Multi-national corporations

MNC’S&foreign Collaborations

A multinational corporation (MNC) is a corporation or an enterprise that manages production or delivers services in more than one country.

Types of MNC’s

Horizontally integrated multinational corporations

Vertically integrated multinational corporations

Diversified multinational corporations

What is FOREIGN DIRECT INVESTMENT

FDI occurs with the purchase of “physical assets or a significant amount of ownership (stock) of a company in another country in order to gain a measure of management control.”

FOREIGN INSTITUTIONAL INVESTORS(FII)

• An investor or investment fund that is registered in a country outside of the one in which it is currently investing. Institutional investors include insurance companies, pension funds and mutual funds etc.

• The term is used most commonly in India to refer to outside companies investing in the financial markets of India. International institutional investors must register with the Securities and Exchange Board of India to participate in the market. 

Foreign collaboration

• Collaboration meaning- working jointly on an activity, venture or a project.

• Joint participation of foreign and domestic.

• There are three kinds –• Joint participation between private parties • between foreign firms and Indian government• between foreign government and Indian

government

Two types of foreign collaborations

Financial collaboration (foreign equity participation) where foreign equity alone is involved

Technical collaboration (technology transfer) involving licensing of technology by the foreign collaborator on due compensation.

TRENDS IN INDIAN INDUSTRIES

Investing in India

Automatic Route Prior permission

(FIPB)

GENERAL RULE No prior permission required only

information to the RBI within 30 days of inflow/ issue of shares

BY EXCEPTIONPrior government approval needed

Decision generally within 4-6 weeks

THE CAPITAL MARKET

Capital Market is the market for long term finance. It is the medium that channelizes the small savings of the community and make it available for industrial outlets.

Primary market

It is also known as new issue market Conversion of savings into corporate

investment Raising of financial resources from the

investors by issuing them new and fresh securities

Secondary market

It is a market for all those securities and stock which are already issued to the public

It is also called as stock market It deals with securities like shares,

debentures and bonds, etc issued by different companies

Importance of capital market Mobilization of savings Channelization of savings for productive

purposes Encouragement of savings It facilitates industrial development It provides wide avenue for investment It increases production and productivity It facilitates technological up gradation It facilitates over all economic growth of the

company

Functions of capital market Motivates individual to save and invest Safe and productive channel for

investment Liquidity to the savings Mobilizes savings of large number of

individuals

Role of SEBI in Indian capital market

It is an apex body to develop and regulate stock exchange in India

It was setup on April 12, 1988. Initially SEBI was a non statuary body but in 1992 SEBI got the statuary power.

Main role of SEBI

• INVESTOR PROTECTION

• REGULATORY ROLE

• DEVELOPMENTAL ROLE

Segments of the capital market

Investors Capital seekers Regulatory bodies The stock exchange The registered intermediaries

Following are the reasons why multinational companies consider India as a preferred destination for business:

Huge market potential of the country FDI attractiveness Labor competitiveness Macro-economic stability

Advantages of MNC's in India Increase in job opportunities Better and cheaper products will be available

to the consumers The government will also benefit by earning

more in taxes etc It will lead to an increase in infrastructure

improvement

Disadvantages of MNC’s in India

MNC’s create monopolies in the market and eliminate local competitors.

MNC’s may create depletion of resources due to its continues use by these overseas companies.

MNC’s generally carry out their R&D in their home country and supply to the host country.

MNC’s generally import huge raw materials due to its continuous use by these overseas companies.

By:-Team-6