Drawbacks of MNCs

There are lots of drawbacks of MNCs. All these drawbacks are being written on the basis of past experience of MNCs.

1. Interference in the Economic Sovereignty of the Host Country

MNCs affects the independence of any country. For example, one East India company came in India for business but it made India slave for 200 years. So, it is the biggest drawback of MNCs that these are the risky for freedom of any country.

2. Drainage of Resources

MNC's main aim is to earn the profit by any way. So, it exploits developing country's natural resources. These MNCs increase pollution of air and water. 

3. Strain on Foreign Exchange Reserves

MNCs are very risky for foreign exchange reserves. India, there are lots of MNCs which transfer Indian currencies to their home country in the form of profit and dividends of foreign shareholders. With this, our foreign exchange reserve level  is decreasing.

4. Minimum Transfer of Technology

No MNC bring any new technology in India. They only produces zero technology products in the form of cold drinks and other which can easily make in each village of India.

5. Exploitation of Labour

These MNCs do not create any employment in the host country because these MNCs are only interested to exploit laborers by paying them less. All top posts are filled by their home countries employees.  

6. Cultural Loss

This is the one of biggest drawback of MNCs that it is risky for our cultural loss. Our culture makes us vegetarian but many MNCs employees eat meat and chicken. So, all these things are against our culture. Bad Indians copies MNCs employees and start to wear leather shoes. Due to this, animals of India are being killed . So, this activities are so bad.

7. Creation of Monopolies

MNCs create also monopolies. With high advertising and other ways, these MNCs do not live domestic companies. After this, these MNCs increase prices and then get high profit by exploiting consumers of India.

8. Evasion of Taxes

These MNCs do not disclose its all true account. So, with this, these MNCs save their tax liabilities.

9. Economic Power

This is also one of the important drawback of MNCs that these MNCs misuse of their economic power. With economic power, these MNCs tries to change the economic policies. With this, they have to pay zero tax in host country.

10. Depletion of Natural Resources

After increasing of MNCs in India, you can see that our all natural resources are decreasing very fastly. These MNCS are selling urea fertilizers. With this, our land is becoming useless. 

Continue reading »

Benefits of MNCs

If any MNC works with honesty and high moral ethics, at that time there are lots of following benefits:

1. If MNC wants to benefit of human resource of the country in which it is operating, it can play important role to generate new employment. For example, there are lots of IT companies who hired Indians for their work, so with this employment of Indians  has increased.

2. If MNC takes social responsibility, at that time, it can invest his profit for development of parks, education of employees' children and other welfare schemes instead of sending this profit to his home country.

3. MNC creates a place where different countries employees can collaborate. With this, they can increase world unity. They can think to solve world problems like poverty, killing of animals and pollution problems.

4. If MNC works with more honestly, at that time, it can share his technology with host country. But it is very rare case.

5. After coming of MNC, advertising company can earn more.

Continue reading »

What is MNC

MNC means multinational corporation. If any company's head office in one country and its business activities are  in many countries, that company will be called multinational corporation. Its other popular name is multinational enterprise. These corporation is also called transnational corporation. Multinational corporation starts from their own country but they increase their business level and they do business many countries as per the rules and regulations of different countries.

Foreign Exchange Regulation Act 1973 applies on MNC. As per this, a corporation will be MNC, if

1) Its subsidiary or branches are in two or more countries. All these countries will be host countries for him.

2) Its head office is outside of India. His own country will be home country for him.

British East India company is first MNC who issued shares and created stock. More than 400 years history of big MNCs and its development. Every corporation starts his business as MNC because it has to get tax benefits. It has to get low labor cost benefits. It has to get marketing benefits. Large number of MNCs are from developed countries. There are big competition, so these corporations go to developing countries for their own benefits. By opening branches or subsidiaries in developing countries, they can produce their products at cheap material and labor cost.

What is MMNC?

It means micro multinational corporation. It is just like multinational corporation but at micro level. With the help of internet, anyone can make MMNC by creating or using e-commerce website or providing international service.

Features of MNC

1. Board of directors will be of home country.

2. MNCs do business with direct investment. It means these MNC will have right to buy land and make plant. It also have right to produce the products and sell the products in other country.

3. MNCs's advertising lobby is very advance. They want to sell every thing on the basis of high advertising whether it is quality product or not. 

Continue reading »

SWOT analysis

Meaning of SWOT Analysis 

SWOT analysis means strength, weakness, opportunities and threat analysis. In this analysis, first of company identify its strength and weaknesses. On this identification, company finds its opportunities and future threats. This analysis is very useful for planning and decision making. If any organisation finds its all strengths and weaknesses correctly, it is very easy to make a plan which will be helpful for getting opportunities and reducing future risks.

Example of SWOT Analysis 

I can give SWOT Analysis example of my organisation. I started my organisation from Jan. 2008. Now, it is reaching its 4th year. Just 2 months after, it will be of 4 years. In this time, I find many my strengths and weakness through SWOT analysis which I am sharing with you.

1. I write what I know. This is my strength. So, I can find more opportunity if I will start to know more things and then write it myself. Yes, I am trying  myself to know everything in my field.

2. My main weakness is that I do not know what are my weaknesses. So, when these weaknesses happens, I  also faces loss. But, I started new way to find my known weaknesses. One of best way is for me to read and listen what are people are saying about me in my comment box or in my inbox. I am personally thankful all of them.

SWOT Analysis Template 

Following SWOT Analysis Template will be helpful for business organisation for making good SWOT Analysis

Issues	Strengths	Opportunities	Weaknesses	Threats
1. Fund	Company has enough fund for investment	Company can start new projects or develop new project with this fund	No enough fund	Company can face the risk for repayment of past loan.
2. ROI	Company is gaining high Return on C Product.	Company can develop that C Product.	Company's D product has low return.	Company may suffer loss on D Product.
3. Innovation	If company works with innovation approach, it will be the strength of company	Company can take the share of other company who is not enough innovative.	If company do not care enough on innovation, it can become the major weakness of company	Company can lose the share of market due to lack of innovation.
4. Product Life	If company's product life is very high, it is very one of best strength of company.	Company can make it as brand of company because it will reduce the cost of customer for buying new product soon.	If company's product life is very less, it is the weakness of company.	Company can lose its brand due to this weakness in the market.
5. Confidence	If its all employees have confidence, it is big strength of company.	Company can get more efficiency from this confidence.	If company's employees have no confidence, it is the weakness of company.	Company may face big cost of training for increasing confidence of employees.

Continue reading »

What is Environmental Appraisal? What are the Stages Involved in Appraisal?

For finding business's available opportunities and risks, environmental appraisal is needed. Environmental appraisal means to analyze all the factors of business environments. Following are the main stages involved in environment appraisal.

1st Stage : Factors Affecting Environmental Appraisal

Following are the main factors affecting environmental appraisal

a) Factors relating to environment

We can not evaluate equally two organisation in same environment. we have to study every organisation's complexity and flexibility.

b) Factors relating to Organisation

Age of organisation will affect our environmental appraisal. We also see the organisation's size for doing business and its market type. What are the services and products, it is providing?

c) Factors Relating to Strategies

Policy makers  play  important role in appraisal. Age, education and experience of policy maker  will affect the environmental appraisal.

2nd Stage : Identification of Environmental Factors 

In second stage we have to identification of environmental factors on the basis of following issue

a) Critical Issues

b) High Priority Issues

c) Low Priority Issues

3rd Stage :  Structuring the Environmental Appraisal 

This is the third stage of environmental appraisal. In this stage, we create the structure of environmental appraisal. One side of structure will be our strengths and other side will be our weaknesses. By comparing both, we estimate our surviving power in the environment of business. 

Continue reading »

Factors of Environmental Scanning

Following are the main factors of environment scanning.


1. Events

Past events of business environment is the main factor of environment scanning. For example, if Govt. has to control food prices, it has to scan every week prices of vegetables, fruits, milk and other food items. For more simplification of price rise, Govt. will calculate wholesale price index.

2. Trends

Not just to see the past events are effective but to establish the trends on the basis of events is also very important because this is important factor of business environment scanning. Suppose, you have to take decision relating to your vegetable prices, you have all the past market price data of same vegetable. Now, you will make a trend graph. If there is an increasing trend, you will fix your vegetable price according to this.

3. Issues 

Issues are also important factor of business environment scanning. As a good businessman, you have to scan both cold and burning issues on daily basis. For example, I can tell you following business issue which I studied today newspaper.

a) European union wrote down a 50% of Greece's debts.

b) Sony Corp. buys Sony  Erickson mobile phone joint venture for $ 1.45 billion.

c) Rajat Gupta is being charged for insider trading.

d) Bharti Airtel's urgent request failed.

4. PESTEL analysis

It means political , economical, social and technological analysis. We scan following updates in it.

• Changes in Taxation Policy
• Changes in Trade regulations
• Changes in Governmental rules 
• Changes in Unemployment Policy etc.
• Changes in Inflation rate
• Changes in Growth in spending power
• Changes in  a pensionable age, suppose in Italy, pensionable age will be 67 years in 2026.
• Technological changes
• New or improved distribution channels
• Improved communication and knowledge transfer etc.
• moral factor
• Laws on
• Waste disposal
• Energy consumption
• Pollution monitoring etc.
• Unemployment law
• Health and safety
• Product safety
• Advertising regulations
• Product labelling etc.

Continue reading »

Approaches to Environmental Scanning

For analyzing the information in environment scanning, we can use following approaches.

1. Systematic approach

In this approach, we first collect the information in systematic way. This information is collected from market, customers and govt. organisations.

2. Ad- hoc approach

Following are main features of this approach.

a) In ad hoc approach, organisation can survey of special environment issues. These survey will be done, if any new project will be made or has to analyze the current policies.

3. Processed Form Approach 

If any organisation uses the secondary sources of information, then that approaches will be processed form approach to environment scanning. 

Continue reading »