MULTINATIONAL CORPORATIONS : NEED OF MNC's IN INDIA MERIT AND DEMERIT OF MNC'S.

           A Multinational corporation at its simplest level can be defined as an entity that has its ambit of operation in more than one country with a general view of maximizing the profit and thus generating substantial revenues from the concerned economies. The differentiating point between a national corporation and a multinational corporation is their ambit of operation. Where on one hand , a national corporation defines it's operational area to be within the borders of a single state , a multinational corporation can spread it's functioning covering almost all major states/ countries around the globe. It can also be referred to as an international corporation because it's area of functioning is very wide and can include several major economies of the world.

          Some multinational corporation (MNCS) are really big with budget that exceeds some nation's gross domestic product (GDP) . Some of the well-known MNCs are MICROSOFT , TOYOTA , PEPSI , SOUTH -WEST AIRLINES , HEWLETT-PACKARD, WAL-MART and many more to add to the list. Multinational corporations can have a powerful influence in local economies ,and even the world economy , and thus they play an important role in international relations and globalization. MNC as a company that meets the following five criteria : 

   1. It operates in many countries at different levels of economic development .

   2. It's local subsidiaries are managed by nationals. 

   3. It maintains a healthy and complete organisational environment including research and development facility in different countries.

  4. It has a multinational central management.

  5. It has multinational stock ownership .

MULTINATIONALS IN INDIA : 

         Multinational in India was a thing that was never dream of a few decades ago . Earlier it was indeed difficult to even think of such entities in a country like India. But change is the only constant in nature and fortunately India , after 1991 , was about to have a taste of these huge corporations. The era after the year 1991 , is generally known as the era of liberalization . In India the era of post liberalization , i.e , after 1991 witnessed a huge influx of business operations in several states and gradually it gripped almost 70-75% of the Indian states. The performance and the operation of the MNC's is on its zenith in India with the advent of globalization and newer technologies everyday. 

        A common criticism against the MNCs is that they tend to invest in the low priority and high profit sectors in the developing countries , thus ignoring the national priorities . However , in India the government policy confined the foreign investment to the priority areas like high technology and heavy investment sectors that are of national importance , export sectors , etc . Firms that have been established in non-priority areas prior to the implementation of this policy have , however , been allowed to continue in those sectors. 

NEED FOR MULTINATIONALS IN INDIA : 

      It would be quite unwise to put just one reason forth and say that this is the reason why more and more multinationals are penetrating in India , India is undoubtedly a growing economy with a huge market potential and this is the reason behind multinational coming and operating in India every now and then . The Indian government , now - a - days , makes continuous efforts in order to attract more and more foreign investment by offering a relaxation in its stringent policies and ordinance. 

    Following are the most probable sighted reasons for kore and more multinationals coming to India every now and then and thus making it a preferred destination : 

   1. Huge market potential of the country.

   2. FDI liberalization and attractiveness .

  3. Macroeconomic stability , and 

  4. Labour competitiveness.

BENEFITS OF INCREASING MNC PARTICIPATION TO INDIA :

   1.  Bridging and reducing the foreign exchange and technological gap.

   2. Initiating a higher level of investment .

   3. Use of natural resources in true sense.

  4.  Boosts up the basic economic structure .

      Some of the examples of companies that entered the Indian market and captured a handsome number of consumer base , thus making increased profits are , 

NOKIA : In India , people with Nokia handsets are a common and daily sight. Today Nokia is a name that basks in its own glory. Nokia operates in the major metropolis in India. The success of Nokia is reflected in the fact that in and around the year 2004 Nokia had an employee count of around 450-500 people all over India but it soared over and above 14000 employees by the year 2018 . This was a big feat achieved by Nokia within auch a short period of time.

REEBOK : Reebok had a very tough beginning in India. Reebok turned over a new leaf when it came to India would be improbable because Reebok already enjoyed a good name in the other markets excluding India. But entering India required a lot more intelligent strategies to operate. They didn't leave any important sector unserved . And since then till date , Reebok enjoys a good image when it comes to purchasing sports shoes , flip flops , apparels ,etc. And therefore , India to them is a market of growing importance. Moreover the flourishing sports practices in India say like IPL , FOOTBALL , ETC have given Reebok ample opportunities to sponsor the same and thus promote it's product .

RANBAXY : Ranbaxy is the leading pharmaceutical firm in India established in the year 1967.  Operating across 45 countries and offering manufacturing facilities in 7 of them , thus multinational in India actually started off way back in 1947 . Since the operation of the company are spread across all the small and big cities of India the company enjoys a huge chunk of the indian population. Currently there are above 13000 employee of Ranbaxy all over the country . The profit earned by Ranbaxy laboratories in 2010 stood at around $ 327 million .

    MERITS OF MNCs : 

      1. MNCs are a source of integrating national income . 

     2.  MNCs enable the host countries to increase their exports and decrease their import requirements.

    3.  They help increase the investment level and thereby the income and employment in the host country.

    4. They have become vehicles for technology transfer , especially to the developing economies.

   5. They work to equalize the cost of factors of production around the world.

  6.  MNCs help increase competition and break domestic monopolies.

       DEMERITS OF MNCs : 

   1. MNCs retard growth of employment in the home country .

   2. The transfer pricing enables MNCs to avoid taxes by manipulating prices on intra company transactions.

   3. MNCs may destroy competition and acquire monopoly powers.

   4. The tremendous power of global corporations may threaten rhe sovereignty of nations in which they usually do business.

  5. Through their power and flexibility , MNCs can evade or undermine national economic autonomy and control , and their activities may be inimical to the national interests of particular economies.