Page 231 - DMGT401Business Environment

Business Environment

Notes (b) Rendering professional or consultancy services
(c) Carrying out research work, in which the parent company is engaged.
(d) Promoting technical or financial collaborations between Indian companies and
parent or overseas group company.
(e) Representing the parent company in India and acting as buying/selling agents in
India.

(f) Rendering services in Information Technology and development of software in
India.
(g) Rendering technical support to the products supplied by the parent/group
companies.
(h) Foreign airline/shipping company.
Branch Office on "Stand Alone Basis: Such branch offices would be isolated and restricted to the
Special Economic zone (SEZ) alone and no business activity/transaction will be allowed outside
the SEZs in India, which include branches/subsidiaries of its parent office in India.

Task Give examples of companies that adopted above mentioned entry strategies
to enter Indian market. (Give at least one example for each strategy)

10.2 Multinational Corporations (MNCs)

MNCs are defined as an enterprise that is headquartered in one country but has operations in
one or more countries. Sometimes it is difficult to know if a firm is an MNC because
multinationals often downplay the fact that they are foreign held.

Example: Most of the people in India are unaware that Bata is a Canadian company,
Bayer is a German company, Nestle is a Swiss company and Cadbury a British company.

10.2.1 Multinational, Global, Multi-domestic and Transnational

Multinational, Global, International and Transnational are terms which are frequently used to
describe the organizations which are operating in more than one nation. Though usually these
terms are used interchangeably, they have specific meanings.

1. Multinational Enterprise (MNE) is a company that takes a global approach to foreign
markets and production; it is thus willing to consider market and production location
anywhere in the world. The term multinational corporation (MNC) is also commonly
used in the international business arena and often is a synonym for MNE. Usually, most
authors prefer MNE as there are many international firms which are not organized as
corporations.
2. Transnational Companies (TNC) is a term used by United Nations and most of the
developing nations for multinational firms. This term is used in two contexts though
some writers use this term for a company that is:
(a) trying to achieve economies of scale through global integrations of its functional
area while at the same time.

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