Shikha Ojha

 

Shikha Ojha

 

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MNCs, TNCs, MNEs Organization structure, Merits & demerits. Global Manufacturing & SCM Global Human Resource Management

IB/ Sem II

6/20/2014

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Multihas National Corporation is a corporation that its management headquarters in one country, known as the home country , and operates in several other countries, known as host cou ntri ntries es

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Generally MNCs does not set up production facilities in host countries, they will source raw materials, semi finished goods & finished goods from host countries as well as, They sell finished goods in host countries.

IB/ Sem II

6/20/2014

3

 

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MNCs are national companies with foreign subsidiaries  MNCs tend to follow Autocratic control mechanism They are Ethnocentric in Nature They overlook national differences Ignores important local factors Believes in fulfillment of the objectives of home ◦

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country Thinks change is easy and can be force on people They employ most of the people from home country

IB/ Sem II

6/20/2014

4

 

Horizontally integrated Manage production establishments located in different countries to produce the same or similar products.(example: McDonald's) Vertically integrated It manages production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas) Diversified It manages production establishments located in different countries that are neither horizontally nor vertically nor straight, nor non-straight integrated. (example: Microsoft or Siemens A.G.) IB/ Sem II

6/20/2014

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Wipro Technologies

Aditya Birla Group Aluminum, Copper, Cement, Fertilizer, Textile, Fiber, etc. TATA Steel, Automobiles, Telecommunications, Software, Hotels, Consumer goods, Engineering Materials, Reliance Group energy and materials value chain Infosys Technologies Ltd. Global leader in the "next generation" of IT and consulting

IB/ Sem II

6/20/2014

6

 

Ford IBM British Petroleum Mc Donald’s  Phillips

largest MNCs

Wal-Mart Stores Exxon Mobil Royal Dutch Shell These companies have turnovers in excess of the GNPs of some countries.

IB/ Sem II

6/20/2014

7

 

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TNC It does not identify itself with one national home ◦

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TNCs spread out their operations in many countries. High levels of local responsiveness. An example of a TNC is Nestlé which employs senior executives from many countries. Tries to make decisions from a global perspective rather than from one centralized headquarters.

These companies follow Geocentric approach The control is not Autocratic Mainly the member countries of UNCTAD were using the term TNC since it was preferred in UNCTAD

IB/ Sem II

6/20/2014

8

 

1. host The country investment level, employment level, and increases due to the operation of income MNCs & level TNCs.of the 2. The industries of host country get latest technology from foreign countries through MNCs & TNCs. 3. The host country's business also gets management expertise from MNCs & TNCs. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNCs & TNCs. 5. MNCs & TNCs break local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R&D outcomes of MNCs & TNCs. 7. The host country can reduce imports and increase exports due to goods produced by MNCs & TNCs in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of MNCs & TNCs in the host country.

IB/ Sem II

6/20/2014

 

1. MNCs & TNCs create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people abroad. of home country both at home and 3. It gives a boost to the industrial activities of home country. 4. MNCs & TNCs help to maintain favorable balance of payment of the home country in the long run. 5. Home country can also get the benefit of foreign culture brought by MNCs & TNCs

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IB/ Sem II

6/20/2014

 

1. MNCs & TNCs may transfer technology which has become outdated in the home country. 2. As MNCs & TNCs do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNCs & TNCs may kill the domestic industry by monopolizing the host country's market. 4. In order to make profit, MNCs & TNCs 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.

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IB/ Sem II

6/20/2014

 

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MNE's are headquartered all over the world. Many of them are owned by a mixture of domestic and foreign stock holders. The Importance is more on local needs and demands They follow Polycentric approach Most the companies are operating todayof are either TNCs orwhich MNEs.

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IB/ Sem II

6/20/2014

 

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These are the new breed of multinational companies Enabled by Internet based communication too tools ls They start operating in different countries from the very early To begin with stages they are small businesses, the they y grow big with their operations in many countries in later stages Particularly software development companies & Service sector companies are good examples. The Style & structure of Management dependents the values, principles and objectives of the company

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IB/ Sem II

6/20/2014

 

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Manufacturing Configuration: ◦

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Centralized Regionalized Multinational Outsourced

Where to Manufacture ?  ?  ◦

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Country Factors : Differences in Political Economy, Factor Costs, Trade Barriers, Location Externalities, Exchange Rates. Technology Factors : Fixed Costs, Efficiency Scale, Flexible Manufacturing Technology.

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IB/ Sem II

6/20/2014

 

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Managing Global Supply Chain  Chain  ◦ ◦

Strategic Alliance with Suppliers ( OEM's) Role of JIT

sourcing raw materials and parts just as they are needed in the manufacturing process Spares the cost of storing large inventories Must develop solid supplier relationships May have to make concessions to foreign suppliers Typically implies sole sourcing Problematic if sole supplier is foreign ◦

Role of IT and Internet

EDI - links suppliers, customers, and third-party intermediaries to

expedite documents and financial flows. Links exporters with customs Drawbacks—limited, expensive, and inflexible ERP - software that can link information flows from different parts of a business and from different geographic areas Brings information together within the firm Unable to tie in the customer and take advantage of e-commerce

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IB/ Sem II

6/20/2014

 

TPL ( 3PL) : Functional, Sectorial & Geographical Integration. Is a firm that provides service to its customers of outsourced logistics services for part, or all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customers' needs based on market conditions and the demands and delivery service requirements for their products and materials.

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IB/ Sem II

6/20/2014

 

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Staffing Policy  Policy  ◦

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Ethnocentric Geocentric Polycentric

 Expatriate Employees Managers  Managers  ◦

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Expatriate Selection Expatriate Training Expatriate Compensation, Facilities & Benefits Expatriate Promotion.

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IB/ Sem II  

 

6/20/2014

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