A multinational corporation (MNC) is a corporation Essay Example

A multinational corporation (MNC) is a corporation Essay Introduction Multinational corporations can be viewed from different positions ( ownership, direction, scheme and structural, etc. ) and have several dimensions. There have been statements in the yesteryear over the importance of each position and theoreticians have shared different positions when it comes to specifying a ‘multinational’ corporation. Franklin Root ( 1994 ) tries to set the statements to rest by giving some lucidity to the definition. Harmonizing to his definition, a transnational corporation ( MNC ) is a parent company that engages in foreign production through its affiliates located in several states, exercisings direct control over the policies of its affiliates and implements concern schemes in production, selling, finance and staffing that transcend national boundaries. ( Howard, 1994 ) In simplistic footings, a MNC is a concern which has production and/or distribution operations in at least two states, via subordinates, keeping companies, joint ventures, licenci ng etc. By and large, because of their munificence, transnational corporations play a powerful function in international dealingss and local economic systems. The survey analyzes one such planetary corporation which plays a major function both in the local economic system and the economic system at the planetary phase. 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Company Profile Tata Group of Companies Tata Group is one of India’s oldest and largest concern pudding stones. The concern spreads across 96 runing companies in seven concern sectors: information systems and communications ; technology ; stuffs ; services ; energy ; consumer merchandises ; and chemicals. It employs some 2,46,000 people and jointly has a stockholder base of over two million and market capitilisation of $ 57.6 billion. ( Web 1 ) It is a genuinely planetary corporation which made concern headlines with its winning command for Corus ( the UK based steel company ) . Some of the Group’s subordinates and its operations are analyzed below. Tata Tea Tata Tea was setup in 1964 as a joint venture with UK-based James Finlay and Company to develop valued-added tea. The group, which includes Tata Tea and the UK-based Tetley Group expands 40 states and is the universe s 2nd largest planetary branded tea operation. ( Web 1 ) The three major location where Tata tea subordinates are based are in India, UK and US. Tata tea entered the UK market with a Joint Venture with Allied Lyons ( proprietors of Tetley ) to make Tata Tea in 1993. ( Web 1 ) Subsequently on, in 2000, Tetley was acquired by Tata tea making one of the largest planetary tea trade names. Tetley, on its ain, sells over 60 branded merchandises and is the taking tea trade name in UK and Canada with important market portions in the United States, Australia, Poland and France. Tetley’s growing scheme focuses on custom-making the portfolio of offerings for each state. While Tetley is headquartered in London, Tata Tetley has an export oriented unit at Kochi in Kerala, India . Tata Tea Inc ( based in Florida, US ) is a subordinate of Tata Tea, established to run into specific demands of wellness witting US consumers. The company has its mill operations in Florida which is used to recycle or intermix instant teas brought from India. Tata tea besides has important presence in plantation activity in Sri Lanka through Watawala Plantations. ( Web 1 ) Tata Tea’s international portfolio of activities is steadily turning its presence in the remainder of Europe, throughout the Caribbean and lesser developed markets such as Bangladesh, Pakistan and Russia where Tetley was launched in 2004. The amalgamate worldwide branded tea concern of the Tata Tea Group contributes to around 86 per cent of its amalgamate turnover. ( Web 1 ) Tata Steel Tata Steel signifiers India s largest incorporate private sector steel company. It was late in the intelligence for its coup detat command for Corus ( the UK based Steel maker ) . Tata Steel successfully won thecoup detatcommand and is now the world’s fifth-biggest steel house. Corus itself was a planetary company formed out of the 1999 amalgamation of British Steel and Dutch group Hoogovens and employed 47000 employees. ( Web 2 ) It had a graduated table of 19 million metric tons and a presence in Europe with a important trade name name. Corus is now an unlisted company and is held by one of Tata Steel s subordinates on a 100-per cent footing. Tata Steel’s other major acquisition before Corus was Singapore’s steel house Natsteel. It acquired Natsteel to give itself a bridgehead in seven states, including Australia. Before thecoup detatof Corus and Natsteel, Tata steel was chiefly a place based company and Corus represents its first enlargement outside of Asia. It does hold has subordinates in Sri Lanka ( ajoint venturewith Lanka Special Steel ) . Tata Steel’s typical advantage lies in the efficiency of its operations and inexpensive altogether stuffs which has earned itself a alone ticket of being the lowest cost steel manufacturers in the universe. Tata Consultancy Services Tata Consultancy Services ( TCS ) is one of the taking information engineering companies in the universe holding over 50 planetary bringing Centres. Its clients include seven of the top 10 corporations in the Fortune 500 list of the largest corporations in the United States, corporations such as IBM, GE etc. ( Web 3 ) Through its consulting services, TSC helps clients to optimise their concern processes to guarantee faster and accurate consequences. It besides provides client such as GE proving integrating and proving solutions. Its outsourcing maps allow companies like IBM to concentrate on their nucleus operations. TCS besides offers cognition based outsourcing for clients like Danone ( France ) through which it spouses to do its IT substructure flexible, scalable, and secure, while maximising public presentation. Tata Motors Tata Motors is India s largest car company which began its fabrication with a 15-yearcoaction understandingwith Daimler Benz of Germany. It is a quickly turning company and like other Tata Group of companies pursues growing through amalgamations, joint ventures and acquisitions. In 2004, itacquiredthe Daewoo Commercial Vehicle Company, Korea s second-largest truck shaper, now named Tata Daewoo Commercial Vehicles Company. ( Rao, 2003 ) Following Year, Tata Motorsacquired a 21-per cent interestin Hispano Carrocera, a reputed Spanish coach and manager maker, with an option to get the staying interest every bit good. This acquisition has made Tata Motors the universe s fifth-largest medium and heavy commercial vehicle maker. It nowexportsvehicles to Europe, Africa, the Middle East, South and South East Asia and Australia and hasassembly operationsin Malaysia, Bangladesh, Ukraine, Kenya and Russia. Some of its other associates include Tata Cummmins ; a joint venture with US based engine maker Cummins, Telco Construction Equipment Company ; a joint venture with Nipponese based Hitachi Machinery for earthmoving and heavy equipments like Cranes etc. ( Web 3 ) Tata AutoComp Systems ( TACO ) Tata AutoComp System is a genuinely planetary engineering company in the automotive sector offering merchandises and services to vehicle and constituent makers every bit good as end-users of cars. It has built its base through partnerships and joint ventures with planetary constituent and vehicle makers. Its three major countries of concern include fabrication, technology and supply-chain direction. TACO has entered into a joint venture with fabrication companies across the universe which include states like Japan, South Korea, US and Germany. Some of its joint ventures are with Johnson Controls ( US ) , Yazaki Corporation ( Japan ) , CHKK ( Japan ) , Ficosa International ( Spain ) , Nifco Corporation ( Japan ) and Stadco ( UK ) ( Web 1 ) Tata BP Solar Tata BP Solar is ajoint venturebetween Tata Power Company and BP Solar, one of the largest solar companies in the universe. It uses state-of-the-art engineering to offer high-quality, advanced solar solutions that cater to the demands of single clients, big establishments every bit good as full communities. ( Source ) Tata BP solar can besides be termed transnational because it exports its merchandises and systems to a host of states and more than half ( 60 % ) of its gross revenues come from exports with more than 95 per cent of the exports traveling to Europe and America. Tata Group’s other large acquisitions list includes the acquisition of South Korean Automaker Daewoo. Daewoo’s domestic market portion has risen from 26 per cent to 33 per cent after the coup detat. ( Newing, 2005 ) Ratan Tata, the president of Tata Group is a steadfast truster in spread outing globally through acquisitions and joint ventures. He advises other Indian companies to turn organically and through amalgamations and acquisitions because he feels that a broader base equips a house against economic downswings. In line with his thought, the Tata Group’s planetary amalgamations hasn’t stopped. It sees the hotel section as the following large chance for growing and is actively seeking to turn its Tata Hotel Group by amalgamations, acquisitions and joint ventures with major hotel groups. Features of a good transnational company Company’s internationalisation and abroad enlargement affect all facets of the concern. For a MNC to be successful, the first measure is to take the right manner of incursion ( Acquisition, Stakeholder, Joint Venture, Licensing etc ) . How a company enters into understanding with the other company is a strategic determination which can take to a successful relationship. Eg. come ining a Chinese market can be really different to the US because Chinese companies and the authorities has greater control over distribution channels which can act upon the incursion scheme. Government ordinances, once more, can play a large portion in taking the best incursion scheme. Eg. Companies can merely keep up to 5-10 % interest in an Indian retail sector harmonizing to authorities ordinances. But, taking the right incursion scheme is merely the first measure and does non vouch success. Other facets such as concern scheme, Research and Development, production, procurance, gross revenues A ; se lling, trade name A ; rational belongings, direction, human resources, financing As ; accounting, IT direction hold to be considered. Companies could besides be required to alter their organisation construction and the manner work is carried out. Eg. A US based company come ining into a joint venture with a Nipponese house may hold to flatten its organisational construction harmonizing to Nipponese demands. Cultural and societal factors besides come into image, particularly, if the amalgamation is between two companies coming from different parts. Eg. Japan and US. All these facets of the concern has to be clearly understood before make up ones minding on a scheme. Decisions Tata Group of companies has been successful because of its model of communicating and value systems which cater to the demands of different demographic groups around the universe. Its experience in diverse sectors has armed it with the ability to visualise the merchandise from the end-users point of view which is critical to any MNC’s success. ( Skapinker, 2005 ) The Group and its transnational subordinates has helped further the development of domestic intermediate good bring forthing houses and has had a positive impact on the development of domestic fabrication houses and later on the Indian economic system. Through its Tata Consultancy, Tata Motors and now Tata Steel trade name, it has shown the manner to other Indian companies who have ever shied away from amalgamations and acquisitions. Taking a cue from Tata Group, other Indian companies have began spread outing their concern overseas. Tata Group have besides contributed to bettering the fabricating state of affairs in India and across the universe through good fabrication patterns. Another ground for its success is its control of abroad subordinates which is much stronger than that of Western companies. The group as a whole is cohesive and integrated which allows it to meet on ends. Ratan Tata ( 2006 ) sums up his Group’s success by saying that the group had allowed the companies that were taken over to retain the face, touch and experience of a local company while still pull offing to incorporate merchandise programs and schemes. Mentions Most of the company specific information was taken from Tata Group’s web site and Company Reports Books and Diaries Howard V. Perlmutter ( 1994 ) , The Tortuous Evolution of the Multinational Corporation, Columbia Journal of World Business, pp. 9-18. Lacity, M.C. , Willcocks, ( 1995 ) L.P. A ; Feeny, D.F. , ‘IT Outsourcing: Maximize Flexibility and Control, ’Harvard Business Review, May-June, pp.84-93 Murray, S ( 2005 ) ‘Managing Relationships’Financial Times, London, 2 June, p.29 Newing, R ( 2005 ) ‘Tactical out Tasking for operational benefits’Financial Times, 1 June, p.4 Prahalad, C.V. A ; Hamel, G. , ( 1990 ) ‘The Core Competence of the Corporation, ’Harvard Business Review, May-June, 79-91 Rao, H. R. , Nam, K. A ; Chaudhury, A. , ( 2003 ) ‘Information Systems Outsourcing, ’Communicationss of the ACM, Vol.39, No.7, pp.27, 28 Skapinker, M ( 2005 ) ‘Changing industry enters fresh era’Financial Times, London, 2 June, p.28 Web sites Web 1:Tata Group( online ) ( cited on 14 March 2007 ) Available from lt ; URL: //www.tata.com/ gt ; Web 2:Tata Corus But Who’s following( online ) ( cited on 14 March 2007 ) Available from lt ; URL: //http: //www.fool.co.uk/news/investing/company-comment/2006/10/19/tata-corusbut-whos-next.aspx gt ; Web 3:Tata Corus( online ) ( cited on 15 March 2007 ) Available from lt ; URL: // hypertext transfer protocol: //www.ft.com/cms/s/887968fa-54d7-11db-901f-0000779e2340.html