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8/2/2019 Multi National Corporations
http://slidepdf.com/reader/full/multi-national-corporations 1/13
Multi-national corporations
MNC’S &
foreign Collaborations
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A multinational corporation (MNC) is
a corporation or an enterprise thatmanages production or delivers servicesin more than one country.
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Types of MNC’s
Horizontally integrated multinationalcorporations
Vertically integrated multinationalcorporations
Diversified multinational corporations
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8/2/2019 Multi National Corporations
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What is FOREIGN DIRECT
INVESTMENTFDI occurs with the purchase of“physical assets or a significant
amount of ownership (stock) of acompany in another country in orderto gain a measure of managementcontrol.”
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• An investor or investment fund that is registered in acountry outside of the one in which it is currently
investing. Institutional investors include insurancecompanies, pension funds and mutual funds etc.
• The term is used most commonly in India to refer to
outside companies investing in the financial markets ofIndia. International institutional investors must registerwith the Securities and Exchange Board of India toparticipate in the market.
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Foreign collaboration
• Collaboration meaning- working jointly onan activity, venture or a project.
• Joint participation of foreign and domestic.
• There are three kinds –
• Joint participation between private parties
• between foreign firms and Indian government
• between foreign government and Indiangovernment
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Two types of foreign collaborations
Financial collaboration (foreign equity participation)where foreign equity alone is involved
Technical collaboration (technology transfer)involving licensing of technology by the foreign
collaborator on due compensation.
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Main role of SEBI
• INVESTOR PROTECTION
• REGULATORY ROLE
• DEVELOPMENTAL ROLE
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Segments of the capital market
Investors
Capital seekers
Regulatory bodies
The stock exchange
The registered intermediaries
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Following are the reasons why multinationalcompanies consider India as a preferreddestination for business:
Huge market potential of the country
FDI attractiveness
Labor competitiveness
Macro-economic stability
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Advantages of MNC's in
India
Increase in job opportunities
Better and cheaper products will be available
to the consumers The government will also benefit by earning
more in taxes etc
It will lead to an increase in infrastructureimprovement
Di d t f MNC’ i
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Disadvantages of MNC’s in
India
MNC’s create monopolies in the market andeliminate local competitors.
MNC’s may create depletion of resources dueto its continues use by these overseascompanies.
MNC’s generally carry out their R&D in their
home country and supply to the host country.
MNC’s generally import huge raw materialsdue to its continuous use by these overseas
companies.