Concept of Mnc Essay

10298 Words Jun 25th, 2012 42 Pages
CONCEPT OF MNC
A multinational corporation is an enterprise that carries on business operations in more than one country. It extends its manufacturing and marketing operations through a network of branches and subsidiaries which are known as its foreign affiliates. According to a report of international labour office the essential nature of multinational enterprises lies in the fact that its managerial headquarters are located in one country while the enterprise carries out operations in a number of other countries as well.´

CHARACTERISTICS OF MNC: * Large size * Worldwide operations * Centralized control * Sophisticated technology * Professional management * International market * High brand equity

ROLES
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* Through their power and flexibility, MNC’s can evade national economic autonomy & control, and their activities may be inimical to national income interests of particular countries. * MNCs retard growth of employment in home country. * MNCs technology is designed for world-wide Profit maximization, not the development needs of poor countries. In general, it is asserted, the imported technologies are not adapted to (a) Consumption needs (b) size of domestic markets (c) resource availabilities (d) stage of development of many of developing countries.
TYPES OF MNCS
Multinational corporations can be divided into three broad groups according to the configuration of their production facilities: * Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (Example: McDonalds) * Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas) * Diversified multinational corporations manage production establishments located in different countries that are neither horizontally nor vertically integrated. (example: Microsoft)
Over the last few decades, multinationals companies (MNCs) have become very powerful instruments for transfer managerial

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