Page 17 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes 1.6 Emerging Opportunities in International Marketing

Opportunities are becoming more and more global in an increasing number of industries and
markets. With the progressive liberalization of economic policies in many countries, firms
encounter growing competition not only in markets but in domestic markets as well.

1.6.1 Multinational Corporations

Multinational Corporations (MNCs) are major players in the world of international business.
In India, the mention of an MNC usually elicits mixed reaction among the Indians. On one hand,
MNCs are associated with exploitation and ruthlessness. They are often criticised for moving
resources in and out of the country as they strive for profit without much regard for the country’s
social welfare.

Example: Varity Corporation, an MNC of Canada was criticised for its action in 1991 to
relocate its headquarter from Toronto to United States (Buffalo) in order to take advantage of the
US – Canadian Trade Agreement. For a long time, India referred to MNCs as “agents of neo-
colonialism”. It was not until 1991 that India began to woo MNCs. Yet several years later, MNCs
are still not welcome to India. To many Indians, such MNCs as Pepsi, Coca-Cola, Kentucky Food
Corporation (KFC) and Enron Corporation are all “foreign devils”.

In defence of MNCs more and more of them have been trying to be responsible members
of the society.

Example: Pepsi and Coke are contributing a lot for the development of sports especially
cricket in India.

On the other hand, MNCs have power and prestige; additionally, they create social benefit
for facilitating economic balance. As explained by Miller, “with resources, capital, food,
and technology unevenly distributed around the planet and all in short supply, an efficient
instrument of quick and effective production and distribution of a complex of goods and
services is the first essential.” This instrument is the MNC.

Regardless of whether MNCs are viewed positively or negatively, they are here to stay
and the important point is to understand when a company becomes a member of this elite
group. MNC is not a one-dimensional concept. Similarly, globalisation does not have a
single definition. There is no single criterion that proves satisfactory at all times in
identifying an MNC; whether a company is identified as MNC or not depends on a number
of criteria used.

1.6.2 Transnational Corporations

The largest national market in the world, the United States, today represents roughly 25 percent
of the total world market for all products and services. Thus, U.S. companies wishing to achieve
maximum growth potential must “go global” because 75 percent of world market potential is
outside their home country. Coca-cola is one American-based company that understands this;
82 percent of its 1995 operating income and 71 percent of revenues were generated by its soft-
drink business outside the United States. Non-U.S. companies have an even greater motivation
to seek market opportunities beyond their own borders; their opportunities include the
260 million people in the United States.

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