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Nature of TNCs

According to John H Dunnings nature of TNCs are

1. Appears as confederation of loosely knit foreign aliates2. Designed primarily to sere the parent company on natural

resources of local markets !ith manufactured products andserices

". Descri#ed as proider of capital$ management and technologyto outlaying aliates

%. &resume themseles and '()*A( and not national markets+. ,-ecuties are trained in !orld !ide operations and not ust

domestic and international diision/. 0anagement recruited from many countries components

and supplies are purchased !here they can #e o#tained atleast cost 3 inestments are made !here anticipated returnsare the greatest.

Organizational Structure of TNCs

&roduct )rgani4ing 5tructure6 Actiities are diided on the #asis ofproducts$ product line and serice and are grouped into departmentAll important functions such are marketing$ production$ 7nance andhuman resources are contained !ithin each department.

'eographical )rgani4ation 5tructure6 8unctions are grouped intodepartments #ased on the actiities performed in the geographicalareas,ach geographical units include all functions re9uired to produceand market the products in a particular geographical areasThis structure is used #y chain stores$ po!er companies$ restaurantchains$ dairy products$ #anking companies etc.

Decentrali4ed *usiness :nit 5tructure6 'rouping actiities #ased onproduct lines has #een a trend among diersi7ed companies. n adiersi7ed 7rm$ the #asic operational #uilding #locks are its

#usiness units$ each #usiness is operated as a stand long pro7tcenter.

5trategic *usiness :nit 5tructure6 #usiness can #e e;ectielycontrolled$ if the related #usinesses are grouped into strategic unitsand the ecient and senior e;ectie is delegated the authority andresponsi#ility for its e-ecutie.t is grouping of #usiness su#sidiaries #ased on some importantstrategic elements common to each.

0atri- )rgani4ation 5tructure6 5ome 7rms possess a dual chain ofcommand.

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*oth functional and proect managers e-ercise authority oerorgani4ational actiities Therefore personnel in matri- hae 2superisors.This is appropriate !hen3D outcomes of TNCs/. ,na#les to increase e-ports and decrease import re9uirement=. Can #reak protectionism$ create competition among domestic

companies and thus enhance their competitieness

N H)0, C):NT>E

1. ndustry actiity gets actiated2. Contri#utes for faora#le #alance of payments in long run". Create opportunities for marketing the products produced in

the home country throughout the !orld%. ncrease 'N& of home country

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+. Create employment oppurtunities in home country

isadvantages of TNCs

N H)5T C):NT>E

1. They imperil political soereignty of nations2. Through po!er Fe-i#ility$ they can eade or undermine

national economic autonomy and control". 0ay destroy competition and ac9uire monopoly po!er%. 0ay adopt ethnocentric approach in stang and there#y

cause unemployment+. (arge sum of money Fo!s to the foreign countries in terms of

payments to!ards pro7ts$ diidends and royalty/. )nly inest in those sectors !hich earn high rate of pro7t$

e-ploit material

N H)0, C):NT>E1. 0ay neglect the home countries industrial and economic

deelopment so as to inest in more pro7ta#le countries2. Transfer capital causing unfaora#le #alance of payment". 0ay not create employment in home country as it may follo!

geocentric or polycentric approach%. 0ay #ring culture of foreign country !hich may #e detrimental

to the interest of the home country

!O"# OF TNCs in INIA

At the end of 1@ there !ere %/ foreign companies in ndia.n addition many fGndian companies !ith foreign e9uityparticipation(ater !ith economic li#erali4ation in 11$ the 'ot encouraged thept sector and inited foreign 7rms to inest in ndia.

No! there are a num#er of fortune +@@ 0NCs in ndia

TNcs are speci7cally coered under 8oreign ,-change 0anagementact.

ndia e-pects NCs to increase their e-ports and earn foreigne-change for ndia

')T has allo!ed TNCs to inest in ndia through oint entures ortechnical colla#orations !ith the ndian Companies

TnCs are !idely critici4ed in india for not inesting in enironmentalpollution controlling e9uipment as they normally do in homecountries.