Multinational companies essay

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Multinational companies essay

In India, since the announcement of the liberalised foreign investment policy inthere has been a spurt in the number of MNCs as well as foreign collaborations. The multinational companies in India represent a diversified portfolio of companies from different countries.

Though the American companies—the majority of the MNC in India—account for about one-third of the turnover of the top 20 firms operating in India, the scenario has changed a lot of late.

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Finnish mobile giant Nokia has a large base in this country. India has a huge market for automobiles and hence a number of automobile giants have stepped into this country to reap the market.

French Heavy Engineering major Alstom and Pharma major Sanofi Aventis have also started their operations in this country.

Multinational companies essay

The latter is in fact one of the earliest entrants in the list of multinational companies in India. There are also a number of oil companies and infrastructure builders from the Middle East.

As to why the multinational companies are coming down to India, the reasons are: India has got a huge market; it has one of the fastest growing economies in the world; the policy of the government towards foreign direct investment has also played a major role in attracting the multinational companies in India; there is labour competitiveness.

The impact of MNCs on the development of a country is highly uneven. In some ways the impact of MNCs in India has been positive. They have brought in new technology and products, so the consumers have wide choice and awareness of international standards.

They have indirectly made Indian companies more efficient as they brought in competition. But the negative aspects of their entry into our country are serious.

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In many situations these enterprises widen the already high income gap between the rich and the poor. They tend to promote the interests of the small number of well-paid modern sector workers, and this leads to the widening of wage differentials in the country.

As they are mostly located in urban areas, the MNCs worsen the already existing imbalance between the rural and urban areas as well as contribute to accelerated rural-urban migration. They divert resources away from much- needed food production to the manufacture of sophisticated products catering to the demands of the local elite.

These products stimulate inappropriate consumption patterns through advertisement and their monopolistic market power, using inappropriate capital intensive technology.

Such capital intensive technology leads to negligible, or even reduces, job creation. Although MNCs improve the foreign exchange position of a country, their long-term impact may be to reduce foreign exchange earnings of both current and capital accounts.

Multinational companies essay

The current account may deteriorate due to large-scale import of intermediate goods, and capital account may worsen because of repatriation of profits, interest, royalties, management fees, etc.

Indeed, the RBI has said that the average rate of profit of MNCs is something between 20 per cent and 25 per cent—which is a substantial amount sent out of the country. While the MNCs contribute to the public revenue in the form of corporate taxes, their contribution is less than it should be as a result of liberal tax concessions, excessive investment allowances, disguised subsidies and tariff protection by the local government which often offset the gains made from tax revenue.

MNCs may damage the economies of the underdeveloped economies because their superior knowledge, worldwide contacts and advertising skills inhibit the emergence of small-scale local enterprises. Because of their huge resources, MNCs are able to diversify into various economic activities, pushing out indigenous companies in those fields.Special on-the-ground report about the nearly million West African children who harvest cocoa for big chocolate companies.

Multinational companies are giant firms with their origin in one country, but their operations extending beyond the boundaries of that nation. May 30,  · Definition of multinational company which says that a company which serves more than one country at a time and small description about its background.

2. Main body contains: * Description about how multinational corporations give employment and remove poverty. Multinational Companies Multinational Companies Karen Mooney-Crouch Grantham University Abstract Multinational corporations are businesses that operate in more than one county.

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The typical multinational corporation normally functions with a headquarters that is based in one country, while other facilities are based in locations around the world. Aug 30,  · A Multinational Corporation has been described as one that has production facilities or other fixed assets in at least one foreign country and makes its major management decisions in a global context.

Multinational companies are giant firms with their origin in one country, but their operations extending beyond the boundaries of that nation. For reasons of marketing, financial and technological superiority, these multinationals are generally considered as a sine qua non of the modernisation of an economy.

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