Subject Name : Business Organization and Structure

Subject Code : 04LS1104

Guided by
Dr. Navjyot Raval

Students Name : Akshay Vadodariya - 91900425206

Smit Gadhiya - 91900425083
Dhruv Sojitra - 91900425086
Jainith Siroya - 91900425120
Krish Sakhiya - 91900425113
Bhautik Ramoliya - 91900425199
Somil Santoki - 91900425130

Basic Information Of Multi-National

Company

BBA Hons - I , Division - B

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 Meaning :

With this ease of formation and establishment, there come accounting complexities and
problems. One of the main complications in dealing with multinational corporations is
accounting for and planning around foreign currency exchange rates.

Most countries have their own form of currency that fluctuates with the market and political
climate in their country. Multinational companies must keep these changes in mind when
doing any type of business abroad.

According to the United Nations, the largest 100 multinational corporations control about
40% of global trade.

For the past 100 years, the vast majority of the world’s largest multinational companies have
been either Western European (Volkswagen, Nestle, BP), American (Ford, Coca-Cola,
Procter & Gamble) or Japanese (Toyota, Sony, Mitsubishi).

Since the turn of the century, new multinationals have emerged in other regions, such as in
South Korea (Samsung and Hyundai), Mexico (Grupo Bimbo, Cemex), and China (Lenovo,
Huawei).

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 Defination :

“A multinational company is a business that operates in many different countries at the same
time. In other words, it’s a company that has business activities in more than one country.”

“A multinational company, known more commonly as a multinational corporation or

transnational corporation in North America, is a business with branches, offices or production
facilities in more than one country.”

" A MNC is a business which owns or controls production or service facilities outside the
country in which it is based. "

" Multinational corporation (MNC) is a enterprise that manages production or delivers

services in more than one country can also be referred to as an international corporation. "

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 Advantages :

1. Efficiency

In terms of efficiency, multinational companies are able to reach its target markets more
easily because they manufacture in the countries where the target markets are. Also, they can
easily access raw materials and cheaper labor costs.

2. Development

In terms of development, multinational corporations pay better than domestic companies,

making them more attractive to the local labor force. They are favored in some way by the
government because they also pay local taxes, which help boost the country’s economy.

3. Employment

In terms of employment, multinational corporations hire local workers who know the culture
of their place and are thus able to give helpful insider feedback on what the locals want.

4. Innovation

As multinational corporations employ both locals and foreign workers, they are able to come
up with products that are more creative as a result of their convergence..

5. Proper Use of Idle Resources:

Because of their advanced technical knowledge, MNCs are in a position to properly utilise
idle physical and human resources of the host country. This results in an increase in the
National Income of the host country.

6.Technical Development:
MNCs carry the advantages of technical development 10 host countries. In fact, MNCs are a
vehicle for transference of technical development from one country to another. Because of
MNCs poor host countries also begin to develop technically.

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7. Improvement in Standard of Living:
By providing super quality products and services, MNCs help to improve the standard of
living of people of host countries.

8. Promotion of international brotherhood and culture:

MNCs integrate economies of various nations with the world economy. Through their
international dealings, MNCs promote international brotherhood and culture; and pave way
for world peace and prosperity..

9. Managerial Development:
MNCs employ latest management techniques. People employed by MNCs do a lot of
research in management. In a way, they help to professionalize management along latest lines
of management theory and practice. This leads to managerial development in host countries.

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 Disadvantages :-

1. High Profit Low Risk Investment:-

The multinational company prefer to invest in areas of low risk and high profitability. Issue
like social welfare, national priority etc. have less priority on their agenda. Mostly they invest
in consumer goods industry.

2. Interference in Political Matters:-

The multinational company from developed countries interfere in the political affairs of
developing nations. There are many cases where multinational company has bribed political
leadership for their own economic gains.

3. Create Artificial Demand:-

These companies create artificial and unwarranted demand by making extensive use of
advertising and ales and promotion techniques.

4. Exploitation:-
These companies are financially very strong and adopt aggressive marketing strategies to sale
their products, adopt all means to eliminate competition and create monopoly.

5. Technological Problem:-
Technology they use is capital intensive so sometimes that technology does not fully fit in the
needs of developing countries. Also, multinational company is criticized for transferring
outdated technology to developing countries.

6. Foreign Exchange go outside the Country:-

The working of multinational company is a burden on the limited resources of developing
countries. They charge high price in the form of commission and royalty paid by local
business subsidiary to its parent company. This leads to outflow of foreign exchange.

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7. National Threat:-
Sometimes outdated technology is used by domestic industries which hamper the quality and
price of their products so they cannot compete with those multinational company. Hence,
there is a threat of nationwide opposition to multinational company. Arrival of these
companies creates an atmosphere of uncertainly to the domestic industries.

8. Impose their Culture:-

Multinational company impose their culture on developing countries. Along with the
products they also indirectly impose the culture of developed nations. These companies have
imposed the culture of fast food and soft drinks onto the developing nations. For examples:-
burger and coke.

9. Work for Self Interest:-

Multinational company work toward their own self interest rather than working for the
economic development of host country. They are more interested in marketing of profits at
any cost.

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 Filling Procedure Of Tax :-

➢ Indian taxation system is divided into two types: One is direct taxes and other is
indirect taxes.

➢ Talking about direct taxes, it is levied on the income that different types of business
entities earn in a financial year.

➢ There are different types of taxpayers registered with income tax department and they
paid taxes at different rates.

➢ For e.g. An individual and a company being a taxpayer are not taxed at the same rate..

➢ Therefore, Direct taxes are again subdivided as:

Income Tax:
This tax paid by the taxpayers other than companies registered under company law in
India on the income earned by them. They are taxed on the basis of slabs at different
rates.

Corporate Tax:
This tax is paid by companies registered under company law in India on the net profit
that it makes from businesses. It is taxed at a specific rate as prescribed by the income
tax act subject to the changes in the rates every year by the IT department.

CORPORATE TAX IN INDIA

Domestic as well as foreign companies are liable to pay corporate tax under the
income tax act. While a domestic company is taxed on the income earned within India
I.e. is being accrued or received in India.

Domestic company:
Domestic company is one which is registered under the companies act of India and also
includes the company registered in the foreign countries having control and management
wholly situated in India. A domestic company includes private as well as public
company.

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Foreign company:
Foreign company is one which is not registered under the companies act of India and
has control & management located outside India.

What is meant as Income of the company?.

Before understanding about the rate of taxes and how will the tax be calculated on
income of the companies, we should learn about the types of income which a company
earn. Here it is:

1. Profits earn from the business

2. Capital gains

3. Income from renting property

4. Income from other sources like dividend, interest etc.

Tax rates applicable :-

• Health and Education Cess:

Further 4% of income tax calculated and applicable surcharge will be added to the
amount of total tax liability before this Cess.

• Minimum Alternate Tax (MAT)

Alternatively, all the companies (including foreign companies) are required to pay
minimum alternate tax at the rate of 18.5% on book profit if the tax calculated as per
above rates are less than 18.5% of book profit.

• Dividend Distribution Tax (DDT)

Companies are required to pay tax on the dividend distributed to the shareholder in a
particular year. This dividend is exempted in the hands of shareholder upto an amount
of Rs.10 lakh but the companies have to pay tax @ 20.56%.

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Everything About Filing income tax return :-

• Due date for filing income tax return :-

Companies including foreign companies have to file their income tax return on or
before September 30 every year. Even if the company came into existence during the
same financial year, then too, it has to file the income tax return for that period on or
before September 30.

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 Feature of a Multinational Company :-.

1. Very high assets and turnover

To become a multinational corporation, the business must be large and must own a huge
amount of assets, both physical and financial. The company’s targets are so high that they are
also able to make substantial profits.

2. Network of branches
Multinational companies keep production and marketing operations in different countries. In
each country, the business oversees more than one office that functions through several
branches and subsidiaries.

3. Control
In relation to the previous point, the management of the offices in other countries is
controlled by one head office located in the home country. Therefore, the source of command
is found in the home country.

4. Continued growth
Multinational corporations keep growing. Even as they operate in other countries, they strive
to grow their economic size by constantly upgrading and even doing mergers and
acquisitions.

5. Sophisticated technology
When a company goes global, they need to make sure that their investment will grow
substantially. In order to do achieve substantial growth, they need to make use of capital-
intensive technology, especially in their production and marketing.

6. Right skills
Multinational companies employ only the best managers who are capable of handling huge
funds, using advanced technology, managing workers, and running a huge business entity.

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7. Forceful marketing and advertising
One of the most effective survival strategies of multinational corporations is spending a huge
amount of money on marketing and advertising. It is how they are able to sell every product
or brand they make.

8. Good quality products

Because they use capital-intensive technology, they are able to produce top-of-the-line
products.

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 Examples:-

1. Microsoft Corporation

Microsoft was Founded by Bill Gates and Paul Allen on april 4, 1975. Its Headquarters is
Situated in Redmond , Washington , U.S. Its Revenue is US $125.8 Billion

2.Aditya Bila Group

Aditya Bila Group was Founded by Sheth Shiv Narayan Birla IN 1857. Its Headquarters is
Situated in Mumbai , India. Its Revenue is US $48.3 Billion. It operates in 34 countries with
more than 120,000 employees worldwide.

3. Canon

Canon was Founded by Takeshi Mitarai on 10 August,1937. Its Headquarters is Situated in

Tokyo , Japan. Its Revenue is US : $3.75 Trillion. Fujio Mitarai is CEO & Chaiman of
Canon.

4. Acer

Acer was Founded by Stan Shihon on 1 August,1976. Its Headquarters is Situated in Xizhi,
Taipei , Taiwan. . Its Revenue is US $7.67 Billion. In 2015 , It had 7967 Employees in
Worldwide.

5. Samsung

Samsung was Founded by Lee Kun-hee on 1 March 1938. Its Headquarters is Situated in
Seoul , South Korea. Its Revenue is US $210.9 Billion. Lee Kun-hee is Chairman of
Samsung.

6. DELL

DELL was Founded by Michael Dell on 1 February,1984. Its Headquarters is Situated in

Round Rock , Texas , U.S. Its Revenue is US $78.7 Billion. Michael Dell is CEO &
Chairman of DELL.

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7. Adidas

Adidas was Founded by Adolf Dassler on July,1924. Its Headquarters is Situated in

Herzogenaurach , Germany. Its Revenue is U.S. $23.98 billion. Igor Landau Is Chairman &
Kasper Rorsted is CEO of Adidas.

8. Sony

Sony was Founded by Masaru Ibuka & Akio Morita on 7 May,1946. Its Headquarters is Situated
in Minato , Tokyo. Its Revenue is yen$8.665 Trillion. Kenichiro Yoshida is CEO & Shuzo
Sumi is Chairman of Sony.

9. Tata

Tata was Founded by Jamsedji Tata in 1868. Its Headquarters is Situated in Bombay House,
Mumbai. Its Revenue is U.S. $110.7 Billion. Natarajan Chandrashekharan is Chairmen of
Tata Group.

10. Ford Motor

Ford Motor was Founded by 16 June,1903. Its Headquarters is Situated in Dearborn ,

Michigan , U.S. Its Revenue is US : $160.33 Billion. Jim Hackett is CEO of Ford Motors.

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