What Does Multinational Corporation - MNC Mean?

A corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. Sometimes referred to as a "transnational corporation".

Investopedia explains Multinational Corporation - MNC Nearly all major multinationals are either American, Japanese or Western European, such as Nike, CocaCola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of multinationals say they create jobs and wealth and improve technology in countries that are in need of such development. On the other hand, critics say multinationals can have undue political influence over governments, can exploit developing nations as well as create job losses in their own home countries.

Multinational Companies in India (MNC)

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 onto 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.

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. 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.

Top MNCs in India

IBM India

Employee head count:

IBM India is the subsidiary of IBM. It has grown in huge stature in India after it made a reentry in 1992 after the exit on 1970,s. It has the largest number of employee in India in comparison to any other MCs in India. As the growth rate suggest it had grown by almost 800% from 2003 to 2007 where the number of employees have increased to nearly 74000 from 9000 in 2003. It acquired this leading position in having the largest number of employee in India since 2006. The scenario is such that one quarter of the employees of this institution is from India. It was expected that IBM would be recruiting 24000 employee ore in India in 2011 and the trend is showing the same this year. They have a planning to hire aggressively in India. If the expectation

proves to be true then the head count is going to rise up nearly 154,000. as the estimated value suggest the employee head count reads as under:

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010

Employees 5000 9,000 23,010 38,500 53,000 74,000 94,000 1,12,900 1,31,000

growth rate

The 2006 meet stated that IBM I India plan for a long term investment of $6 billion in the proposed next three years. The revenues that the company procured crossed about $300 million with minimal work strength of 4000 employee but with the change in certain avenues this led to a huge hige to $937 million in 2007 from $350 from 2002. The track remains stable and on 2005 IBM crossed the $1 billion parameters even. From here on the growth took leaps and bound and the domestic revenue was 60% in the year 2005-2006 that mark a history of IBM's portfolio. The emerging trends have found that the business analytics are coming down to India and would make huge investments here. They are the one that provides the most trust worthy solutions and even help in making a distinction to the customers, investors and the regulators. This is sure to have a positive effect in Indian scenario too.

Profit Rate

The main motto of IBM is to establish 47 branch offices in India and the estimated year is 2013. All their medium and small sectors at work have brought in benefits to them. The company has a huge share in countries export which amounts to 45-50 percent of the share. The growth rate shows that the revenue earned was $99.90 billion in 2010 which is a 4percent growth. Moreover the company has generated a cash flow of $109 billion that was made to fund the future expansion and solely done to enhance the research and development. If such remains the growth and the working of the company this is sure to make huge profits in future. Nokia Communications People with nokia handsets are a daily sight. Nokia has crept in Indian scenario and culture very fast but with a steady pace. It made its way to Indian market in the year 1995 and off ate it has come out as a renowned company singing its glory. Nokia operates in the major metropolis in India and even in certain other major states too. They have flourished their business very strategically. The device market of Nokia has diversified its aim to cater to different customers and consumer segments. More over their close links with the operators have helped them to flourish over a wide geographical area which have lead them to be the highest and the largest network distributor.
Employee head count:

On the start the company had 450 people working India in the year 2004 but it soared over 15000 employees in the year 2008. Today India comes 2nd I raking in the list.
Growth rate

The growing market strategy of nokia shows that 8 million new subscriber come in every month.and the estimated rate shows that it's market would grow to US $427 billion in 2010.
Reebok in India

Reebok had a very hard start in India. They only had the male accessories and later the market added the female products. Rebook apart from having the sports goods had variety of other products too. India to them is the market of growing importance. More over the flourishing sports in India in all forms whether the national or international cricket and football or the local form like IPL have used this brand for promoting and even at times sponsoring. The cricket IPL format from 2008 to that of 2011 has seen some of the state to promote this brand recently. They have a good hold on the market and cater to consumers fancy.

Growth rate

Reebok claims to have a come a long way off late. This has reached success in all levels in Indian scenario since it had made its way along. The sales at reached exceedingly to $91 million since 2005.
Profit rate

Reebok's Indian revenue has turned out to be nearing 1400 crores in the year 2008. Even the same rate was maintained in the year 2009 as the IPL fanned the floor of marketing. They have kept there strategy the same through out and made a quiet secured and a healthy footing in Indian market. Ranbaxy Laboratories Established in 1961 Ranbaxy is the largest pharmaceutical company in India. Operating across 45 countries and offering manufacturing facilities in 7 this multinational company in India actually started off way back in 1937. Ranbaxy entered the US market in 1998 and it went on to become the biggest share holder of the US pharmaceutical market in 2005 by holding almost 28 percent of the market share. In December 2005 Ranbaxy's total sales stood at US $1,178 million. Since the operations of the company are spread across the big and small cities of India the company employees a huge section of the Indian population. Currently there are 12,995 people employed with Ranbaxy in India. The revenues earned by Ranbaxy Laboratories in 2010 stood at ` 4,198.96 Billion. The profit for the same year accumulated to $327 Million. Tata Motors Tata Motors is among the top multinational companies in India. It is an operating subsidiary of the Tata Group. Tata Motors was established in the year 1945 and since then it has become the country's largest automotive producers. It is listed on both the Bombay Stock Exchange and the New York Stock Exchange. In 2005 this multinational company featured alongside the top ten firms in India procuring annual revenue of ` 320 billion. Tata Motors is ranked amongst the top employers of the country. The current strength of employees in the company stands as 50,000. In the year 2010 the total revenue earned by Tata Motors was $20.572 billion posting a growth rate of almost 64.2 per cent.

The world's first multinational

Nick Robins Published 13 December 2004

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NS Essay 1- Corporate greed, the ruination of traditional ways of life, share-price bubbles, western imperialism: all these modern complaints were made against the British East India Company in the 18th century. Nick Robins draws the lessons In The Discovery of India, the final and perhaps most profound part of his "prison trilogy", written in 1944 from Ahmednagar Fort, Jawaharlal Nehru described the effect of the East India Company on the country he would shortly rule. "The corruption, venality, nepotism, violence and greed of money of these early generations of British rule in India," he wrote, "is something which passes comprehension." It was, he added, "significant that one of the Hindustani words which has become part of the English language is 'loot'". For most of the succeeding 60 years, the East India Company sank from view. No plaque marked the site where its headquarters had stood in the City of London for more than two centuries. It was regarded as something that could be consigned to the history books, its deeds to be squabbled over by academics and imperial romantics. But the onset of globalisation has revived interest in a company that could be seen as a pioneering force for world trade. Exhibitions at the British Library and the V&A, plus a string of popular histories, have sought to revive the reputation of the "Honourable East India Company". Its founders are now hailed as swashbuckling adventurers, its operations praised for pioneering the birth of modern consumerism and its glamorous executives profiled as multicultural "white moguls". Yet the East India Company, romantic as it may seem, has more profound and disturbing lessons to teach us. Abuse of market power; corporate greed; judicial impunity; the "irrational exuberance" of the financial markets; and the destruction of traditional economies (in what could not, at one time, be called the poor or developing world): none of these is new. The most common complaints against late 20th- and early 21st-century capitalism were all foreshadowed in the story of the East India Company more than two centuries ago. In The Wealth of Nations (1776), Adam Smith used the East India Company as a case study to show how monopoly capitalism undermines both liberty and justice, and how the management of shareholder-controlled corporations invariably ends in "negligence, profusion and malversation". Yet nothing of Smith's scepticism of corporations, his criticism of their pursuit of monopoly and of their faulty system of governance, enters the speeches of today's free-market advocates.

Smith's vision of free trade entailed firm controls on corporate power. And, as did his own times, subsequent history shows how right he was. If it is to contribute to economic progress, the corporation's market power has to be limited to allow real choice, and to prevent suppliers being squeezed and consumers gouged. Its political power also needs to be constrained, if it is not to rig the rules of regulation so that it enjoys unjustified public subsidy or protection. Internal and external checks and balances must curb the tendency of executives to become corporate emperors. And clear and enforceable systems of justice are necessary to hold the corporation to account for any damage to society and the environment. These are tough conditions, and have rarely been met, either in the age of the East India Company or in today's era of globalisation. Today, we can see the East India Company as the first "imperial corporation", the very design of which drove it to market domination, speculative excess and the evasion of justice. Like the modern multinational, it was eager to avoid the mere interplay of supply and demand. It jealously guarded its chartered monopoly of imports from Asia. But it also wanted to control the sources of supply by breaking the power of local rulers in India and eliminating competition so that it could force down its purchase prices. By controlling both ends of the chain, the company could buy cheap and sell dear. This meant organising coups against local rulers and placing puppets on the throne. By the middle of the 18th century, the company was deliberately breaching the terms of its commercial concessions in Bengal by trading in prohibited domestic goods and selling its duty-free passes to local merchants. Combining economic muscle with extensive bribery and the deployment of its small but effective private army, the company engineered a series of "revolutions" that gave it territorial as well as economic control. After Robert Clive's victory at the Battle of Palashi in 1757, the company literally looted Bengal's treasury. It loaded the country's gold and silver on to a fleet of more than a hundred boats and sent it downriver to Calcutta. In one stroke, Clive netted a cool 2.5m (more than 200m today) for the company, and 234,000 (20m) for himself. Historical convention views Palashi as the first step in the creation of the British empire in India. It is perhaps better understood as the company's most successful business deal. It was the unrivalled quality and cheapness of textiles that had lured the East India Company to Bengal, and it would be Bengal's weavers who felt the full force of the company's new-found market power. Never rich, the weavers nevertheless had a better standard of living than their counterparts in 18th-century England. At a time when the British state was intervening on the side of the employer - for example, to set maximum levels for wages - India's weavers were able to act collectively, aiding their ability to negotiate favourable prices. But the East India Company eliminated the weavers' freedom to sell to other merchants, and so crushed their limited but important market autonomy. It imposed prices 40 per cent below the market rate, and enforced them with violence and imprisonment. Many weavers were driven to despair. One account reports that, among the winders of raw silk, "instances have been known of their cutting off their thumbs to prevent their being forced to wind silk". As the company transformed itself from a modest trading venture into a powerful corporate machine, so its systems of governance completely failed to cope with the new responsibilities

that it faced. As Philip Francis, one of its leading critics, put it, in- stead of seeking "moderate but permanent profit", the company had recklessly pursued "immediate and excessive returns". Corruption assumed epidemic proportions and speculation overtook its shares, stoked up by insider trading led by Clive and other executives. In the history of financial crises, the South Sea Bubble is often regarded as the only premodern crash worthy of note. But the East India Company also engineered its own stock-market boom, ending in a share-price slump that rocked the world. The company's share price doubled in the decade following Palashi, stoked by ever more extraordinary acquisitions, such as the takeover of Bengal's entire tax system in 1765. In London, the company's management and shareholders fought for control of a money machine they believed would yield unlimited returns. A swarm of "bulls" and "bears" descended on the company's shares, with shareholders voting for a doubling of the annual dividend from 6 to 12 per cent in order to cash in on the new-found wealth. This upward spiral of "infectious greed" - to use a phrase employed by Alan Greenspan, chairman of the US Federal Reserve, more than two centuries later - came to an end in May 1769 when news of renewed conflict in India reached the London markets. The share price fell 16 per cent in a single month, and would continue a downward course for the next 15 years, reaching the depths in July 1784 after a fall of 55 per cent. Yet the human tragedy was just beginning. In Bengal, the annual monsoon rains had failed. But what turned a manageable natural disaster into a catastrophe was the manipulation of local grain markets by East India speculators, driving up the price of food beyond the reach of the poor. "As soon as the dryness of the season foretold the approaching dearness of rice," went one eyewitness account, "our Gentlemen in the Company's service were as early as possible in buying up all they could lay hold of." The situation was compounded by the company's decision to increase the rate of tax to ensure that revenue levels remained stable. Estimates vary, but up to ten million people may have died of starvation. When the full story became known in Britain, there was fury at the firm's negligence. As Horace Walpole wrote at the time: "We have murdered, deposed, plundered, usurped - nay, what think you of the famine in Bengal, in which millions perished, being caused by a monopoly of provisions by the servants of the East Indies." The company's fortunes had now turned sharply downwards. By the end of 1772 it was, in effect, bankrupt. A final slump in its shares precipitated a Europe-wide financial crisis, and forced the company, begging for a bailout, into the arms of the government. But not only was the East India Company the mother of the modern multinational corporation, it also stimulated one of the first movements for corporate reform. Well-versed in the history of the Roman Republic, Britain's elite feared that, just as the proceeds of Rome's conquest of Asia (western Anatolia) had been used to subvert its ancient freedoms, so the company's takeover of Bengal would bring despotism back home. If left unchecked, argued one editorial, the company could "repeat the same cruelties in this island which have disgraced humanity and deluged with native and innocent blood the plains of India". Prior to his conservative turn during the French revolution, Edmund Burke pressed repeatedly for the company to be made accountable to parliament and for its system of exploitation to be ended. "Every rupee of profit made by an Englishman is lost for ever to India," he concluded, a

judgement that would probably be echoed today by millions of people working at the wrong end of the multinational bargain. All the tools with which we are now familiar were deployed to tame the firm: codes of conduct for company executives, rules on shareholder abuse, government regulation, and ultimately, as with so many failed firms, nationalisation. Government intervention over a hundred years transformed the company from a purely commercial institution to an agent of the British state. It was only in the wake of the great rebellion against company rule, which shook northern India in 1857-58, that its anachronistic position as a profit-making ruler was put to an end. Direct control of the company's territories passed to the crown, and the British Raj was born. Yet in spite of all the parliamentary inquiries and waves of regulation, few of the company's executives were ever brought to book. Clive narrowly escaped parliamentary censure in 1773, only to die by his own hand. Parliament then turned its attention to Warren Hastings, governorgeneral of Bengal, voting twice to recall him for mismanagement. Both times this was rebuffed by the company's shareholders and, as a last resort, and at Burke's instigation, the medieval practice of impeachment was revived and used against him. Among the charges was that Hastings had introduced a company monopoly over the production of opium and, in an attempt to smuggle the crop into China, had awarded the contract at a knock-down price to the son of the East India Company chairman, who promptly sold it on for a tidy profit. Hastings was also the first to seek deliberately to break China's ban on the importation of opium. His attempt failed, but would be pursued by his successors, with tragic consequences. Burke won Commons majorities in support of his case, and in February 1788, the trial of Hastings began in the Lords with Burke delivering a four-day opening speech against him. What makes Burke's challenge to Hastings and the East India Company so compelling are the principles on which it was based. "The laws of morality," he declared, "are the same everywhere . . . there is no action which would pass for an act of extortion, of peculation, of bribery, and oppression in England, that is not an act of extortion, of peculation, of bribery, and oppression in Europe, Asia, Africa and the world over." Against the relativism that increasingly viewed India as an inferior land in which different standards of justice should apply, Burke unfurled the standard of absolute values, protesting against "geographical morality". In the heat of his reactions to the French revolution, Burke would oppose Tom Paine's Rights of Man. But in the case against Hastings, Burke argued for companies to be judged by their respect for what we would understand as universal human rights. The trial was interrupted, first by George III's madness and then by the French revolution. After eight long years, Hastings was acquitted of all charges, a result that surprised nobody, given the political complexion of the Lords. Yet there is one instance where the company's impunity was broken. In 1774, a group of Armenian merchants launched a civil case for damages against Hastings's predecessor, Harry Verelst. Led by Gregore Cojamaul and Johannes Padre Rafael, the merchants alleged that Verelst had arbitrarily locked them up in Bengal six years earlier, confiscating their property and removing their freedom to trade. It is a testimony to the British legal system that in December 1774, the Lord Chief Justice decided in favour of the Armenians, judging that Verelst had been

guilty of "oppression, false imprisonment and singular depredations". Verelst had to pay 9,000 in damages, as well as full costs. Thousands of miles away from the scene of the crime, the principle of extra-territorial liability for corporate malpractice was established in 1770s London. Many in business regard the current upsurge of global litigation against corporations such as Talisman, Unocal and Shell as somehow new and unjustified. Yet Verelst's case provides a powerful precedent, demonstrating that more than 200 years ago, a senior executive of the world's first multinational was tried and found guilty of what we would now consider human rights abuses. It is not, however, Cojamaul's statue that stands outside the Foreign Office in Whitehall, but Robert Clive's. That such a rogue still has pride of place at the heart of government suggests that Britain has not yet confronted the connections between its corporate and imperial pasts. This is not mere forgetfulness, but the mark of a continued belief that the unrestrained pursuit of market power and personal reward is to be praised at the highest levels. In India, the East India Company's mismanagement remains part of the national consciousness; here, knowledge of the company's corruption and abuse is almost entirely lacking. We still do not recognise the "imperial gene" that remains at the heart of modern corporate design. Perhaps Nehru can help us. In The Discovery of India, he examined the consequences of England's long domination of India in terms of karma, the spiritual law of cause and effect. "Entangled in its meshes," he wrote, "we have thus struggled in vain to rid ourselves of this past inheritance and start afresh on a different basis." Independence was a necessary starting point for India, wrote Nehru, but Britain, too, needed to "start afresh". As we approach the 250th anniversary of Palashi, we do not need further glorification of the East India Company's contribution to consumerism or of the celebrity of its executives. We need an honest reckoning with the human costs of its quest for market domination.

ndian Multinationals in the World Economy Implications for Development

Editors: Jaya Prakash Pradhan Publishers: Bookwell Hard Bound Book (5" x 8"): Pages: xvii+263 2008 Edition ISBN: 978-81-89640-59-0 Price: Rs. 595.00 about the book Indian multinationals have been active in the world economy since early 1960s. However, their number and scale of operation have grown significantly in the last fifteen years or so. In the face of increasing global competition unleashed by extensive liberalization measures, Indian firms have adopted the strategy of outward foreign direct investment (OFDI) as an integral part of their business strategies. By undertaking greenfield OFDI and brownfield OFDI for acquiring foreign companies, Indian firms are enhancing their potential for growth and global competitiveness. Consequently, India has emerged as a major developing source country of FDI and Indian multinationals are likely to affect world development in several ways. The book analyses the phenomenon of Indian multinationals from both macro level factors and firm-level corporate strategies and examines its implications for India and host countries. A detailed investigation of Indian overseas investment flows and stocks from sectoral, regional, ownership and motivational perspectives provides a rigorous long-run coverage of Indian multinational firms from 1970s onwards. The role of innovation, entrepreneurial skills, scale of business, productivity, and government policies, received critical attention in explaining the emergence of Indian multinationals. The comprehensive quantitative and case studies approach offers valuable insights into the behaviour and impacts of these new global actors on home and host countries. This book offers a number of lessons to home country, host countries, and Indian enterprises becoming multinationals. With the growing global interest from policy makers, business practitioners, researchers, and students in Indian multinationals, this book would serve as an important and timely reading for all of them.

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