Chapter-1: An Overview of MNC
Multinational Corporation is a company that is headquarter in one country but has operations in one or more other countries. Because of huge potentiality of market in Bangladesh, there have been a good number of multinational corporations operating in Bangladesh both under manufacturing and service sector. Multinational Corporations (MNCs) have been playing an important role in the world economy and occupying a gigantic share of the world’s industrial investment, production, employment and trade. Although the multinational corporation took birth in the early 1860s, it was only after Second World War that the multinationals have grown rapidly. So far, The United Nations has identified over 60000 MNC and among them 500 are the largest.
Meaning of Multinational Corporations (MNCs):
Actually there is no universal definition of MNCs, however generally a multinational corporation is a company that is headquarter in one country but has operations in one or more other countries. As an ILO report (1973, p-3) observes, the essential nature of the multinational enterprises lies in the fact that its managerial headquarters are locate in one country (Home country). While the enterprise carries out operations in a number of other countries as well (Host countries).
According to, Leonard Gomes (1978)-
MNC is corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment. Farms that participate in international business, however large they may be solely by exporting or by licensing technologies are not multinational enterprises. To be a multinational company, five criteria must be met as mentioned by Jacques Maisonrogue, president of IBM world Trade Corporation:
It operates in many countries at different levels of economic development.
Its local subsidiaries are managed by nationals.
It maintains complete industrial organizations, including R&D a Manufacturing facilities, in several countries.
It has multinational central management.
It has multinational stock ownership.
Some times the word multinational corporation is used as transnational or global corporation. Apparently it seems to be similar, but a delicate difference is their. Transnational Corporation has got more than one headquarters. On the other hand Global corporation dose not have any specific headquartered and consider the entire world as a single, homogenous market.
Example of MNC Operating in Bangladesh:
British American Tobacco,
Glaxo Smith Kline,
Holcim, etc. are prominent.
Not only these companies but also their competitors also fighting in our market to capture the market share. As a result, to survive in the competitive market, all of these MNCs are trying to adjust their operation with the socio cultural environment of Bangladesh.
Arguments for MNCs:
Act as a vehicle of transferring technologies,
Kindle managerial revolution in the host countries through highly sophisticated management techniques
Also increase the employment and income to host countries
Help to improve lifestyle
Introduced with new products and services
Helps to create diplomatic relation.
Arguments against MNCs:
Do not consider the welfare of poor countries rather than focusing only profit maximization.
Sometimes they undermine national economic autonomy and control and their activities may be inimical to the national interests of host country
They may destroy competition and acquire monopoly powers which pose the risk that they may threaten the sovereignty of the host country.
Sometime they try to change host country’s own socio culture.
Reasons for Becoming MNCs:
To diversify them-selves against the risks and uncertainties of the domestic...
Bibliography: • Lesiker, Raymond V. and Marie E. Flatley, Basic Business Communication, 9th Ed., (International), New Delhi, McGraw-Hill Companies Inc., 2004.
• Kotler, Philip, Marketing Management, the millennium edition, New Delhi, Prentice Hall of India Pvt. Ltd., 2000.
• Malhotra, Naresh K., Marketing Research, fourth edition, New Delhi, Pearson Education Pte. Ltd., 2004.
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