with global market at profit. These companies have sales offices and/ or manufacturing facilities in many countries. A corporation (MNC) engages in various activities likeexporting, importing, manufacturing in different countries. MNCs have worldwide involvement and aglobal perspective in its management and decision- making.1. MNCs consider opportunities throughout the globe through they do the business in a fewcountries.2. MNCs invest considerable portion of their assets internationally.3. MNCs engage in international production and operate plants in the number of countries.4. MNCs take managerial decision based on a global perspective. The international operations areintegrated into the corporations overall business.MNCs are huge industrial/ business organizations. They extend their industrial/ marketingoperations through a network of branches or their majority owned foreign affiliates. MNCs produce theproducts in one or few countries and sell them in most of the countries. Transnational corporationsproduce the products in each country based on the specific needs of the customers of that country andmarket these. A transnational corporation mostly uses the inputs of the host country where it operatesunlike a multinational company.Large corporations having investment and business in a number of countries, knows by variousnames such as multinational corporations, international corporations and global corporations have become a very powerful driving force at the worlds economy.

Large corporations having investment and business in a number of countries, knows by variousnames such as multinational corporations, international corporations and global corporations have become a very powerful driving force at the worlds economy. MNCs are huge industrial organizations which extend their industrial and marketing operationsthrough a network of their branches or their Majority Owned Foreign Affiliates. MNCs are alsoknow as Transnational Corporation (TNCs). Till 1991, India was more or less a closed Economy. The rate of growth of the economy was limited. The contribution of the local industries to the countrys GDP was limited that were the main cause of shortage of funds for various development projects initiated by the government.In an effort to revive the industries and to bring the country back on the right track, thegovernment began to open various sectors such as Infrastructure, Automobile, Tourism,Information Technology, Food and Beverages, etc to the Multinational Corporations. The MNCsslowly but reluctantly began to pour capital investment, technology and other valuable resourcesin the country causing a surge in GDP and upliftment of the economy as a hole. This was thepost 1991 era where the government began to invite and welcome giant MNCs into the country. Opportunities for Developing Economies The opportunities for developing economies are significant as well. Through the application of capital, technology, and a range of skills, multinational companies' overseas investments havecreated positive economic value in host countries, across different industries and within different policy regimes. The single biggest effect evidenced was the improvement in the standards of living of thecountry's population, as consumers have directly benefited from lower prices, higher qualitygoods, and broader selection. Improved productivity and output in the sector and its suppliersindirectly contributed to increasing national income. And despite often-cited worries, the impacton employment was either neutral or positive in two-thirds of the cases. Foreign direct investment is already having a dramatic impact on the way companies
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do businessand developing economies integrate with the global economy. Compared to its potential,however, it's just a drop in the bucket. Impact On Developing Economies & Policy Implications: Investments by multinational companies (MNC) allow developing economies to share in theconsiderable benefits of the global economy. Official incentives, trade barriers, and otherregulatory policies, though, can result in inefficiency and waste. Case studies reveal that in virtually all cases, MNC investment had a positive to very positiveimpact on the host country. Rather than leading to the exploitation of lower-wage workers, assome critics have charged, the investments fostered innovation, productivity, and an improvedliving standard. Therefore, government seeking those advantages would be advised to favorpolicies of openness, rather than regulation, when it comes to foreign direct investment. The world's service provider The services sector, which has been growing consistently at a rate of 7 percent perannum, accounts for almost half of the country's GDP. Export revenues from the sectorare expected to grow from $8 billion in 2003 to $46 billion in 2007. Global investment banks, brokerages and accounting firms have set up large researchestablishments in India. A growing number of US companies are hiring Indianmathematics experts to devise models for risk analysis, consumer behaviour andindustrial processes.

Definitions and Concepts

Global Corporation It produces in home country or in a single country and focuses onmarketing these products globally or produces the products globally and focuses on marketingthese products domestically. International Corporation These corporations conduct the operations in more than one foreigncountry, but with the domestic orientation. This country believes that the practices adopted in thedomestic business, the people and products of the domestic business are superior to those of theother countries. This company extends the domestic product, domestic price, promotions andother business practices to the foreign market.

Multinational Corporation These corporations responds to the specific needs of the differentcountry markets regarding products, promotions and price. Thus MNC operates in more than onecountry but operates like a domestic company of the country concerned. Transnational Corporations Transnational Corporations produces, markets, invests, andoperates across the world.A firm which has the power to coordinate and control operations in more than one country, even if it doesnt own them. Multinational Corporation (MNC) or transnational corporation (TNC) is a corporation or enterprise that manages production or delivers services in more than one country. A corporation that has its facilities and other assets in at least one country other than its homecountry. Such companies have offices and/or factories in different countries and usually have acentralized head office where they co-ordinate global management. Very large multinationalshave budgets that exceed those of many small countries. Sometimes referred to as a "transnational corporation". A multinational corporation (MNC) or enterprise (MNE) is a corporation or an enterprise thatmanages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has define 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 theworld's first mega corporation, possessing quasi-governmental powers, including the ability towage 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 globalization.

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FDI Foreign Direct Investment

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. Definitions: Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans". In a narrow sense, foreign direct investment refers just to building new facilities. The numerical FDI figures based on varied definitions are not easily comparable. As a part of the national accounts of a country, and in regard to the GDP equation Y=C+I+G+(X-M)[Consumption + gross Investment + Government spending +(eXports iMports], where I is domestic investment plus foreign investment, FDI is defined as the net inflows of investment (inflow minus outflow) to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity capital, other long-term capital, and short-term capital as shown the balance of payments. FDI usually involves participation in management, jointventure, transfer of technology and expertise. There are two types of FDI: inward and outward, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. FDI is one example of international factor movements. Types: 1. Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. 2. Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country. 3. Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country. 4. Horizontal FDI decreases international trade as the product of them is usually aimed at host country; the two other types generally act as a stimulus for it. Methods: The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods: by incorporating a wholly owned subsidiary or company anywhere by acquiring shares in an associated enterprise through a merger or an acquisition of an unrelated enterprise
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participating in an equity joint venture with another investor or enterprise

Forms of FDI incentives Foreign direct investment incentives may take the following forms: low corporate tax and individual income tax rates tax holidays other types of tax concessions preferential tariffs special economic zones EPZ Export Processing Zones Bonded warehouses Maquiladoras investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation infrastructure subsidies R&D support derogation from regulations (usually for very large projects) Governmental Investment Promotion Agencies (IPAs) use various marketing strategies inspired by the private sector to try and attract inward FDI, including Diaspora marketing. by excluding the internal investment to get a profited downstream. Importance and barriers to FDI The rapid growth of world population since 1950 has occurred mostly in developing countries.[citation needed] This growth has been matched by more rapid increases in gross domestic product, and thus income per capita has increased in most countries around the world since 1950. While the quality of the data from 1950 may be of question, taking the average across a range of estimates confirms this. Only war-torn and countries with other serious external problems, such as Haiti, Somalia, and Niger have not registered substantial increases in GDP per capita. The data available to confirm this are freely available. An increase in FDI may be associated with improved economic growth due to the influx of capital and increased tax revenues for the host country. Host countries often try to channel FDI investment into new infrastructure and other projects to boost development. Greater competition from new companies can lead to productivity gains and greater efficiency in the host country and it has been suggested that the application of a foreign entitys policies to a domestic subsidiary may improve corporate governance standards. Furthermore, foreign investment can result in the transfer of soft skills through training and job creation, the availability of more advanced technology for the domestic market and access to research and development resources. The local population may be able to benefit from the employment opportunities created by new businesses.

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Factors That Contributed for the Growth (MNC)

The MNCs share in global investment, production, employment and trade has assumed considerable proportions. According to the UN, there are 63,000 MNCs with 6,90,000 affiliates all over the globe with 2,40,000 in China and only 1400 in India. The US was the forerunner in giving births to MNCs. Today, biggest MNCs are Japanese. T He global liberalization wave, paved the path for faster expansion and growth of MNCs. The value added by the foreign affiliates of MNCs, as a percentage of global GDP grew from 5% in the 1980s to about 7% by the end of 90s. The MNCs control about a third of world output and the total sales of their foreign affiliates is almost equal to the GNP of all developing countries. The value of the annual sales of the largest manufacturing multinational General Motors, was about $178bn in 1996. The total sales of the 3 largest automobile firms of the world, namely, General Motors, Ford and Toyota is greater than the value of Indias GDP. In terms of direct employment, the MNCs accounted for 73mn people worldwide and if indirect employment is considered, the figure approximates 150mn people. Over 350m people were employed by the foreign affiliates of MNCs in 1988. A number of factors have contributed to the phenomenal growth of MNCs. Some of the important factors are as follows: -

1) Expansion of market territories: Rapid economic growth in a number of countries resulting in rising GDPs and per capita incomes contributed to the growing standards of living. This in turn contributed to the continuous expansion of market territories. MNCs, both contributed to the expansion of market territories and also grew in size and spread as a result of expansion of market territories.

2) Market superiorities: In many ways, MNCs have an edge over domestic firms, such as: a) Availability of reliable and current data,

b) MNCs enjoy market reputation, c) MNCs encounters relatively less problems and difficulties in marketing the products,

d) MNCs adopt more effective advertising and sales promotion techniques, and e) MNCs enjoy faster transportation and adequate warehousing facilities
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3) Financial superiorities: MNCs also enjoy a number of financial advantages over domestic firms. These are: a) Availability of huge financial resources with the MNCs helps them to transform business environment and circumstances in their favor. b) MNCs can use the funds more effectively and economically on account of their activities in numerous countries. c) MNCs have easy access to international capital markets, and

d) MNCs have easy assessed to international banks and financial institutions.

4) Technological superiorities: MNCs are technologically prosperous on account of high and sustained spend on R&D. developing countries on account of their technological backwardness welcome MNCs to their countries because of the attendant benefits of technology transfer.

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Advantages & Disadvantages of MNCs

Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. According to ILO report "for some, the multinational companies are an invaluable dynamic force and instrument for wider distribution of capital, technology and employment; for others they are monsters which our present institutions, national or international, cannot adequately control, a law to themselves with no reasonable concept, the public interest or social policy can accept. MNC's directly and indirectly help both the home country and the host country. Advantages of MNC's for the host country: MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The industries of host country get latest technology from foreign countries through MNC's. 3. The host country's business also gets management expertise from MNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. 5. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of MNC's. 7. The host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of MNC's in the host country. Advantages of MNC's for the home country: MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people of home country both at home and abroad. 3. It gives a boost to the industrial activities of home country. 4. MNC's help to maintain favourable balance of payment of the home country in the long run.

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5. Home country can also get the benefit of foreign culture brought by MNC's. Disadvantages of MNC's for the host country: 1. MNC's may transfer technology which has become outdated in the home country. 2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monpolising the host country's market. 4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty. Disadvantages of MNC's for the home country: 1. MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development. Applicability to particular business MNC's is suitable in the following cases. 1. Where the Government wants to avail of foreign technology and foreign capital e.g. Maruti Udyog Limited, Hind lever, Philips, HP, Honeywell etc. 2. Where it is desirable in the national interest to increase employment opportunities in the country e.g., Hindustan Lever. 3. Where foreign management expertise is needed e.g. Honeywell, Samsung, LG Electronics etc. 4. Where it is desirable to diversify activities into untapped and priority areas like core and infrastructure industries, e.g. ITC is more acceptable to Indians L&T etc. 5. Pharmaceutical industries e.g. Glaxo, Bayer etc.

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MNCs in India
As the name suggests, any company is referred to as a multinational company or corporation (M. N. C.) when that company manages its operation or production or service delivery from more than a single country. Such a company is even known as international company or corporation. As defined by I. L. O. or the International Labor Organization, a M. N. C. is one, which has its operational headquarters based in one country with several other operating branches in different other countries. The country where the head quarter is located is called the home country whereas, the other countries with operational branches are called the host countries. Apart from playing an important role in globalization and international relations, these multinational companies even have notable influence in a country's economy as well as the world economy. The budget of some of the M. N. C.s are so high that at times they even exceed the G. D. P. (Gross Domestic Product) of a nation. 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. 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 MNCs 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.
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Besides the foreign directive policies the labour competitive market, market competition and the macro-economic stability are some of the key factors that magnetize the foreign MNCs 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 Advantages of the growing MNCs to 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. Disadvantages of MNCs Roses does not come without thrones. Disadvantages of having an MNCs in a developing country like India are as underCompetition to SMSI Pollution and Environmental hazards Some MNCs come only for tax benefits only Exploitation of natural resources Lack of employment opportunities Diffusion of profits and Forex Imbalance Working environment and conditions Slows down decision making Economical distress 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: 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.

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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: Microsoft Corporation India (Pvt.) Limited (Marketing Division) Microsoft Global Services India Microsoft Global Technical Support Centre Microsoft India Development Center Microsoft IT 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. Nokia Corporation: Nokia Corporation was started in the year 1865. Being one of the leading mobile companies in India, their stylish product range includes the following: 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. 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-For-You 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. 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.
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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. 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. 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. 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. 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.

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CASE STUDY: NOKIA

Introduction: This case study focuses on one such organisation, Nokia, a Finnish company which has become a key global player in the telecommunications industry. Nokia's main markets were in both Eastern and Western Europe until the transformation of the Soviet bloc of countries in the late 1980s and early 1990s. The liberalisation of trade with the former Soviet bloc led to increased competition for Finnish companies who had previously considered the Eastern European market their own. Nokia therefore looked to expand globally - concentrating on its strengths and cutting out its least effective lines. The business writer Tom Peters has described this process as one of 'sticking to the knitting'. It is something that some of the most successful companies like Coca-Cola did in the 1990s. They concentrated on their best lines and cut out what they were not so good at. They also decided to look to future markets rather than past successes. Telecommunications will, of course, be the major growth industry of the post millennium era. Nokia 4 Diagram 2Nokia is a leading international telecommunications company. The roots of Nokia go back to 1865 and the establishment of a forest industry enterprise in southwestern Finland by mining engineer Fredrik Idestam. The year 1898 witnessed the foundation of Finnish Rubber Works Ltd and in 1912, Finnish Cable Works began operations. In 1966, the three companies were merged to form Nokia Corporation. At the beginning of the 1980s, Nokia started to strengthen its position in the telecommunications and consumer electronics market. Today, Nokia is a leading international telecommunications group with net sales of FIM 52.6 billion in 1997. Headquartered in Helsinki, the Nokia Group employed in 1997 over 36,000 people in 45 countries where it is strongly positioned as a global telecommunications business. Business Focus: Nokia concentrates on the key growth areas of wireline/wireless telecommunications. The Group runs global R&D programs on audiovisual signal/data processing and communications, third-generation wireless systems as well as integrated, multi-service network solutions. A pioneer in mobile telephony, Nokia is the worlds second largest manufacturer of mobile phones and a leading supplier of digital cellular networks. The Group is also a significant supplier of advanced transmission systems and access networks, multimedia equipment, satellite and cable receivers and other telecommunications related products. Nokias shares were first listed in Helsinki in 1915. Today, they are also traded in Stockholm, London, Paris, Frankfurt and New York. Today, Nokia is a focused telecommunications company, but this has not always been the case. A successful company is one which can adapt to changes in its environment. The secret is to anticipate future changes and adapt appropriately in order to make the transition successfully. This process can be illustrated by highlighting some examples of companys evolution. 1865 Nokia was established as a forest-industry enterprise. 1898 Foundation of the Finnish Rubber Works. 1912 Establishment of Finnish Cable Works. 1967 Nokia, Finnish Rubber Works and Finnish Cable Works merge to form Nokia Corporation.
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1979 Nokia Mobile Phones, owned jointly by Nokia and Televa, was founded. 1982 Nokia introduced the first fully digitalised local exchange in Europe. 1991 The worlds first genuine Global System for Mobile Communications (GSM) call was made in Finland with equipment supplied by Nokia. Core skills in rubber and cable became the foundation of a cable lead telecommunications business. Once in this market, it was a natural process to become involved in building telephone exchanges and, with the global development of mobile phones, to be at the leading edge of hand-held communications. Nokia 4 Diagram 1In the early 1990s, Nokia made a major shift in its activities by becoming a focused telecommunications company, as illustrated in the following chart. Nokia had effectively decided that the future lay in: Telecommunications products ('sticking to the knitting'). The global rather than simply the national market (manufacturing in 11 countries to sell in 130). In 1997, Nokia Mobile Phones accounted for 51% of Nokias sales and Nokia Telecommunications for 35%. Other operations, (14% of sales) included Nokia Multimedia Network Terminals and Nokia Industrial Electronics. Nokia Mobile Phones, a pioneer in the development of cellular phone products, manufactures a complete range of cellular phones for all digital and major analogue cellular phone systems. Nokia Mobile Phones are used in all 130 countries that the Groups products are sold. Developing A Global Business: Nokia the mobile telephone networks opened, Nokia faced competition from well-known international rivals jumping into the Nordic market in Nokias own backyard. With this directly challenging situation, the company soon learned what it would need to succeed in a global telecommunications industry. Whereas in some industries organisations focus upon domestic markets within limited geographical boundaries, Nokia made a key decision in 1991 to increase its research and development and global marketing. This was a critical decision which set a pathway for the whole organisation, so that Nokia was prepared when the cellular boom hit world markets. The development of global strategies offered Nokia the ability to respond and meet customer needs quickly as they developed, with the added benefits of cost reduction, improved quality and competitive leverage. Digitalisation has ushered in a completely new telecommunications age. Peoples ideas of the nature of telecommunications will change fundamentally in the next decade. Networks will become more customer focused and offer a wider range of services. In simple terms, 'going digital' means that radio or television signals are turned into strings of numbers (bits). These numbers occupy a much narrower part of the network than conventional signals and do not corrupt so easily in the transmission. Therefore, it is possible to: create more radio or television channels transmit clear, sharp 'phone pictures' on digital phone lines transmit much greater quantities of information at a faster rate.

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Increasingly, data and graphics are transmitted over the phone in addition to speech. Therefore, new technologies are being developed to enhance the capacities of access networks. By the year 2000, it will be possible to transmit approximately one hundred times more information, cost-effectively, over access networks than was possible in 1986. These and the home multimedia terminals of the future will allow integrated use of telecommunications, computer applications and media technologies. Nokia identified the opportunity for digital developments before anyone else, introducing its first digital transmissions systems in 1969. Following ongoing research and development in this field, Nokia was able to deliver the first GSM network in 1991. The third-generation telecommunications systems, UMTS (Universal Mobile Telephone System) and FPLMTS (Future Public Land Mobile Telecommunications System), will be standardised during the next few years prior to launch at the beginning of the next millennium. Future solutions will include new platforms on which operators will build their service ranges. Third-generation wireless telecommunications will support versatile broadband services largely based on various combinations of image, voice and data. The investments required for the new systems are so great that the networks must be developed in stages. Competitive Advantage: Nokia broadband systems become more popular, the share of data in all network traffic will increase. New product possibilities include the Internet whose rapid expansion is stunning the world. The Internet will generate a new demand for broadband services, thereby offering new challenges, as well as business potential, to Nokia. The highly entangled Internet web-sites provide neither sure access to the data required nor guarantees as to their accuracy. In the future, there will be many opportunities for companies who can offer a professionally managed Internet network to operators. Nokia is currently developing circuit switched and packet switched data traffic which will vastly speed up the transfer of large volumes of data in a quickly and easily accessed way through the Internet. The telecommunications market is highly competitive. In the future, telecommunications and information technology, as well as different media technology applications, will often merge. In order to keep ahead of the field, Nokia is seeking differentiation strategies which build on its current strengths and include its high frequency technology expertise. Nokias extensive R & D investment has been channelled into a number of key areas where it knows it can create a competitive edge over its rivals. Staff training and development is targeted at these areas known as core competencies. By focusing on consumer requirements, Nokia has become a symbol of user-friendliness, simplicity and style, combined with high technology and broad choice of features. The emphasis placed on meeting consumer requirements is likely to maintain Nokias competitive edge in the future. Nokias ability to keep ahead of the competition is illustrated by one of its most recent stateof-the-art products, the Nokia 9000 Communicator, launched in 1996. It is a GSM phone with fax, e-mail, short message service, address-book, calendar and Internet connections and

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created an entirely new category of digital all-in-one communications device. The Nokia 9000i Communicator was introduced in 1997 with enhanced software features. Using Values To Drive Business: Nokia 4 Image 5At the heart of any successful organisation is a value system that drives the organisation forward. As an international company, Nokia needs to recognise and value the diversity of its individual employees and its operating units. However, it also needs to generate a shared vision within the Group. The Nokia values, common to all its divisions whatever the country, are those of: Customer satisfaction - Nokia is a market driven company which sets out to identify, anticipate and satisfy customer requirements. Respect for the individual - This is based on open and honest communications between members of the organisation, fair treatment at all times, mutual trust, the ability to depend on each other and accept diversity. Nokia employees are expected to be able to make decisions for themselves and work together as a team. In 1997, Nokia employed more than 36,000 people from all nationalities, ethnic groups, ages, sexes and backgrounds. Nokia continues to cherish this diversity and views it as a core strength in helping to generate a variety of local and global solutions. Achievement - Nokia places a strong emphasis on the achievements of the organisation and the individuals within it. This emphasis is based on creating a shared vision of how the organisation can become the global leader in telecommunications. By empowering its employees - encouraging them to take responsibility for their own actions - Nokia has created a workforce that fights to win rather than sitting back and letting others do the work. Continuous learning - Rapid decision-making and flexible use of resources are critical in the dynamic field of telecommunications. Nokia sees itself as a learning organisation - it does not rest on its existing strengths but seeks to add to them, encouraging employees to take on more responsibilities and acquire new knowledge and skills. This world-wide network of knowledge and expertise is at the disposal of all the members of the Nokia team and is ultimately available to provide complete customer satisfaction.

Conclusion: Nokia has created a set of values which enables the organisation to adapt to the rapidly changing environment of telecommunications. Although the future of telecommunications cannot be predicted accurately, an organisation which clearly understands its market and its product, with a confident and flexible work force, will be in a very strong position to change with its environment and shape the future of telecommunications.

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CONCLUSION
Multinational companies are like double-edged sword. The sword can harm if not handled properly. Similarly the Multinational companies have their own pros and cons. The extent of technology and management of know-how transfer by the MNCs depend to a large extent on their corporate strategy; for example, firms desiring to have a longer-term relationship with the suppliers (rather than those simply using the host country as a marketing/export base) will be more inclined to effect transfer technology. As pointed out in the World Investment Report, 2000, MNCs may restrict the access of particular affiliates to technology in order to minimise inter-affiliate competition. It is noted that MNCs are more likely to license older technologies from which they have already derived significant rents than newer technologies on which there are still relying for market leadership. Further, they may hold back the upgrading of the affiliate technology or invest insufficiently in hostcountry training and R&D in accordance with their global corporate strategies. Therefore, arguing that FDI inflows and economic liberalization automatically facilitates technology transfer is being extremely nave.

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BIBLIOGRAPHY
http://www.ibef.org/ https://www.google.co.in http://www.cii.com/ http://www.ficci.com/ http://www.indoinfoline.com/ International Marketing Management- M.V. Kulkarni International Marketing- Francis Cherunilam

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