classification of mnc
TRANSCRIPT
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 1/16
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 2/16
A corporation that has its facilities and
other assets in at least one country other
than its home country. Such companieshave offices and/or factories in different
countries and usually have a centralized
head office where they co-ordinate
global management.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 3/16
There are three types of MNC
classification they are:-
1. THE ETHNOCENTRIC MNC
2. POLYCENTRIC MNCS
3. REGIOCENTRIC AND GEOCENTRIC MNCs
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 4/16
These are the type of MNCs which have
strong orientation towards home country
This means that home country peopleare considered as superior and
allocated all key posts.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 5/16
Companies whose values and interests
guide strategic decisions. usually
companies that are involved inextractive FDI such as oil/gas companies
include in ethnocentric mnc.
Ethnocentric organizations manage
overseas operations directly primarily to
protect the company·s competitiveness
in the home market.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 6/16
´Communication and information is top
down and all strategic decisions are
steered from corporate headquarters.
Subsidiaries sell products design andmanufactured by parent companies
with little or no local control.µ
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 7/16
Simpler structure
More tightly controlled
More ineffective
Management In flexibility
Social & political backlash
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 8/16
Just opposite to Ethnocentric polycentric
type of MNCs has strong orientationtowards host country where few key
people are nationals and remaining arefrom the host country.
An MNC that adopts the polycentricinnovation model evolving through four
successive stages of maturity they are:-
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 9/16
Stage 0: At this stage, the MNC's R&Doperations are mostly concentrated in the
West. While the MNC operates in emergingmarkets, their local units are primarily salesand marketing functions.
Stage 1: Here the MNC starts shifting some
of its R&D work to low-cost countries likeIndia that offer plenty of high-qualityscientists and engineers.
Stage 2: The MNC recognizes the massive
potential of emerging markets anddelegates more responsibilities to local unitsin emerging markets which initiate andmanage their own R&D projects to cater to
local needs.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 10/16
Stage 3: The MNC starts networking R&D
activities in emerging markets with the rest
of their global network in order to cross-pollinate ideas for new products and
business models across multiple regions. The
P&L responsibilities for new product lines
gradually shift to emerging markets.
Stage 4: At this ultimate stage, the R&D
hubs in emerging markets are given aglobal remit as they now own the P&L
responsibilities for the global design and
rollout of new products.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 11/16
HOST COUNTRY ORIENTED
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 12/16
Extensive knowledge of foreign market &workplace
More support from host government Committed local manager with high
morale
Duplication of work
Reduced inefficiency
Difficult to maintain global objectivesbecause of intense focus on local traditions
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 13/16
These MNCs have their concentration inwhole world and they make selection for
best employees whether they are from hostcountry or home country it does not matter.
When MNCs desire an integration of all of
their foreign subsidiaries and the melding ofa worldwide corporate culture, they adopta geocentric management strategy.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 14/16
The geocentric organization has the most
complex organizational structure, requiringthe greatest amount of communication
and integration across national boundaries.
WORLD ORIENTED
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 15/16
Difficult to achieve.
Managers must have both local and
global knowledge. Forces understanding of global issues.
Balanced local and global objectives.
Best people and work approaches usedregardless of region.
5/14/2018 Classification of Mnc - slidepdf.com
http://slidepdf.com/reader/full/classification-of-mnc 16/16
The liberalization has paved the way for
easy entry and growth of MNCs in India.
At the same time a number of Indianfirms have been becoming multinational
One of the important ways by which
MNCs can contribute to the
development of the host countries is bytransfer of technology to them.