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What is Globalization? Definition, Features, Types, Effects, and Factors

April 26, 2022 by Sujan
Page Contents
 What is Globalization?
 Characteristics of Globalization
 Types (Forms) of Globalization
o Economic Globalization
o Political Globalization
o Socio-Cultural Globalization
o Natural/Environmental Globalization
o Technological Globalization
 Effects of Globalization
o Positive Effects/Benefits:
 Growth in Trade
 Customer Supremacy
 Foreign Direct Investments (FDIs)
 International Cooperation
o Negative Effects/Drawbacks
 Threat to National Sovereignty
 Threat to Domestic Businesses
 Unequal Partnership
 Environmental Degradation
 Threat to Social and Cultural Values
 Driving/Promoting Factors of Globalization
o Status of Technology
o Liberalization of Cross-Border Trade and Resource Movement
o Services that Support International Business
o Consumer Pressure
o Global Competition
o Changing Political Situations
o Cross-National Cooperation

What is Globalization?

Globalization refers to the process of integration of the national economy with the
world economy. It integrates the nation’s economy and businesses and increases the
economic, socio-cultural, demographic, political, technological, and environmental
interdependence of different places around the world.

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Globalization is driven by international trade, investment, information technology, and a
free-market economic system. It has given the domestic market global competition.

It has integrated all nation’s economies and made the whole world a single marketplace
through liberalization and removal of trade barriers.

Globalization promotes interdependence between countries because it assumes no

single country can have its all needed products and services by itself. International
trades/sales are promoted and governments’ interventions have no stopping effects.
Mainly it includes:

 The economic interdependence of countries in the world.

 Integrating national economies into one global economy, and national
businesses into global businesses.
 Free movement of products and services across borders.
 Free flow of capital, labor, and technologies across the national borders.
 A process of not just integrating the economy but also culture, technology,
values, and governance.
Globalization is facilitated by global organizations like World Trade Organization (WTO),
International Monetary Fund (IMF), European Union (EU), World Bank (WB), etc., and
promoted by information technology. It transforms a local phenomenon into a global
phenomenon.

It has been understood differently by different professionals, some majors are:

 To a Business Executive: Globalization is a strategy to cross the national

boundaries through globalized production and marketing networks. This
includes import, export, direct investment, and collaborative strategies.
 To an Economist: Globalization is an economic interdependence between
countries in terms of the flow of technology, capital, and labor. With
lessening barriers and restrictions, the factors of production are moving
rapidly among the countries. It is promoting an integrated world economy.
 To a Political Scientist: Globalization is the integration of the world in
terms of ideas, norms, and values. The countries in the world are being
borderless in terms of political ideology.
It offers diversified products in a national economy and supports businesses to compete
in a free market. It has also been defined by many:

 Sundaram and Black – Globalization is the process by which an activity or

undertaking becomes worldwide in scope.
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  Zia Qureshi – Globalization is the growing international integration of
markets for goods, services, and capital.
 M.P. Todaro – Globalization is the increasing integration of national
economies into global markets.
 Slaughter and Swagel – Globalization is the international integration of
goods, technology, labor, and capital, that is firms implement global
strategies which link and coordinate their international activities on a
worldwide basis.
Characteristics of Globalization

It connects the world’s economies and promotes free trade of goods, services,
technology, capital, labor, norms, values, and political ideology across the globe.

There seems confusion about what is international business and globalization. The fact
is globalization is macroeconomic and international business is microeconomic.
International business covers the part of the transactions of goods and services and FDIs
internationally, on the other hand, globalization covers more than that.

Its features are what reflect what it is, some major characteristics are:

 Economy Integration. It integrates the national economy into the global

economy.
 Free Market Economies. There are no direct interventions of the
government to business rather it facilitates and regulates them.
 Free Movements of Products. Due to this different trade and tariff barriers
are cut down to promote the free flow of goods and services across the
countries.
 Free Flow of Factors of Production. Capital, Labor, technology, and
management are free to move.
 Standarized Technology. It promotes even forces to use standard
technologies in domestic businesses in order to compete in global
competition.
 Global Competition. Due to it, the competition is not limited to a country
but the whole world.
 Global Corporations and Image. It flourishes with the emergence of MNCs
like Apple, Microsoft, etc.
 Growth in Merger and Acquisitions. Both national and international
companies are offered for mergers and acquisitions.
 Change in Lifestyles. Since it has aviled quality products people’s lifestyles
and consumption and living standards have improved.

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Types (Forms) of Globalization

The main types of globalization are:

Economic Globalization

It is today’s most dynamic and dominant force in human life. Economic globalization
entails a growing number of globally interconnected marketplaces for products,
services, capital, and finance.

Liberalization, deregulation, privatization, and lower transportation and communication

costs are all part of economic globalization. Deregulation of foreign exchange leading to
full convertibility of money, as well as delicensing of merchandise trade, are some of the
other policies that have aided in igniting and speeding up the process.

Under the WTO rule, the global system for removing barriers to foreign exchange and
trade has thrived. The expansion of international corporations has also contributed to
the acceleration of this trend.

Political Globalization

It is a mutual framework in which countries exchange thoughts and ideas on how to

implement and bill policies, plans, and other implementations. There are discussions
among nations about the construction of a legal system, the protection of women’s
right to property, human and child rights, free media, sustainable development, a
decentralized government structure, and other topics.

Socio-Cultural Globalization

It’s a more multifaceted, reflecting, and refracted phenomenon. It is occurring as a

result of the global absorption of cultural values, beliefs, and customs via
communication technologies, media, tourism, and consumer habits, as well as the
international flow of ideas.

Mutual understanding, peaceful coexistence, and learning from one another are all
implications of cultural globalization. Tattoos on the exposed regions of the body are
becoming increasingly popular around the world.

Natural/Environmental Globalization

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It has evolved into a broad spectrum of solutions to the most serious and
unprecedented challenges of global warming, ozone depletion, acute biodiversity loss,
and trans-border pollution.

These situations have aided in the growth of unification among nations that have
reached an agreement and a new integration mindset. They are collaborating to protect
the global ecosystem by preventing further ecological damage.

Water management, sensible use of nonrenewable resources, wildlife management, air

pollution control, and other challenges have all become global issues that require
globalized solutions.

Technological Globalization

Technology has brought the world even closer together. Science, information
communication, and entertainment technologies have all witnessed enormous
advancements around the world. Production, operations, and communications
technology established in one region of the world become insanely globalized and used
in other parts of the world.

Effects of Globalization

It is globalization that is bringing the whole world into one forum. It has a number
of benefits or positive aspects but also has various drawbacks or negative impacts.

Positive Effects/Benefits:

The positive effects are mentioned below:

Growth in Trade

International trade is becoming more open as a result of globalization. The globalized

approach has resulted in a significant reduction in international trade obstacles. Import
and export trade volumes have both increased.

It also results in a more competitive business environment. It is possible to generate

high-quality goods and services. Trade’s significance to the economy is increasing. The
World Trade Organization (WTO) was established to facilitate global trade.

Customer Supremacy
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As a result, there is a lot of competition among business firms. It ultimately aids in the
improvement of product and service quality. Companies from the national level should
compete with those from other countries.

To increase client happiness and remain competitive, they must improve the quality of
their products. Customer supremacy is maintained in such a situation.

Foreign Direct Investments (FDIs)

Increased foreign direct investment is the result. The countries’ liberalized economic
policies create the conditions for capital to migrate from industrialized to developing
and impoverished countries.

Aside from technology, those countries are also receiving management systems. Foreign
direct investment (FDI) has long been a cornerstone of emerging and underdeveloped
countries’ economic development.

International Cooperation

Globalization promotes international cooperation through trade and economic

relationships. Such relationships are driven by multinational companies, reduced trade
barriers, and increased interdependence among the countries.

Negative Effects/Drawbacks

Some negative effects are:

Threat to National Sovereignty

MNCs are the drives of globalization. They are very powerful. They may attempt to
influence a country for their economic benefit. This may threaten national sovereignty.

Threat to Domestic Businesses

At the international level, it raises the level of competitiveness. Due to a lack of cash,
technology, and economies of scale, local enterprises may not be able to compete with
multinationals. Domestic enterprises, particularly cottage and small firms, may have
difficulties in such a circumstance.

Unequal Partnership
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It does not help all countries in the same way. It is said that only developed countries
can reap the benefits of globalization. The least developed countries may not be able to
fully benefit from globalization due to a lack of capital, technology, and other resources.
The wealthy are becoming wealthier, while the poor are becoming poorer.

Environmental Degradation

It may also result in the degradation of the environment. Multinational companies

operate operation in developing and least developed countries and exploit natural
resources. This may seriously threaten the biodiversity and environmental situation in
those countries.

Threat to Social and Cultural Values

Domestic countries are also negatively affected by the social and cultural environment
of globalization. Such as developing country Nepal has diverse social and cultural values
but due to this youngsters have given more focus to western cultures than their one.

Driving/Promoting Factors of Globalization

The main driving forces of globalization are mentioned below:

Status of Technology

Today the status of technology is sophisticated, advanced, and updated even emerging.
The expansion of the internet, the world wide web, communication, and transportation
technologies have affected globalization.

Due to this, the cost is reduced, and they enhance a manager’s ability to foreign
operations. Small companies can reach global customers and suppliers with the help of
the internet and WWW easily at a low cost.

Liberalization of Cross-Border Trade and Resource Movement

To protect its own industries, every country restricts the movement across its borders.
Over time, most governments have reduced restrictions on international movements of
products and services mainly for three reasons.

 Their citizens want a greater variety of goods and services at a lower price.
 Competition spurs domestic producers to become more efficient.

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  They hope to introduce other countries to lower their barriers in turn.
Services that Support International Business

Today we enjoy the benefits of different services which are produced by foreign
countries and companies. Financial and technology services are dominating the world.

For eg., Nike (US Company) sells sportswear to a French soccer/football team. As soon
as the shipment arrives at the French customer, a bank in Paris can collect payment in
Euros from the soccers team and pay Nike in US dollars through a US bank.

Consumer Pressure

Today customer pressures are high on the companies. They want quality products at
fewer costs. Due to the internet and WWW customers know more about which
products are where, quality, and prices already before such products entering in the
domestic market.

It gives companies under pressure to provide such products otherwise they will no
longer survive in the market due to international free trade.

Global Competition

Pressure, both present, and the potential of increased foreign competition can strongly
persuade companies to buy or sell abroad. Introducing products into markets that are
cheap, qualitative, and competitive with competitors is essential to be alive in the
international market.

Even in recent years more companies have merged & acquired foreign companies to
gain operating efficiencies and large global market shares and to gain competitive
advantages.

Changing Political Situations

The end of the Schism (difference in beliefs/opinion) between the non-communist world
and what was once the Communist world is a major reason for the expansion of
international business.

Following WWII, trade between the two worlds was minimal. Following the transition of
political and economic policies in the former Soviet Union, Eastern Europe, China, and
Vietnam, trade between those regions and the rest of the globe has flourished.
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The government has encouraged travel efficiency by enhancing airport and seaport
facilities, lowering the cost of sending goods abroad. The government now offers a
variety of services to assist domestic businesses in expanding their international sales.

Cross-National Cooperation

Governments have come to realize that their interest can be addressed through
international cooperation by means of treaties, agreements, and consultation. The
willingness to pursue such policies is due to the following:

 To join reciprocals advantages.

 To attack problems jointly that one country acting alone can’t solve.
 To deal with areas of concern that lie outside the territory of any nation.
Conclusion…

Globalization hence is the freeing of nations to join internationally consisting of different

commercial and non-commercial activities. Today globalization has become a
compulsion for the world. In fact, the world without globalization in this 21st century
can not be imagined.

matter 2

Main Objectives under Globalization** Globalization is the process of increasing

interconnectedness and integration of economies, cultures, and societies worldwide. It
is driven by advancements in technology, communication, transportation, and trade.
The main objectives under globalization include:
1. **Economic Growth and Development:** Globalization aims to promote economic
growth and development by expanding markets, increasing trade, and attracting foreign
direct investment (FDI). It enables countries to access new markets, technologies, and
resources, leading to increased productivity and higher living standards.
2. **Free Trade and Market Access:** Globalization seeks to promote free trade by
reducing barriers such as tariffs, quotas, and trade restrictions. It aims to create a level
playing field for businesses and facilitate the exchange of goods and services across
borders. Market access is crucial for countries to expand their export opportunities and
benefit from comparative advantages.

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3. **Efficiency and Specialization:** Globalization encourages countries to specialize in
producing goods and services in which they have a comparative advantage. This
specialization leads to increased efficiency, as countries can focus on producing what
they are best at and trade for other goods and services. It promotes the efficient
allocation of resources globally.
4. **Technology Transfer and Innovation:** Globalization facilitates the transfer of
technology, knowledge, and best practices across borders. It allows countries to adopt
and adapt new technologies, improving productivity, competitiveness, and innovation.
Technological advancements can lead to the development of new industries and the
transformation of existing ones.
5. **Cultural Exchange and Diversity:** Globalization promotes cultural exchange and
diversity by connecting people from different backgrounds, traditions, and beliefs. It
allows for the sharing of ideas, values, and experiences, fostering understanding and
tolerance. Cultural exchange can lead to the enrichment of societies and the
preservation of cultural heritage.
6. **Poverty Reduction and Social Welfare:** Globalization aims to reduce poverty and
improve social welfare by creating opportunities for employment, income generation,
and access to basic services. It can contribute to poverty reduction through increased
trade, investment, and economic growth.
7. **Environmental Sustainability:** Globalization recognizes the need for
environmental sustainability and aims to promote responsible and sustainable practices.
It encourages countries to address environmental challenges collectively, such as
climate change, pollution, deforestation, and resource depletion.
**NCERT Solutions - Liberalisation, Privatisation and Globalisation: An Appraisal**
NCERT Solutions provide a comprehensive appraisal of liberalization, privatization, and
globalization (LPG) in India. These solutions analyze the impact of LPG policies
implemented in the early 1990s and evaluate their outcomes. The key points covered in
the NCERT Solutions include:
1. **Background and Rationale:** The solutions provide an introduction to the LPG
policies and the reasons behind their implementation. It explains the economic crisis
faced by India in the late 1980s and the need for structural reforms to address the
challenges.
2. **Objectives and Impact:** The solutions discuss the objectives of the LPG policies,
such as promoting economic growth, attracting foreign investment, and improving

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efficiency. It analyzes the impact of these policies on various sectors of the economy,
including industry, agriculture, services, and employment.
3. **Sector-wise Analysis:** The solutions provide a sector-wise analysis of the impact
of liberalization, privatization, and globalization. It examines the changes in industrial
policies, trade and foreign investment regulations, agricultural reforms, and the growth
of the services sector.
4. **Social and Environmental Impacts:** The Upvote | 8 Reply Priyanshu Tiwari
answered • Sep 24 A country opting Globalization welcomes the other countries to
invest in them considering the domestic and international policies. It facilitates financial
flow,development in trade increase in employment opportunities.

matter 3
Impact of Globalisation on India

Globalization has been defined as the process of rapid integration of countries and
happenings through greater foreign trade and foreign investment. It is the process of
international integration arising from the interchange of world views, products, ideas,
and other aspects of culture.

What are the factors aiding globalization?

1) Technology: has reduced the speed of communication manifolds. The phenomenon

of social media in the recent world has made distance insignificant.

The integration of technology in India has transformed jobs that required specialized
skills and lacked decision-making skills into extensively defined jobs with higher
accountability that require new skills, such as numerical, analytical, communication, and
interactive skills. As a result of this, more job opportunities are created for people.

2) LPG Reforms: The 1991 reforms in India have led to greater economic liberalization
which has in turn increased India’s interaction with the rest of the world.

3) Faster Transportation: Improved transport, making global travel easier. For example,
there has been a rapid growth in air-travel, enabling greater movement of people and
goods across the globe.

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4) Rise of WTO: The formation of WTO in 1994 led to reduction in tariffs and non-tariff
barriers across the world. It also led to the increase in the free trade agreements among
various countries.

5) Improved mobility of capital: In the past few decades there has been a general
reduction in capital barriers, making it easier for capital to flow between different
economies. This has increased the ability for firms to receive finance. It has also
increased the global interconnectedness of global financial markets.

6) Rise of MNCs: Multinational corporations operating in different geographies have led

to a diffusion of best practices. MNCs source resources from around the globe and sell
their products in global markets leading to greater local interaction.

These factors have helped in economic liberalization and globalization and have
facilitated the world in becoming a “global village”. Increasing interaction between
people of different countries has led to internationalization of food habits, dress habits,
lifestyle and views.

Globalization and India:

Developed countries have been trying to pursue developing countries to liberalize the
trade and allow more flexibility in business policies to provide equal opportunities to
multinational firms in their domestic market. International Monetary Fund
(IMF) and World Bank helped them in this endeavour. Liberalization began to hold its
foot on barren lands of developing countries like India by means of reduction in excise
duties on electronic goods in a fixed time frame.

Indian government did the same and liberalized the trade and investment due to the
pressure from World Trade Organization. Import duties were cut down phase-wise to
allow MNC’s operate in India on equality basis. As a result globalization has brought to
India new technologies, new products and also the economic opportunities.

Despite bureaucracy, lack of infrastructure, and an ambiguous policy framework that

adversely impact MNCs operating in India, MNCs are looking at India in a big way, and
are making huge investments to set up R&D centers in the country. India has made a
lead over other growing economies for IT, business processing, and R&D investments.
There have been both positive and negative impacts of globalization on social and
cultural values in India.

IMPACTS OF GLOBALISATION IN INDIA

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Economic Impact:

1. Greater Number of Jobs: The advent of foreign companies and growth in

economy has led to job creation. However, these jobs are concentrated more in
the services sector and this has led to rapid growth of service sector creating
problems for individuals with low level of education. The last decade came to be
known for its jobless growth as job creation was not proportionate to the level of
economic growth.
2. More choice to consumers: Globalisation has led to a boom in consumer
products market. We have a range of choice in selecting goods unlike the times
where there were just a couple of manufacturers.
3. Higher Disposable Incomes: People in cities working in high paying jobs have
greater income to spend on lifestyle goods. There has been an increase in the
demand of products like meat, egg, pulses, organic food as a result. It has also led
to protein inflation.

Protein food inflation contributes a large part to the food inflation in India. It is evident
from the rising prices of pulses and animal proteins in the form of eggs, milk and meat.

With an improvement in standard of living and rising income level, the food habits of
people change. People tend toward taking more protein intensive foods. This shift in
dietary pattern, along with rising population results in an overwhelming demand for
protein rich food, which the supply side could not meet. Thus resulting in a demand
supply mismatch thereby, causing inflation.

In India, the Green Revolution and other technological advancements have primarily
focused on enhancing cereals productivity and pulses and oilseeds have traditionally
been neglected.

 Shrinking Agricultural Sector: Agriculture now contributes only about 15% to

GDP. The international norms imposed by WTO and other multilateral
organizations have reduced government support to agriculture. Greater
integration of global commodities markets leads to constant fluctuation in prices.
 This has increased the vulnerability of Indian farmers. Farmers are also
increasingly dependent on seeds and fertilizers sold by the MNCs.
 Globalization does not have any positive impact on agriculture. On the contrary,
it has few detrimental effects as government is always willing to import food
grains, sugar etc. Whenever there is a price increase of these commodities.
 Government never thinks to pay more to farmers so that they produce more food
grains but resorts to imports. On the other hand, subsidies are declining so cost
of production is increasing. Even farms producing fertilizers have to suffer due to

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 imports. There are also threats like introduction of GM crops, herbicide resistant
crops etc.
 Increasing Health-Care costs: Greater interconnections of the world has also led
to the increasing susceptibility to diseases. Whether it is the bird-flu virus or
Ebola, the diseases have taken a global turn, spreading far and wide. This results
in greater investment in healthcare system to fight such diseases.
 Child Labour: Despite prohibition of child labor by the Indian constitution, over
60 to a 115 million children in India work. While most rural child workers are
agricultural laborers, urban children work in manufacturing, processing, servicing
and repairs. Globalization most directly exploits an estimated 300,000 Indian
children who work in India’s hand-knotted carpet industry, which exports over
$300 million worth of goods a year.

Socio-Cultural Impact on Indian Society

Nuclear families are emerging. Divorce rates are rising day by day. Men and women are
gaining equal right to education, to earn, and to speak. ‘Hi’, ‘Hello’ is used to greet
people in spite of Namaskar and Namaste. American festivals like Valentines’ day,
Friendship day etc. are spreading across India.

 Access to education: On one hand globalisation has aided in the explosion of

information on the web that has helped in greater awareness among people. It
has also led to greater need for specialisation and promotion of higher education
in the country.
 On the flip side the advent of private education, coaching classes and paid study
material has created a gap between the haves and have-nots. It has become
increasingly difficult for an individual to obtain higher education.
 Growth of cities: It has been estimated that by 2050 more than 50% of India’s
population will live in cities. The boom of services sector and city centric job
creation has led to increasing rural to urban migration.
 Indian cuisine: is one of the most popular cuisines across the globe. Historically,
Indian spices and herbs were one of the most sought after trade commodities.
Pizzas, burgers, Chinese foods and other Western foods have become quite
popular.
 Clothing: Traditional Indian clothes for women are the saris, suits, etc. and for
men, traditional clothes are the dhoti, kurta. Hindu married women also adorned
the red bindi and sindhur, but now, it is no more a compulsion. Rather, Indo-
western clothing, the fusion of Western and Sub continental fashion is in trend.
Wearing jeans, t-shirts, mini skirts have become common among Indian girls.
 Indian Performing Arts: The music of India includes multiples varieties of
religious, folk, popular, pop, and classical music. India’s classical music includes

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 two distinct styles: Carnatic and Hindustani music. It remains instrumental to the
religious inspiration, cultural expression and pure entertainment. Indian dance
too has diverse folk and classical forms.
 Bharatanatyam, Kathak, Kathakali, Mohiniattam, Kuchipudi, Odissi are popular
dance forms in India. Kalarippayattu or Kalari for short is considered one of the
world’s oldest martial art. There have been many great practitioners of Indian
Martial Arts including Bodhidharma who supposedly brought Indian martial arts
to China.
 The Indian Classical music has gained worldwide recognition but recently,
western music is too becoming very popular in our country. Fusing Indian music
along with western music is encouraged among musicians. More Indian dance
shows are held globally. The number of foreigners who are eager to learn
Bharatanatyam is rising. Western dance forms such as Jazz, Hip hop, Salsa, Ballet
have become common among Indian youngsters.
 Nuclear Families: The increasing migration coupled with financial independence
has led to the breaking of joint families into nuclear ones. The western influence
of individualism has led to an aspirational generation of youth. Concepts of
national identity, family, job and tradition are changing rapidly and significantly.
 Old Age Vulnerability: The rise of nuclear families has reduced the social security
that the joint family provided. This has led to greater economic, health and
emotional vulnerability of old age individuals.
 Pervasive Media: There is greater access to news, music, movies, videos from
around the world. Foreign media houses have increased their presence in India.
India is part of the global launch of Hollywood movies which is very well received
here. It has a psychological, social and cultural influence on our society.
 McDonaldization: A term denoting the increasing rationalization of the routine
tasks of everyday life. It becomes manifested when a culture adopts the
characteristics of a fast-food restaurant. McDonaldization is a
reconceptualization of rationalization, or moving from traditional to rational
modes of thought, and scientific management.
 Walmartization: A term referring to profound transformations in regional and
global economies through the sheer size, influence, and power of the big-box
department store WalMart. It can be seen with the rise of big businesses which
have nearly killed the small traditional businesses in our society.

Psychological Impact on Indian Society

 Development of Bicultural Identity: The first is the development of a bicultural

identity or perhaps a hybrid identity, which means that part of one’s identity is
rooted in the local culture while another part stems from an awareness of one’s
relation to the global world.
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  The development of global identities is no longer just a part of immigrants and
ethnic minorities. People today especially the young develop an identity that
gives them a sense of belonging to a worldwide culture, which includes an
awareness of events, practices, styles and information that are a part of the
global culture. Media such as television and especially the Internet, which allows
for instant communication with any place in the world, play an important part in
developing a global identity.

A good example of bicultural identity is among the educated youth in India who despite
being integrated into the global fast paced technological world, may continue to have
deep rooted traditional Indian values with respect to their personal lives and choices
such as preference for an arranged marriage, caring for parents in their old age.

1. Growth of Self-Selected Culture: means people choose to form groups with like-
minded persons who wish to have an identity that is untainted by the global
culture and its values. The values of the global culture, which are based on
individualism, free market economics, and democracy and include freedom, of
choice, individual rights, openness to change, and tolerance of differences are
part of western values. For most people worldwide, what the global culture has
to offer is appealing. One of the most vehement criticisms of globalization is that
it threatens to create one homogeneous worldwide culture in which all children
grow up wanting to be like the latest pop music star, eat Big Macs, vacation at
Disney World, and wear blue jeans, and Nikes.
2. Emerging Adulthood: The timing of transitions to adult roles such as work,
marriage and parenthood are occurring at later stages in most parts of the world
as the need for preparing for jobs in an economy that is highly technological and
information based is slowly extending from the late teens to the mid-twenties.
Additionally, as the traditional hierarchies of authority weaken and break down
under the pressure of globalization, the youth are forced to develop control over
their own lives including marriage and parenthood. The spread of emerging
adulthood is related to issues of identity.
3. Consumerism: Consumerism has permeated and changed the fabric of
contemporary Indian society. Western fashions are coming to India: the
traditional Indian dress is increasingly being displaced by western dresses
especially in urban areas. Media- movies and serials- set a stage for patterns of
behavior, dress codes and jargon. There is a changing need to consume more and
more of everything.

Globalisation is an age old phenomenon which has been taking place for centuries now.
We can experience it so profoundly these days because of its increased pace. The
penetration of technology and new economic structures are leading to an increased

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interaction between people. As with other things there have been both positive and
negative impacts on India due to it.

Conclusion: We cannot say that the impact of globalization has been totally positive or
totally negative. It has been both. Each impact mentioned above can be seen as both
positive as well as negative. However, it becomes a point of concern when, an
overwhelming impact of globalization can be observed on the Indian culture.

Every educated Indian seems to believe that nothing in India, past or present, is to be
approved unless recognized and recommended by an appropriate authority in the West.
There is an all-pervading presence of a positive, if not worshipful, attitude towards
everything in western society and culture, past as well as present in the name of
progress, reason and science. Nothing from the West is to be rejected unless it has first
been weighed and found wanting by a Western evaluation. This should be checked, to
preserve the rich culture and diversity of India.

matter 4

Multinational Corporation | Definition, Objectives, Problems, Advantage & Disadvantage

Contents :

 Meaning and Definition of Multinational Corporations.

 Objective of Multinational Corporations.
 Advantages and Disadvantages of Multinational Corporations.
 Problems of Multinational Corporation.
 Performance of Multinational Corporation.
What is Multinational Corporations ?

Multinational companies (MNCs) as is evident from their name are those companies
which are having their business in more than one country, in our daily life we hear about
many such companies and also use their products in our daily life. They
include Ranbaxy, Wipro, Tata Motors, Asian Paints, Moser Baer, Cadbury, Coca
Cola, Ponds, Sony, Flat, Samsung, etc. They are those multinational companies whose
products are used in almost all the households.

17
Meaning of Multinational Corporations

A multinational company is that company which is registered in one particular country

but whose products are produced and sold in various other countries. They are also
called Global Corporations. An enterprise operating in several countries but managed
from one (home) country. Generally, any company or group that derives a quarter of its
revenue from operations outside of its home country is considered a multinational
corporation. There are four categories of multinational corporations:
(1) a multinational, decentralized corporation with strong home country presence,
(2) a global, centralized corporation that acquires cost advantage through centralized
production wherever cheaper resources are available,
(3) an international company that builds on the parent corporation's technology or
R&D,
(4) a transnational enterprise that combines the previous three approaches.
According to UN data, some 35,000 companies have direct investment in foreign
countries, and the largest 100 of them control about 40 percent of world trade.

Definitions of Multinational Corporation

ILO Report :
"The essential nature of the multinational enterprises lies in the fact that the managerial
quarters are located in one country (referred to for convenience as the home country)
while the enterprise carries out operations in a number of other countries as well".
IBM World Trade Corporation President :
"A multinational corporation is the one that :
1. Operates in many countries.
2. Carries out research, development and manufacturing in those countries,
3. Has a multinational management and
4. Has a multinational stock ownership."

Objectives of Multinational Corporations

1. To expand the business beyond the boundaries of the home country, where they
were originally established.
2. Minimize the cost of production, especially the labour cost.

18
 3. Capture the lucrative foreign market against international competitors.
4. Avail the competitive advantage internationally.
5. Achieve greater efficiency by producing in local markets and then exporting the
products.
6. Make the diversification intentionally effective so that a steady growth of
business could be achieved.
7. To safeguard the company's interest in order to get behind the tariff walls.
8. Make the best use of technological advantages by setting up production facilities
abroad.
9. Establish an international corporate image.
10. Counter the regulatory measures in the parent country.
Advantages of a Multinational Corporation

The merits of a multinational corporation may be enumerated as follows :

1) Research and Development Activities :

Developing countries lack in research and development areas. Expenditure
on research and development is essential for the promotion of technology.
Multinational corporations have greater capability for research and development
activities in comparison to national companies. Multinationals survive in the
international market through their advanced research and development activities.

2) Far-reaching effects on the economic, social and political conditions of the host
country :
Multinational corporations provide a number of benefits to the host country in the form
of :
a) Economic growth;
b) increased profits ;
c) Developing of new products;
d) Reduced operational costs;
e) Reduced labour costs;
f) Changing social and political structure, etc.
Thus, it helps in the exploitation of resources of host countries for their own economic
advancement.

19
3) Product Innovation :
Multinational corporations have research and development departments engaged in the
task of developing new products, diversification in the product line, etc. Their
production opportunities are far greater as compared to national companies.
4) Marketing Superiority :
Multinational corporations enjoy market reputations and face less difficulties in selling
their products by adopting effective advertising and sales-promotion techniques.
5) Financial Superiority :
Multinational corporations generate funds in one country and use such funds in another
country. They have huge financial resources at their disposal as compared to national
companies. Moreover, multinational corporations have easier access to external capital
markets.
6) Technological Superiority :
Multinational corporations can participate in the industrial development programmes of
underdeveloped countries because of their technological superiority. They can produce
goods having international standards and quality specifications by adopting the latest
technology. Generally, multinationals transfers technology through joint venture
projects.
7) Potential Source of Capital and Advanced Technology :
Economically backward countries invite multinational corporations as a potential source
of capital and advanced technology to generate economic growth and to create
employment opportunities.
8) Expansion of Market Territory :
Multinational corporations enjoy extension of activities beyond the geographical
boundaries of their countries. Multinational corporations can enhance their
international image by expanding their operations activities.
9) Creating Employment Opportunities :
Increase in the scale of operations results in more job opportunities. The entry of
multinational corporations helps in creating employment opportunities in production
and marketing activities.
10) Lower Cost of Production :

20
Multinational corporations carry on operations on a large-scale, which ensure
economics in material, labour and overhead costs.

Disadvantages / Criticisms of Multinational Corporation

The demerits of a multinational company are as follows :

1) Disregard of National Priorities :

MNCs disregard the national priorities of the host country. They invest only in
most profitable sectors e.g. consumer goods.
2) Obsolete Technology :
There is always a danger that a multinational may provide back-dated technology.
3) Excessive Remittance :
A large amount of financial resources flow out from the host country by way of payment
of dividend royalty, technical fees, interest, profits etc. to the foreign investors. Thus, if
affects the foreign exchange reserves and balance of payments of host countries
adversely.
4) Creation of Monopoly :
A multinational company extends oligopolistic practices in the host country by acquiring
big business houses. A multinational company does everything possible to eliminate any
actual or potential competition. After eliminating the competition, a multinational
company starts exploiting consumers by raising prices and lowering the quality of
products.
5) Restrictive Clauses :
Due to their strong bargaining power, MNCs introduce restrictive clause in collaboration
agreement e.g. technology cannot be passed on to third parties etc.
6) Threat to National Sovereignty :
Due to huge capital resources and technical power, a multinational company has a
tendency to influence the decisions of the government of host countries. There is
always a danger to the independence of host countries.
7) Own Culture :
MNCs usually vitiate the cultural heritage of host country promoting their own culture.
For example, MNCs have encouraged the consumption of soft drinks etc.
8) Depletion of Natural Resources :

21
MNCs exploit the resources of the host country to maximize their global profits and not
to maximize the welfare of the host country. MNCs also cause rapid depletion of some
of the non-renewable natural resources in host countries.
Problems of Multinational Corporations

1) The Global Economic Slowdown :

India is hit by the global recession. This is primarily visible in an increase in lay
offs in the export sector where orders have shrunk. Another important change is
the difficulty of finding external financing, on which Indian multinational
firms have become increasingly dependent. Tata is reported to be looking for ways
of sustaining its recent acquisitions and Reliance Industries is said to be looking for
takers for some of its overseas investments.
The Indian IT industry is also hit hard, with almost half its export revenues coming from
the UUS market and in particular the financial markets, which is the epicenter of the
recession. The economic slowdown may however not be such a catastrophe for India as
for many other countries. First, the banking system of India seems to be in reasonably
good shape, and due to a semi-insulated rupee, a strong internal market and the fall in
oil prices, the Indian economy is predicted to grow at about six percent during 2009.
While it is a down-ward revision from the earlier projected nine percent it is, of course,
very good compared to many European economies Second, a global recession can also

22
increase the pressure on cost across the world, which would provide a business
opportunity for Indian firms.
2) Increasing Competition :
India has become a very important destination for most global firms, and in particular
in ICT. While this is good for the economy and for overall economic efficiency, it means
that the earlier fairly safe home market of Indian firms now is contested. IBM,
Accenture and EDS together have 1,00,000 employees in India. This means that they are
one third as big as the big five Indian firms. As the Indian market develops it will become
more competitive and less of a captive market for Indian firms.
3) Talent Crunch :
One result of the expansion of the Indian economy is a serious shortage of talent. This
may sound paradoxical in one of the largest countries in the world, but more and more
sectors are reporting difficulties in recruiting what they need. Indian IT firms are
currently recruiting abroad, in Russia, the Philippines and other places. The rapid inflow
of global firms in combination with a poor supply through higher education and an
unresponsive government has led to this almost crisis situation. There is now a
national mission on upgrading of vocational schools that is planned by the central
government and that will work on a joint venture basis. It is however a long time in the
making. Meanwhile there are a number of private alternatives that are developing from
the private education systems of the large firms (in-house universities) to public-private
partnerships where firms take Over and run government-owned training centers and
schools.
4) Global firms require global management :
There are currently few Indian managers with international management experience.
There is no quick fix for this situation, but there is a functioning international market for
management. Indian industry is currently so hard up for good managers that, according
to local Swedish multinationals, it is as expensive or even more to recruit an Indian
manager as to bring in a Swedish expatriate to manage Indian operations. This is shown
in an increase in hiring of expatriates to run firms both in India and abroad. From only a
handful of expatriate managers in Indian firms in 2003, the latest estimation is about 5
000 in 2007. An outcome of this shortage of management capability is probably the
currently observed'so & acquisition strategy of many Indian multinational firms as they
may have difficulties in finding replacement managers.

23
5) Governance Framework :
The biggest challenge that most multinational companies face is the unique architecture
of the Indian governance framework, which is badly intertwined between the Central
and State structures. Hence, the attractiveness of contiguity of geography needn't
enable simplicity of market access, and may not even offer benefits of scale due
to logistics optimisation. The reasons are simple. State laws and incentives are
structured to attract investments which local leadership see as critical to driving
economic growth, and are also dependent on electoral constituencies of ruling
parties. It's not uncommon for neighbouring State Governments to have vastly differing
legislations on labour, land acquisition, commercial taxes, prioity sector categorisation
for incentives, and intrastate movement of goods.
These come into play in a substantial way when planning investments in India. Very
often, companies get lured with incentives and/or hinterland market access, yet realise
much later that it doesn't translate to improved returns on capital employed. A lassic
example is the currently applicable duty on automobiles, which includes customs
duty, CENVAT, excise duty, central sales tax, motor vehicles tax, passenger and goods
tax, state sales tax, and additional road user/toll taxes. All of which ensure that you
could buy a car manufactured in Gurgaon at a much cheaper price 2,000 km away in
Goa or Pondicherry. In addition, duties and levies see frequent changes in the Annual
Central and State budgets presentation exercise.

6) Policy Environment :
And not all MNCs are able to cope with the uncertainty and want of clarity around the
policy environment. A good example of the recent past is the telecom sector, which saw
a huge enthusiastic entry of large MNCS when the sector was opened up tor FDI, and
soon enough, many exited, thanks to the ever-changing policy framework. The few that
survived were mostly Indian, and earned good returns The boldest of them all,
Vodafone, a start-up MNC, continues to battle the Government in the Indian courts. The
risk of an uncertain regulatory environment eventually ensures that those who survive
usually do so with good returns. This brings us to an interesting conundrum, when we
compare ourselves with China.
While most statistics reveal that FDI in China is almost three times that of India, yet, in
terms of GDP growth, China delivers just a percentage point more than India.

24
Consequently, it may be assumed, with some degree of certainty that the return on
capital for investments, made by foreign firms in India is, on an average higher than
China. A recent McKinsey study showed that the nine market leaders by category in
India enjoyed a ROCE (Return on Capital Employed) of 48 per cent, and even the next 26
enjoyed a ROCE of 36 per cent. Implicit in the retun is the reward for managing the
regulatory risk.
Interesting inclusions in the list are Korean white-goods-maker LG and automobile giant
Hyundai, and Japanese automotive giant Suzuki. Surprisingly, these companies don't
enjoy market leadership in their very own home countries, which score far higher than
India in terms of 'ease of doing business' or 'starting up anew'. The one common theme
visible across these companies is their willingness to remain engaged with the
regulatory environment and manage the concomitant uncertainties. Their ability to win
includes, in large measure, their capacity to allow Scale to subsume the vagaries of an
uncertain political and regulatory environment.

7) Joint Ventures :
The coming decade will be a decade of momentous change, as India integrates better
with the global economy, focuses on driving greater competitiveness, and draws up a
policy framework to enable a more transparent governance structure. Those MNCs that
participate in this process are likely to position themselves more strongly to succeed,
compared to those that rely on local Indian partners or JVs. The reason isn't difficult to
fathom. Indian JV partners would be mostly family-owned or state PSUs, and, in most
cases, diversified. Consequently, they may often have competing priorities in leveraging
their relationship with the Government, and hence deferring to them for insights is
fraught with inherent risks. In fact, many a times these conflicting interests can make
the task of setting up a new business in India appear a lot more difficult than it might
actually be.

Performance of Multinational Corporations

A multinational enterprise (MNE) is a corporation or an enterprise that manages

production or delivers services in more than one country. It can also be referred to as an
international corporation. The International Labour Organisation (ILO) has defined an
MNC as a corporation that has its management headquarters in one country, known as

25
the home country, and operates in several other countries, known as host countries.
The Dutch East India Company was the first multinational corporation in the world and
the first company to issue stock. It was also arguably the world's first mega corporation,
possessing quasi-governmental powers, including the ability to wage war, negotiate
treaties, coin money, and establish colonies. The first modern multinational corporation
is generally thought to be the East India Company. Many corporations have offices,
branches or manufacturing plants in different countries from where their original and
main headquarters is located. Some multinational corporations are very big, with
budgets that exceed some nations GDPs Multinational corporations can have a powerful
influence in local economies, and even the world's economy, and play an important role
in international relations and globalisation.

Performance of MNC's :

An organisation becomes multinational only because of its operation in many countries.

After independence in India many multinational corporations have gained ground. Many
United States Companies also have entered and grab all Indian business. They have
made number of collaboration agreements with Indian business houses. The great
contribution made by Multinational Corporations to developing economics
Multinational Corporations have tremendous scope in the country like India which can
be evaluated as follows in terms of the contribution they make for the economic
growth.

1) Transfer of Technology :
Technological development and to manage successively with the social change and to
replace the obsolete technology is essential for any country. In developing country
technology transfer is must. Multinational are the most effective bridge for technology
transfer.

2) Core Sector Lines :

The core sector lines which require tremendous capital investment, latest technology,
foreign investment, even for 100 % participation, Multinational Corporations have a
very great role to play in this direction.

26
3) Export Oriented Industries and Latest Sophisticated Technology :
Multinational corporations have very great capability to fair share in highly export
oriented industries and latest sophisticated technology are left open as per the
Industrial and Industrial licensing policies even for 100% share of foreign investors.

4) Employment Opportunities :
Primary, secondary and tertiary sectors of Indian economy could not be provide
adequate gainful employment opportunities to all those who are available for
employment, due to this unemployment and full unemployment has become most
intense problems of densly populated country like India. Multinational Corporations
helps with extensive capital and technological resources are able to provide
employment opportunities for unemployed manpower.

5) Adequate Achievement :
In modem age innovation and invention and mechanization, computerization is most
important factors of industrial development. Multinational are able to gain all these
adequate achievements with their vast resources.

6) Corporate Objectives :
Improvements of existing products and matching the supply of goods and services with
the social and national needs for developed economies and developing economies. Due
to new techniques and methods which leads to large-scale production of new products.
In developed countries leads to definite approaches of business organisation to their
business by trial and error method for the scope of research and development activities,
For the achievement of corporate objective of their subsidiaries. Multinationals with
extensive exposure to new methods and techniques are bound to make use of the
same.

7) Increase Industrial Production :

For the economic growth the growth of output is an essential prerequisite. To increase
industrial production and national productivity multinational corporations can
substantial help.

27
8) Large Scale Production :
Multinational Corporations have greater degree of economies of large-scale production.

9) Profit Making Enterprises :

Multinational Corporations are highly profit-making enterprises they pay high rate of
dividend against equity, due to this ditution principle stressed in India, Indian citizens
make use of the opportunity to invest more in the business of multinational company.

10) Industrial Development :

Due to large scope of multinationals to help in a subsidiary way in India which would
help industrial development and better entrepreneur development.

11) Latest Technology :

Multinational Corporations provides new and latest products into the market, and due
to multinational corporations different extensive programme create an awareness to
raise to a higher rank or help to sell which warns ultimately help to bring about
improvement in the standard of living.

12) Manpower Development :

Multinational contributions can play fairly great role in development of the manpower.

13) Improvement in Balance of Payment :

Multinationals undertake profit making so it can make considerable amount of
contribution to national revenue (Government department) by way tax on certain goods
or imports and different duties which have ability for the improvement of balance of
payment position by increasing exports of the host countries.

matter 5
28
Multinational Corporations: Concept, Stages and Forms, Reasons for Growth, and
Criticism

What are Multinational Corporations?

A multinational corporation can be defined as a globally integrated production system,
wherein a parent corporation based in a specific country exercises ownership and
control. This parent corporation is predominantly managed by individuals who are
nationals of the country where it is domiciled. The multinational corporation consists of
several affiliated firms that are connected through shared functions and operate on a
global scale, even in diverse environments.
One distinguishing feature of multinational corporations is their broad ownership
structure and the implementation of a unified management strategy across their global
operations. These corporations play a significant role in shaping the world’s output and
international trade. Notably, a substantial number of top companies listed in Fortune
Magazine are multinational corporations, underscoring their immense influence on the
global economy.
Stages and Forms of Multinational Corporations
International business transactions can take place through various stages and forms, as
given below:
1. Licensing: This arrangement involves a contractual agreement between a host
country firm and a foreign company, granting the host firm the rights to
produce and sell products under a license provided by the foreign company.
The agreement may also include the transfer of technical expertise for a fixed
fee or ongoing royalties. For instance, companies in India often manufacture
and distribute products under licensed brand names from American and
English companies.
2. Management Contract: In this type of contract, a company operating in a
foreign country agrees to provide managerial talent to firms in less developed
nations. This allows for the exchange of managerial expertise, with Indian
companies, for example, offering their managerial skills to businesses in the
Middle East and Africa.
3. Turnkey Projects: This system involves a company offering comprehensive
services to a foreign company, starting from the initial stages of a project and
continuing until it becomes operational. These services include design,
construction, operation, and personnel training, providing a complete
package to the client.

29
 4. Joint Venture: This form characterizes collaboration between a domestic
company and a foreign firm or government. Companies can establish business
operations by forming a joint venture, leveraging the foreign firm’s
manufacturing capabilities and management expertise. Profits and risks are
shared between the partners. An illustration of a joint venture is the
partnership between Maruti Udyog and Suzuki Company of Japan.
5. Foreign Subsidiaries: Wholly owned branches of a parent company that
operates in different host countries fall under this category. While the parent
company’s headquarters are located in the home country, the subsidiaries
conduct day-to-day operations in a relatively independent manner. Policies
are typically set by the headquarters, but local managers are appointed to act
as contacts and liaisons with the subsidiaries. These subsidiaries are regarded
as integral parts of the parent company.
6. Global Company: This stage represents the final phase where overseas
operations are fully integrated, encompassing not only sales but also
production and other essential functions. This stage marks the emergence of
international management as a separate field of study, focusing on the
management challenges specific to multinational corporations.

Reasons for the Growth of Multinationals

The growth of multinational corporations can be attributed to several key factors, which
are outlined below:
1. Corporate Structure: The establishment of multinational corporations as
separate legal entities allows for effective control over subsidiaries located in
different nations.
2. Global Business Strategies: Advances in transportation and communication
have paved the way for multinational corporations to formulate and execute
global business strategies, expanding their reach across borders.
3. Concentration of Capital: Developed countries, such as the United States,
have witnessed the accumulation of significant capital funds, providing
multinational corporations with ample financial resources to support their
expansion efforts.
4. Market Expansion: As markets in developed countries mature, multinational
corporations seek opportunities in developing countries, where growing
markets offer potential for further growth and profitability.
5. Regional Markets and Free Trade Agreements: The emergence of regional
markets, like the European Common Market, along with the establishment of
free trade agreements between nations, has facilitated the growth and
operations of multinational corporations on a global scale.

30
 6. Competitive Advantage: Multinational corporations from developed
countries venture into international markets to capitalize on reduced
competition and the potential for higher profit margins.
7. Cost Efficiency: Seeking lower labor costs, multinational corporations
establish operations in developing countries abundant in labor resources,
enabling them to carry out labor-intensive operations more economically.
8. Access to Natural Resources: Multinational corporations pursue international
operations to gain access to untapped natural resources and other valuable
assets present in countries with unexplored wealth.
9. Expanded Market and Capital Access: Operating as multinational corporation
grants access to a broader customer base and provides enhanced
opportunities to tap into organized capital markets for funding growth
initiatives.
10. International Management Development: The availability of recruitment,
formal training, and development programs tailored for international
operations empowers multinational corporations to build a skilled workforce
capable of effectively managing global business challenges.
11. Advanced Accounting Techniques: Multinational corporations leverage
sophisticated accounting practices to ensure effective control, comparison,
and analysis of their operations across different locations.
12. Cost Optimization: By strategically shifting production and procurement to
low-cost areas in line with the principles of comparative advantage,
multinational corporations optimize their cost structures and enhance overall
competitiveness.
13. Influence and Power: The significant scale and impact of multinational
corporations afford them considerable influence over governments and
economies of smaller countries, enabling them to shape policies and
economic landscapes.
Criticism of Multinational Corporations
Critics have raised several concerns regarding multinational corporations, including the
following:
1. Neglect of Underdeveloped Areas: Multinationals are often accused of
prioritizing their interests and disregarding the industrialization and
development of backward regions in host countries. This selective focus may
hinder the growth of underdeveloped areas and limit the export market
potential of local units. Such misalignment of priorities creates tensions
between multinational corporations and the host nations.
2. Monopoly Power and Excessive Profits: Multinational corporations,
particularly in industries requiring substantial investments and technical
expertise, have faced criticism for their perceived monopoly power. This

31
 concentration of market control can lead to excessive profits and potentially
stifle the growth of local industries.
3. Limited Development of Local Talent: Critics argue that multinationals often
favor hiring individuals from their home countries for key managerial and
technical positions. This practice may limit opportunities for local talent to
receive training and development, hindering their professional growth.
Additionally, concerns arise regarding the potential exploitation of the host
country’s labor force through low wages and inadequate benefits.
4. Limited Technology Transfer: Multinationals have faced scrutiny for
maintaining research and development facilities primarily in their home
countries, resulting in limited sharing of advanced technology with host
nations. In some instances, outdated technology may be introduced instead.
This situation can create a technological dependency of host countries on
more advanced nations.
5. Inflationary Impact: Critics argue that certain multinational corporations,
through their control over key sectors and manipulation of interdependent
prices, can contribute to inflationary trends. Increases in the prices of their
products can have a cascading effect on the overall price levels within an
economy.
6. Diversion of Profits and Foreign Exchange Outflow: Concerns have been
raised regarding the repatriation of all profits generated by multinational
corporations to the parent company, limiting investment in local markets and
resulting in a significant outflow of foreign exchange resources.
7. Ethical Concerns and Political Influence: Instances of political corruption and
bribery involving multinational corporations have been reported, leading to
accusations of undermining democracy and influencing government policies in
host countries. Such actions raise ethical concerns and can have far-reaching
consequences.
8. Acquisition of Existing Firms: Multinationals have been criticized for entering
markets primarily through the acquisition of existing local firms rather than
making new productive investments. This practice may limit opportunities for
local entrepreneurs and potentially impede broader economic growth.

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matter 6

ROLE OF MULTINATIONAL CORPORATIONS

Multinational corporations (MNCs) are huge industrial organizations having a wide

network of branches and subsidiaries spread over a number of countries. The two main
characteristics of MNCs are their large size and the fact that their worldwide activities
are centrally controlled by the parent companies. Such a company may enter into joint
venture with a company in another country. There may be agreement among
companies of different countries in respect of division of production, market, etc. These
companies are to be found in almost all the advanced countries, with the USA perhaps
the biggest amongst them. Their operations extend beyond their own countries, and
cover not only the advanced countries but also the LDCs.

Many MNCs have annual sales volume in excess of the entire GNPs of the developing
countries in which they operate. MNCs have great impact on the development process
of the Underdeveloped countries.

Let us discuss the arguments for and against the operation of MNCs in underdeveloped
countries.

Arguments for MNCs(The positive role): The MNCs play an important role in the
economic development of underdeveloped countries.

1. Filling Savings Gap: The first important contribution of MNCs is its role in filling the
resource gap between targeted or desired investment and domestically mobilized
savings. For example, to achieve a 7% growth rate of national output if the required rate
of saving is 21% but if the savings that can be domestically mobilised is only 16% then
there is a ‘saving gap’ of 5%. If the country can fill this gap with foreign direct
investments from the MNCs, it will be in a better position to achieve its target rate of
economic growth.

2. Filling Trade Gap: The second contribution relates to filling the foreign exchange or
trade gap. An inflow of foreign capital can reduce or even remove the deficit in the
balance of payments if the MNCs can generate a net positive flow of export earnings.

3. Filling Revenue Gap: The third important role of MNCs is filling the gap between
targeted governmental tax revenues and locally raised taxes. By taxing MNC profits, LDC
governments are able to mobilize public financial resources for development projects.

33
4. Filling Management/Technological Gap: Fourthly, Multinationals not only provide
financial resources but they also supply a “package” of needed resources including
management experience, entrepreneurial abilities, and technological skills. These can be
transferred to their local counterparts by means of training programs and the process of
‘learning by doing’.

Moreover, MNCs bring with them the most sophisticated technological knowledge
about production processes while transferring modern machinery and equipment to
capital poor LDCs. Such transfers of knowledge, skills, and technology are assumed to be
both desirable and productive for the recipient country.

5.Other Beneficial Roles: The MNCs also bring several other benefits to the host
country.

(a) The domestic labour may benefit in the form of higher real wages.

(b) The consumers benefits by way of lower prices and better quality products.

(c) Investments by MNCs will also induce more domestic investment. For example,
ancillary units can be set up to ‘feed’ the main industries of the MNCs

(d) MNCs expenditures on research and development(R&D), although limited is bound

to benefit the host country.

Apart from these there are indirect gains through the realization of external economies.

Arguments Against MNCs(The negative role): There are several arguments against
MNCs which are discuss below.

1. Although MNCs provide capital, they may lower domestic savings and investment
rates by stifling competition through exclusive production agreements with the host
governments. MNCs often fail to reinvest much of their profits and also they may inhibit
the expansion of indigenous firms.

2. Although the initial impact of MNC investment is to improve the foreign exchange
position of the recipient nation, its long-run impact may reduce foreign exchange
earnings on both current and capital accounts. The current account may deteriorate as a
result of substantial importation of intermediate and capital goods while the capital
account may worsen because of the overseas repatriation of profits, interest, royalties,
etc.

34
3. While MNCs do contribute to public revenue in the form of corporate taxes, their
contribution is considerably less than it should be as a result of liberal tax concessions,
excessive investment allowances, subsidies and tariff protection provided by the host
government.

4. The management, entrepreneurial skills, technology, and overseas contacts provided

by the MNCs may have little impact on developing local skills and resources. In fact, the
development of these local skills may be inhibited by the MNCs by stifling the growth of
indigenous entrepreneurship as a result of the MNCs dominance of local markets.

5. MNCs’ impact on development is very uneven. In many situations MNC activities

reinforce dualistic economic structures and widens income inequalities. They tend to
promote the interests of some few modern-sector workers only. They also divert
resources away from the production of consumer goods by producing luxurious goods
demanded by the local elites.

6. MNCs typically produce inappropriate products and stimulate inappropriate

consumption patterns through advertising and their monopolistic market power.
Production is done with capital-intensive technique which is not useful for labour
surplus economies. This would aggravate the unemployment problem in the host
country.

7. The behaviour pattern of MNCs reveals that they do not engage in R & D activities in
underdeveloped countries. However, these LDCs have to bear the bulk of their costs.

8. MNCs often use their economic power to influence government policies in directions
unfavorable to development. The host government has to provide them special
economic and political concessions in the form of excessive protection, lower tax,
subsidized inputs, cheap provision of factory sites. As a result, the private profits of
MNCs may exceed social benefits.

9. Multinationals may damage the host countries by suppressing domestic

entrepreneurship through their superior knowledge, worldwide contacts, and
advertising skills. They drive out local competitors and inhibit the emergence of small-
scale enterprises.

matter 7

Impact of Multinational Companies on Host Countries

35
BUSINESS AND INTERNATIONAL ECONOMY, BUSINESS
MANAGEMENT AND ECONOMICS

A host country is a nation that allows a multinational company to set up operations in its
country. Multinational companies have varying impacts on host countries, some of
which are beneficial whilst others are detrimental.

Positive impact of multinational companies on host countries

There are many advantages for the host country to benefits from the presence of
multinational companies.

1. Job creation. Multinational companies create employment opportunities. They

also tend to pay more than local firms in host countries. Training programmes will
also improve the quality and efficiency of local workforce. Therefore, more of the
local workforce will be employed to work in the multinational companies.

Example 1: Volkswagen produces cars in Kaluga, Russia. The investment created more
than 3,500 jobs.
Example 2: Toyota’s investment in France created 2,000 direct jobs and conceivably
another 2,000 jobs in supporting industries.
Example 3: Audi produces cars in Győr, Hungary. As of 2018, this investment created
over 13,000 jobs.

2. Boost to the local economy. Multinational companies help to increase the value of
a country’s annual output by producing and selling high volume of products. They will
also boost export earnings for the host country by selling products abroad. This will
create consumption expenditure since more people are in paid employment, and
boost the host country’s Gross Domestic Product (GDP). Therefore, the overall
standard of living will be improved.

Example 4: Walmart, an American multinational retail corporation, operates a chain of

hypermarkets, discount department stores and grocery stores in the U.S. and other
countries around the world. Walmart has recorded the sales revenue of USD$559 billion
in 2020. This amount easily exceeds the Gross Domestic Product (GDP) of many
countries in the world. Walmart is also the world’s largest employer hiring around
2,300,000 workers in its stores.

36
 3. More TAX revenue for local governments. The income generated by the
multinational companies will be TAXable in the host country. The government in a
host country will receive more Corporate TAX revenues from any Net Profits Before
Interest and TAX made by multinational companies. Most of the multinational
companies tend to be highly profitable businesses year after year. This will lead to
more income for the government to spend on important public services such as
health care and education.

Example 5: The Net Profit Margin of multinational firms such as The Coca Cola Company
or McDonald's has been consistency exceeding 20% for many years. These companies
also record huge Annual Net Profits amounting to a few billion USD$, hence pay very
large Corporate TAXes.

4. Bringing new managerial skills and technology. Multinational companies

introduce new skills and technology in production processes to host countries. With
new ideas in management, and technology transfers, the efficiency of production in
the host country will be raised. Management expertise in the community will slowly
improve. Then, the foreign managers might be replaced by local staff once they are
suitably qualified.

Example 6: Japanese multinational firms have introduced quality management tools to

the rest of the world. These techniques of quality improvement such as Kaizen, Kanban,
Andon, Quality Circles or Total Quality Management (TQM) have been widely adopted
by many companies around the world.

5. Intensify competition – improved quality. With multinational companies on the

market, local businesses will be forced to improve their quality and productivity up to
international standards to compete with the multinationals. It is because without the
threat from multinational companies, domestic firms do not necessarily have the
incentive to be innovative or to respond to market forces. Higher competition will
lead to greater efficiency to the benefit of domestic customers.

6. Increase in choices of products. Domestic customers will have access to a greater

variety of goods and services as there is more competition. Therefore, customers will
be able to benefit from more choices. Also, due to competition and better production
methods, the quality of goods may be higher too.

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 7. Improvement of the country’s reputation. Multinational companies will invest in
foreign country that has a positive regulatory and economic environment. Usually,
governments of host countries provide incentives to multinational companies to set
up in areas with high unemployment and a plentiful supply of labour. This may
encourage other multinational companies to set up there as well.

8. Improvements in infrastructure. Very often, multinational companies have to

invest in transportation and communication networks as they produce and sell large
volumes of products. This may benefit everyone in the host country. New technology
and techniques that are being used by the multinational companies, as well as
advanced knowledge, will be shared with local employees. In that way, local
companies that will hire those workers in the future could learn from them and
improve.

9. Improvement of the balance of payments. Multinational companies with global

presence will export their good to other countries. Hence, exports of the host country
will increase. At the same time, imports may reduce as the multinational companies
may be able to provide the products to the domestic customers that were previously
imported. After all, the balance of payment of the host country will be improved.
Keeping balance of payment at the appropriate healthy level is one of the six
government objectives. It is because countries, the same as individual people, are not
able to spend more than they earn in the long run to sustain themselves without
borrowing. And borrowing, especially from other countries, is expensive.

10. Local suppliers can gain new customers. Local producers and suppliers are likely
to benefit from the increased presence of multinational companies in the country.
They will be supplying raw materials, components and finished goods, as well as
services, and this will generate additional jobs and higher sales revenues for those
suppliers.

Negative impact of multinational companies on host countries

However, it will not be all good news. The expansion of multinational corporations into
a country could lead to many drawbacks to the host country.

1. Exploitation of the local workforce. Some multinational companies have been

criticized for paying low wages to workers in poor countries. Especially, when the
host country faces high unemployment and workers are low skilled. Also, due to the

38
 absence of strict labor, and health and safety rules in some underdeveloped and
developing countries, multinationals can employ cheap labor for long hours with few
of the benefits that the staff in their home country would demand.

Example 7: Many clothing manufacturers have been facing accusations of employing

illegal child workers who produce their clothes in sweatshops and factories in South-
East Asia. This may lead to poor publicity and tarnished brand reputation globally.

2. Higher pollution and environmental damage. Pollution levels from manufacturing

plants in underdeveloped and developing countries might be at higher levels than
allowed in other developed countries. It might be because of many reasons.
Multinational companies aim to produce goods as quickly and as cheaply as possible,
and in doing so may ignore their impact on the environment. Also, it might be
because of slack rules of the host country’s government which does not insist on
environmentally acceptable practices. Otherwise, it may drive multinational
companies away.

3. Repatriation of profits to home countries. Many multinational companies send

back the profits that they earn in host countries to their home country. Profits may
be sent back to the country where the head office of the company is based, rather
than kept for reinvestment in the host nation. Whilst multinational companies can
create wealth in the host country, the profits are repatriated to the home country in
the end. This will leave the host country with very little financial benefit.

4. Exploitation of natural resources. Sometimes multinational companies set up their

operations in host countries, so that they can have easier and cheaper access to
natural resources. Extensive depletion of the limited natural resources of some
countries has been blamed on some large multinational corporations. The argument
is that they have little incentive to conserve these resources, as they are able to
relocate quickly to other countries once resources have run out. In the long-term this
may lead to scarcity of that natural resource in the host country. Anti-globalization
groups are concerned about the social responsibility of multinational companies in
their attempt to grow and exploit the planet’s scarce resources.

5. Less sense of Corporate Social Responsibility (CSR) and negative social

impact. Most of the multinational companies are Public Limited Companies. They are
mainly driven by profit as investors demand dividends and capital gains. Hence, they
may not pay much attention to health and safety of workers and customers, if the

39
 laws of the host country are not very strict. Host nations are often unable to control
the actions of large multinational companies, due to their sheer market power. The
marketing done by multinational companies can greatly affect the lifestyle, food
habits and culture of the host communities. This may mean that traditional products
and practices disappear leading to a reduction in cultural identity.

Example 8: From time to time, some of the multinational businesses from the West are
being accused in the media of imposing Western culture on other societies.
Example 9: After 2010, a few American companies including Google and Yahoo have
pulled out of China no longer providing services in The Middle Kingdom.

6. Small local companies may go out of business. Since multinational companies are
large and are experts in their area of operation, they are also cost-efficient. Usually,
they can provide better quality goods at lower prices. Local companies that provide
the same goods may suffer in such a case, therefore be squeezed out of business due
to inferior equipment and much smaller resources. Due to fierce competitive
pressures, domestic firms might be forced into reducing prices to remain
competitive.

7. Contributing to severe unemployment. Multinational companies are capable of

causing severe unemployment in the host country. It is because they are so good at
what they do that they can pose a threat to domestic businesses. In general,
competition can be good when it causes local firms to improve their performance.
But, competition can also be bad when domestic firms are unable to compete on
equal terms ending up with laying off redundant workers, or even having to shut
down the business in the worst-case scenario.

8. Intensified pressure on local governments. Many of the Foreign Direct

Investments (FDIs) made by multinational companies are huge amounting to
hundreds of millions of USD$. This will greatly affect the economic conditions of the
host country by positively contributing to the economic growth. However, there is no
free lunch. In exchange for this investment, multinational companies may try to lobby
and influence government policies that affect them in a favorable way. Hence, there
might be undue influence on local governments. This will not be good for the host
country in the long-term as the government may feel like its being held hostage by a
single company.

matter 8

40
Multinational Companies or Corporations (MNC)
Multinational Corporations or Multinational Companies are corporate organizations that
operate in more than one country other than home country. Multinational Companies
(MNCs) have their central head office in the home country and secondary offices, facilities,
factories, industries, and other such assets in other countries.

These companies operate worldwide and hence also known as global enterprises. The
activities are controlled and operated by the parent company worldwide. Products and
services of MNCs are sold around various countries which require global management.

High turnover and many assets, aggressive marketing are some of the features of
Multinational Companies. LTI, TCS, Tech Mahindra, Deloitte, Capgemini are some of the
examples of MNCs in India. Lets us understand the features, advantages of Multinational
Companies in detail.

Table of content

1 Suggested Videos

2 Multinational Companies or Corporations – MNC

2.1 Browse more Topics under Scales Of Business

3 Features of a Multinational Company – MNC

3.1 1. High Turnover and Many Assets

3.2 2. Control

3.3 3. Technological Advantages

3.4 4. Management by Professionals

3.5 5. Aggressive Marketing

4 List of Multinational Companies in India

5 Advantages of Multinational Companies – MNC’s

41
5.1 Merits of a Multinational Companies in a Host Country

5.2 Merits of Multinational Companies in the Home Country

6 Solved Question on Multinational Companies

Multinational Companies or Corporations – MNC

Multinational Corporation – MNC, the name in itself is pretty self-explanatory. It is a

company or a corporation that operates in many countries. So it has business activity in
more than one country at any given time.

So let us look at a more technical definition of an MNC. A multinational corporation is a

company incorporated in its home country (country of origin) but it carries
out business operations beyond that country in many other foreign countries, we call the
host countries. Its head office will be in the home country.

Browse more Topics under Scales Of Business

 What are Micro Enterprises?

 Small Scale Industries

 Role of SSI in Economy

 Large Scale Industries

 Public Enterprises and their Structures

 Development of Public Enterprises in India

Features of a Multinational Company – MNC

1. High Turnover and Many Assets

MNCs operate on a global scale. Which means they have huge assets in almost all
countries in which they operate. Their turnovers can also be incomprehensibly large. For
example, Apple has a market capitalization of 1 trillion dollars. This is bigger than the
entire economy of Saudi Arabia!

2. Control

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MNCs have unity of control. So while they have many branches in many countries, the
main control will remain with the head office in its country of origin. The business
operations in the host country have their own management and offices, but the ultimate
control will still remain at the head office.

3. Technological Advantages

As we saw earlier, an MNC has at its disposal huge amounts of wealth and investments.
This allows them to use the best technology available to boost their products and their
company. Most companies also invest huge money in their Research & Development
Department to invent and discover new technological marvels.

4. Management by Professionals

An MNC is run by very competent and capable individuals. They have suitable managers to
take care of their business operations, technology, finances, expansion etc. And they are
also able to attract the top talent to their corporations due to their resources and their
reputations.

5. Aggressive Marketing

MNCs can spend a lot of their money on marketing, advertising, and promotional
activities. They target an international audience, so effective marketing becomes
necessary. Aggressive marketing allows them to capture the market and sell their products
globally.

List of Multinational Companies in India

 Microsoft

 Apple

 LTI

 Deloitte

 Coca Cola

 TCS

 Accenture

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  IBM

 Capgemini

 Adidas
Learn more about Large scale industries here.

Advantages of Multinational Companies – MNC’s

As one can imagine, there are a lot of merits of having a multinational corporation exist
and function in an economy. They also bring many advantages to the consumers as well.
Let us see some merits of an MNC in both the host country and the home country.

Merits of a Multinational Companies in a Host Country

 One of the main advantages to the host country is that MNCs boost
their economic growth. They bring with them huge investments and capital.
And then through subsidiaries, joint ventures, branches, factories they
promote rapid industrial growth. In fact, MNCs are known as the messengers
of progress.

 A multinational corporation helps the technological growth of the country as

well. They bring new innovations and technological advancements to the host
country. They help modernize the industry in developing countries.

 MNCs also reduce the host countries dependence on imports. Imports reduce
while exports from the country see a rise.

 All MNCs have enormous capital and resources at their disposal. A good
portion of such resources is invested in R&D. This can be very beneficial to the
host countries where they set up their R&D facilities.

 Multinational corporations also promote maximum utilization of the country’s

resources. This, in turn, leads to economic development.

Merits of Multinational Companies in the Home Country

 MNCs make their home countries (country of origin) very rich by their
revenues. The corporation will collect fees, royalties, profits, charges from all
their host countries and bring them back to the home country. This huge
inflow of foreign exchange is very beneficial to the home country.

44
  MNCs provide a means of co-operation between developed countries and
developing or underdeveloped countries. This allows both to benefit from
the partnership.

 And these multinational corporations also help promote bilateral trade

relations between countries. This is beneficial to both the countries and the
global market and economy.

Solved Question on Multinational Companies

Q: Are there any demerits of a Multinational Corporation?

Ans: Yes, an MNC also has a few disadvantages to deal with. Here are a few examples,

 A multinational corporation only has a profit motive. Their interests may not
align with the national interests of the host country and be harmful to their
economy and development

 In some host countries, the presence of MNCs can restrict competition and
may even cause a monopoly or monopolistic competition.

 They also charge heavy fees and charges in their host countries. And move all
the profits to their home country. This outflow of foreign exchange can be
detrimental to the host country.

 They also use tactics like transfer pricing to avoid heavy tax liabilities
Share with friends

matter 9

45
Top 12 Successful MNC Companies in India

Dev Gupta
Jul 25, 2023 — 15 min read
Top MNC in India
India has been a hub for international businesses for several decades, and the presence
of multi-national companies in India has played a crucial role in boosting the country's
economy. The Indian market offers a vast consumer base and a skilled workforce,
making it an attractive destination for MNCs to set up shop. In recent years, the Indian
economy has seen significant growth, and several multinational corporations have
contributed to this growth through their success in various sectors.

In this article, we will take a closer look at the top 12 successful multi-national
companies in India that have made their mark in the Indian market.(To understand the
work culture of various companies we have read the reviews on Glassdoor and Indeed)

Top Multinational Companies In India

COMPANY
INDUSTRY HEADQUARTERS
NAME
Tata Group Conglomerate Mumbai, India
Aditya Birla
Conglomerate Mumbai, India
Group
Infosys Information Technology Bangalore, India
HCL Technologies Information Technology Noida, India
Wipro Information Technology Bangalore, India
Google India Technology Bangalore, India
Amazon India Retail/E-commerce Bangalore, India
Apple India Technology Bangalore, India
Microsoft India Technology Hyderabad, India
Nestle India Food and Beverage Mumbai, India
Information Technology, Consumer
IBM Mumbai, India
Hardware

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 COMPANY
INDUSTRY HEADQUARTERS
NAME
Coca Cola Consumer Goods Gurgaon, India

1. Tata Group
2. Aditya Birla Group
3. Infosys
4. HCL Technologies
5. Wipro
6. Google India
7. Amazon India
8. Apple India
9. Microsoft India
10. Nestle India
11. IBM
12. Coca Cola

1. Tata Group
COMPANY NAME TATA GROUP
Founder Jamsetji Tata
Founded 1868
US$128 billion
Revenue
(2022)
Number of
935,000 (FY 2022)
Employees
Tata Logo

When it comes to multi-national companies in India, the Tata Group is a name that
needs no introduction. Founded in 1868 by Jamsetji Tata, the company has been a
symbol of trust and reliability in the Indian market for over a century.

With a presence in 100+ countries across six continents, the Tata Group has established
itself as a global player in various sectors, including steel, automotive, hospitality, and
more. Their headquarters is in Mumbai, and the group employs over 9,00,000 people
worldwide, making it one of the largest employers in India.

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These include Tata Consultancy Services, Tata Motors, Tata Steel, Tata Chemicals, Tata
Consumer Products, Titan, Tata Capital, Tata Power, Indian Hotels, Tata
Communications, Tata Digital, and Tata Electronics.

These subsidiaries operate in various sectors such as IT services, automotive, steel,

chemicals, consumer goods, retail, financial services, power, hospitality,
telecommunications, and digital technologies. The wide range of businesses under Tata
Group has made it one of the largest and most diversified corporate entities in India.

Work Culture:

Talking about the work culture, most of the employees on Indeed and Glassdoor said
that their managers respect them. They are able to manage work-life balance easily. The
working environment is challenging and new opportunities are given to employees to
upscale themselves. Colleagues are supportive and salaries are given on time. Although
some employees felt that the decision-making process of the company is a bit slow.

2. Aditya Birla Group

COMPANY NAME ADITYA BIRLA GROUP
Founder Seth Shiv Narayan Birla
Founded 1857
Revenue US$60 billion (2022)
Number of
140,000 (2022)
Employees
Aditya Birla Group

Aditya Birla Group is a global conglomerate that operates in 36 countries in North and
South America and Africa. Seth Shiv Narayan Birla founded this company in 1857. Over
140,000 employees are a part of this ever-growing company. The company is
headquartered in Mumbai.

We all famously know Aditya Birla Group for its subsidiary company UltraTech Cement
Limited which is the largest manufacturer of cement in India.

Although the company has spread its footprints across different sectors like chemicals,
metals, pulp, financial services, fashion retail, textiles, carbon black, telecom and fibre
and renewable energy.

48
Work Culture:

The working environment is friendly and employees have the freedom to share ideas.
The company believes in work-life balance. Employees are also able to learn a lot of new
things. Although many of them felt that the work pressure is a bit high. Salaries are not
as per industry standards.

3. Infosys
COMPANY
INFOSYS
NAME
N.R Narayan Murthy, Nandan M. Nilekani, S. Gopalakrishnan,
Founder
S.D. Shibulal, K. Dinesh, N.S. Raghavan, Ashok Arora
Founded 1981
Revenue US$16 billion (2022)
Number of
335,186 (2022)
Employees
Infosys

Infosys Limited is an Indian multinational information technology company that provides

a wide variety of services like business consulting, innovative IT solutions
and outsourcing services. It is the 2nd largest IT company which was founded in 1981.

In 2021, it became the 4th Indian company to cross $100 billion in market capitalization.
The main headquarters is in Bangalore. It operates in 50+ countries and has 3 lakhs
employees working for them.

Work Culture:

The company provides all the needed infrastructure to its employees. The management
also understands their employees. Overall the working environment is friendly.
Although the major con is that the company offers low salaries and the appraisal system
is also not good. The working hours are also a major concern for many people. The
learning opportunities depend upon the kind of project you get.

4. HCL Technologies
COMPANY NAME HCL TECHNOLOGIES
Founder Shiv Nadar, Arjun Malhotra

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 COMPANY NAME HCL TECHNOLOGIES
Founded 1991
Revenue US$11 billion (2022)
Number of
210,966 (2022)
Employees
HCL Technologies

India has seen the rise of several successful multi-national companies over the years,
and HCL Technologies is undoubtedly one of them. Founded in 1991 by Shiv Nadar and
Arjun Malhotra, HCL Technologies (Hindustan Computers Limited) is an Indian
multinational company that has made its mark in the global market. The company
focuses on IT and Business Services (ITBS), Engineering and R&D Services (ERS) and
Products and Platforms (P&P).

The main aim of HCL Technologies is to help companies thrive in the digital age. The
company is headquartered in Noida and operates in 52 countries. 2,10,966 employees
are a part of this innovative organization.

Work Culture:

The working culture is good and employees get opportunities to meet skilled people.
Colleagues are also supportive. Learning opportunities are ample and transparency
across projects is also there.

Management is professional and salaries are paid on time. The major con is that a hike
in salary is not good. Many employees said that their salary is very less.

5. Wipro
COMPANY NAME WIPRO
Founder M.H. Hasham Premji
Founded 1945
Revenue US$10 billion (2022)
Number of
240,000 (2022)
Employees

50
Wipro is an Indian multinational company that is globally known for its IT services. The
company provides an array of services like robotics, cloud, cognitive computing, hyper-
automation, and analytics. Wipro also focuses on consulting and outsourcing. The
headquarters of Wipro is in Bengaluru.

The company aims to help its clients adapt to the digital world. Muhammed Hasham
Premji founded this company in 1945. 230,000+ employees are working in 67 countries.

Work Culture:

The company is excellent for freshers. Employees get a lot of opportunities to learn and
grow. The infrastructure facilities are up to the mark and the working environment is
friendly. Job security is also there. Salaries are paid on time.

Talking about the con many employees said that there is no work-life balance. Salary is
also less when compared to other competitors. Unfortunately, salary is also not
increased easily.

6. Google India
COMPANY NAME GOOGLE INDIA
Founder Larry Page, Sergey Brin
Founded 1998
Revenue US$94 billion (2022)
Number of
139,995 (2021)
Employees
Google

Google needs no introduction. Google India Pvt Ltd is a subsidiary of Google Inc. which
was founded in 2003. More than 1 lakh employees are working for this company.

The company has four offices in India: Hyderabad, Bangalore, Gurgaon and Mumbai.
Google has expertise in search engines, cloud computing, web applications, machine
learning, AI and online advertising.

Work Culture:

Managers are friendly and supportive. You will get a chance to meet talented people
and there are ample opportunities to grow. The company provides good quality healthy

51
food. Work-life balance is also there but, you need to be on your toes and give your best
every day. Salaries are given on time and fun activities are also arranged for the
employees.

7. Amazon India
COMPANY NAME AMAZON INDIA
Founder Jeff Bezos
Founded 1994
US$513.98 billion
Revenue
(2022)
Number of
5,41,000 (2022)
Employees
Amazon

Another company where a lot of people want to work is Amazon India Pvt Ltd. The aim
of this company is to make the experience of buying online smoother and faster.

The company is thinking from the perspective of the Indian audience and solving unique
problems like providing opportunities to small retailers to sell online, regional
discovery, fast delivery in small towns, reliable payment options and much more. Apart
from e-commerce the company also focuses on digital streaming, cloud computing,
machine learning and AI.

Amazon has five offices in India: Chennai, Hyderabad, Mumbai, Pune and Gurugram. The
head office is in Bangalore. According to the 2021 statistics, Amazon India has 65,000
employees and 1,00,000 delivery partners. Although these numbers would have surely
skyrocketed in 2022.

Work Culture:

The working environment is innovative and friendly. Timely salaries and teammates are
supportive as well. You will get a chance to work with global engineers. Every project is
unique in its own way and you will get a lot of exposure. Work-life balance is also there.

Although if you get multiple projects your working hours might increase. Since it is a big
organization the competition level is high and you might feel a bit lost.

8. Apple India

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 COMPANY NAME APPLE INDIA
Founder Steve Jobs, Steve Wozniak, Ronald Wayne
Founded 1976
Revenue US394.33 billion (2022)

The influence of multi-national companies in India can be seen in various sectors,

including technology. One such company that has made a mark in the Indian market
is Apple India, a subsidiary of the global tech giant Apple Inc. Incorporated in 1996,
Apple India has been a prominent player in the Indian smartphone and computer
market.

Their headquarters is in Bangalore. As we all know the company sells a variety of

electronic products like mobile phones, laptops, watches and desktops and also focuses
on its streaming platform: Apple TV. It is one of the biggest MNCs in India.

Work Culture:

The working environment is friendly and colleagues are chilled. You will get ample
learning opportunities and a chance to use Apple products. You will meet a lot of
experienced people that will teach you a lot of things. Salaries are paid on time.

Although sometimes your work-life balance is affected. Promotions take a lot of time
and competition is also high.

9. Microsoft India
COMPANY NAME MICROSOFT INDIA
Founder Bill Gates, Paul Allen
Founded 1975
Revenue US$204.09 billion (2022)

Microsoft India Pvt Ltd subsidiary of Microsoft Corporation that was incorporated in
1990. The head office of the company is in Hyderabad. Microsoft India has 10 offices in
different cities of India: Ahmedabad, Bangalore, Chennai, Hyderabad, Kochi, Kolkata,
Mumbai, New Delhi, Noida, Gurgaon and Pune. 8,000 employees are a part of this
company.

53
The company operates through six business units in India, each serving a different
purpose. These units are Microsoft India (R&D) Private Limited, which focuses on
research and development activities; Microsoft Research India (MSR India), which is
dedicated to conducting scientific research; Microsoft Services Global Delivery (MSGD),
which provides global delivery services; Microsoft Corporation India Pvt. Ltd. (MCIPL),
which operates as the main business entity of Microsoft in India; Microsoft IT India
(MSIT India), which manages the company's IT operations in India; and Microsoft India
Global Technical Support Center (IGTSC), which offers technical support to customers
worldwide. Each unit contributes to Microsoft's operations in India, and together they
help the company serve its customers and expand its presence in the region.

Work Culture:

Managers are supportive and you will find work-life balance. Management takes special
care of employees' physical and mental health. The environment is challenging and
market standards salary is given. You will get a chance to meet talented people.
Although the compensation is poor and there are too many policies. If you are in a
technical role then you may find the work monotonous.

10. Nestle India

COMPANY NAME NESTLE INDIA
Founder Henri Nestl
Founded 1866
Revenue US$102.59 billion (2022)

Nestlé India Limited is the subsidiary of the Swiss multinational company, Nestlé. It is
the world's largest food and beverage company.

Nestlé India Limited, is involved in the production and marketing of various food and
beverage products. Some of the popular brands offered by Nestlé in India include
Maggi, Nescafé, KitKat, Munch, Milkybar, Nestlé Milk, and more.

It was incorporated in 1959 and its headquarters is in Gurgaon, Haryana. Nestlé India
operates in four cities across India: Delhi, Mumbai, Chennai and Kolkata.

Work Culture:

54
The working environment is good and the projects allow you to learn a lot of new
things. Salary is according to the market standards and transparent HR policies give you
a clear idea regarding your job responsibilities.

Although the hierarchical system leads to slow growth of the employees and working
hours are very long which leads to poor work-life balance.

11. IBM
COMPANY NAME IBM
Founder Herman Hollerith, Thomas J. Watson, Charles Ranlett Flint
Founded 1911
Revenue US$60.53 billion (2022)
Number of
288,000 (2022)
Employees
IBM

IBM, short for International Business Machines Corporation, is a globally renowned

multinational technology company. Established on June 16, 1911, IBM has a rich history
of innovation and leadership in the technology industry. Over the years, it has evolved
into a prominent provider of advanced information technology, software, hardware, and
consulting services worldwide.

IBM has a strong focus on research and development, with multiple research centers
worldwide. It actively pursues cutting-edge technologies, such as quantum
computing, blockchain, and nanotechnology, to address emerging challenges and shape
the future of technology.

Work Culture:

IBM's work culture is characterized by its emphasis on diversity, innovation, and

collaboration. With a strong commitment to employee development, the company
encourages continuous learning and provides ample opportunities for skill
enhancement. IBM's agile work environment enables teams to work collaboratively
across borders, fostering a sense of global unity. Ethical business practices and a focus
on corporate social responsibility underline the company's commitment to making a
positive impact on society.

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12. Coca Cola
COMPANY NAME COCA COLA
Founder Asa Griggs Candler
Founded 1892
US$43 billion
Revenue
(2022)
Number of
82,500 (2022)
Employees
Coca Cola - multinational company in india

Coca-Cola is one of the world's largest beverage companies, and it operates in various
countries, including India. The company has a long history in India and has been a
prominent player in the Indian non-alcoholic beverage market.

Coca-Cola India offers a diverse portfolio of products, including its iconic carbonated soft
drinks such as Coca-Cola, Diet Coke, Fanta, Sprite, and Thums Up, along with a range of
non-carbonated beverages like Minute Maid juices, Maaza, and Kinley packaged
drinking water. The brand's popularity and widespread distribution network have made
it a significant player in the Indian beverage market.

Work Culture:

Coca-Cola fosters a diverse and collaborative work culture. Innovation and employee
development are prioritized, encouraging continuous learning. The company values
ethical conduct and social responsibility, creating a supportive and inclusive
environment for its workforce.

Conclusion

In conclusion, the presence of multi-national companies in India has been a significant

contributor to the country's economic growth. The Indian market offers vast potential
for international businesses, and several companies have leveraged this opportunity to
establish themselves as global players.

In this article, we have looked at the top 12 successful multi-national companies in India
that have made their mark in various sectors, including technology, hospitality, and
more. These companies have not only brought in foreign investment but have also
created job opportunities for millions of people across the country. With the Indian
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economy poised for further growth, it will be interesting to see how these companies
evolve and contribute to India's development in the years to come.

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