Hi friends How are you all? I hope you all are in the best of your health. A loads of questions arise before choosing a professional course for our future.
Some questions might be about the future company students want to work into. Students can either work in private companies, public companies or multinational companies.
So in this post we will answer every question which comes into a student’s mind about top 10 multinational companies. The first question that comes into mind is What is a Multinational Company?
MNC Full Form – Multinational Corporation (MNC)
MNCs – So today First of all we are talking about
1. What is a Multinational Company?
2. What are the features of MNCs?
3. top 10 multinational companies?
4. What are the advantages of MNCs in the Home Country?
5. What are the advantages of MNCs in the Host Country?
6. What are the Models of Multinational Companies?
7. List of the Top 10 Multinational Companies?
8. Read Also top 10 richest MNC’s
What is Multinational Corporations?
Multinational Corporations or Companies are corporate organizations that operate in more than one country other than home country.
A Multinational Corporation is usually a large corporation incorporated in one country which produces or sells goods or services in various countries.
MNCs may gain from their global presence in a variety of ways. These companies operate worldwide and hence are also known as global enterprises.
The activities are controlled and operated by the parent company worldwide. Products and services of MNCs are sold around various countries which require global management.
MNCs can benefit from the economy of scale by spreading R&D expenditures and advertising costs over their global sales, pooling global purchasing power over suppliers, and utilizing their technological and managerial know-how globally with minimal additional costs.
A Multinational corporation is a company incorporated in its home country but it carries out business operations beyond that country in many other foreign countries,
we call the host countries. Its head office will be in the home country. It maintains a central office located in one country,
What are the Features of MNCs?
1. High Turnover and Many Assets
To become a multinational corporation, the business must be large and must own a huge amount of assets, both physical and financial. The company’s targets are so high that they are also able to make substantial profits.
MNCs operate on a global scale which means they have huge assets in almost all countries in which they operate. Their turnovers can also be incomprehensibly large.
In relation to the previous point, the management of the offices in other countries is controlled by one head office located in the home country. Therefore, the source of command is found in the home country.
MNCs have unity of control. So while they have many branches in many countries , the main control will remain with the head office in its country of origin.
3. Technological Advantages
In order to do achieve substantial growth, they need to make use of capital-intensive technology, especially in their production and marketing.
MNC has at its disposal huge amounts of wealth and investments. This allows them to use the best technology available to boost their products and their company.
4. Aggressive Marketing
MNCs can spend a lot of their money on marketing, advertising, and promotional activities. They target an international audience, so effective marketing becomes necessary.
One of the most effective survival strategies of multinational corporations is spending a huge amount of money on marketing and advertising.
What are the advantages of MNCs?
Advantages of MNCs as per the Host Country:
1. Employment Generation
In terms of employment, multinational corporations hire local workers who know the culture of their place and are thus able to give helpful insider feedback on what the locals want.
2. Inflow of Foreign Capital
MNCs bring much needed capital for the rapid development of developing countries. In fact, with the entry of MNCs, inflow of foreign capital is automatic.
3. Optimal Use of Idle resources
Because of their advanced technical knowledge, MNCs are in a position to properly utilize idle physical and human resources of the host country. This results in the increase in National Income of the host country.
4. Improvement in Balance of Payment Position
MNCs help the host countries to increase their exports. As such, they help the host country to improve upon its Balance of Payment position.
5. Technical Development
MNCs are a vehicle for transferring the technical development from one country to another. Because of MNCs, underdeveloped host countries also start developing.
6. Managerial Development
MNCs employ latest management techniques. People employed by MNCs do a lot of research in management. In a way,
they help to professionalize management along latest lines of management theory and practice. This leads to managerial development in host countries.
7. End of Local Monopolies
The entry of MNCs leads to competition in the host countries. Local monopoliesof host countries either start improving their products or reduce their prices.
Thus MNCs put an end to exploitative practices of local monopolists. As a matter of fact, MNCs compel domestic companies to improve their efficiency and quality.
Advantages of MNCs as per the Home Country:
1. MNCs usually get raw materials and labour supplies from host countries at lower prices; specially when host countries are backward or developing economies.
2. MNCs can widen their market for good by selling in host country and increase their profits. They usually have good earnings by way of dividends earned from operations in host countries.
3. Through operating in many countries and providing quality services, MNCs add to their international goodwill on which they can capitalize, in the long-run
4. MNCs make their home countries very rich by their revenues. The corporation will collect fees, royalties, profits, charges from all their host countries and bring them back to the home country. This huge inflow of foreign exchange is very beneficial to the home country.
5. It provides means of co-operation between developed countries and developing countries or under developed countries. This allows both to be beneficial from the partnership.
6. MNCs also promote bilateral trade relations between countries. This is beneficial to both the countries and the global market and economy. Read Also Top 10 best USA Survey Job
Models of Multinational Companies
There are three types of models of the formation of Multinational Corporations that are listed below:
When companies put up an executive headquarters in its home country and then build various manufacturing plants and production facilities in other countries than it is the centralized model.
Its most important advantage is being able to avoid tariffs and import quotas and take advantage of lower production costs.
The regionalised model states that a company keeps its headquarters in one country that supervises a collection of offices that are located in various countries. Unlike the centralized model,
The regionalized model includes subsidiaries and affiliates that all report to the headquarters.
When A parent company operates in the home country and puts up subsidiaries in different countries than it is the Multinational model of the company.
The difference is that the subsidiaries and affiliates are more independent in their operations.