Managing Transnational Corporations

1. Managing Transnational Corporations - Prof. Vikram Tyagi Prof. Vikram S Tyagi, JKBS

2. Managing Trannational Corporations • Course Introduction • Definition and role in Globalized world • Strategic frame work for managing TNCs • Major issues involved in managing TGCS • Strategy for managing TNCs • Strategy, structure and operations • Pedagogy: PPT, Case Studies; class discussions • Reading references : 1- International Business-The Challenges of Global Competition (Ed. 2009) -By Donald Ball, Wendell McCulloch, Michael Geringer, Michael Minor 2-International Business- Competing in the Global Marketplace (6th Ed. 2009} -By Charles Hill & A.K. Jain 3- International Business-Environment and operation (12th Ed. 2010) -By John Danial, Lee Radebaugh, Daniel Sullivan and PrashantSalvan • Course facilitators: 1-Harpreet; harpreet_320@yahoo.co.in; 95824269844 ;2-Navjot; nabjot_dhalival@yahoo.co.in ; 98718228927; 3-Sweta;sweta15agrawal@gmail.com; Mo: 9555782410 • Vikramtyagi.jkbs@gmail.com; Mob: 9811809057 Prof. Vikram S Tyagi, JKBS

3. Managing Transnational Corporations • Method of Evaluation • Class attendance -10 marks • Class participation -10 marks (3 observers) • Group Assignment -20 marks • Mid Term Exam. -20 marks • Final Examination -40 Marks Prof. Vikram S Tyagi, JKBS

4. Managing Tranational Corporations • What are Transnational Corporations • A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. • The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries. Prof. Vikram S Tyagi, JKBS

5. Why Managing TNCs is different ? • More Complex Environment • All the forces influencing the life and development of the firm • Domestic • Foreign • International • Forces • External Forces (Uncontrollable) – Forces over which management has no direct control • Internal Forces (Controllable) – Forces that management can use to adapt to external forces

6. Why Managing TNCs is different ? • Domestic Environment • All the uncontrollable forces in the home country that surround and influence the firm’s life and development • Foreign Environment • All the uncontrollable forces originating outside the home country that surround and influence the firm • different values • Different political and legal systems • difficult to assess

7. Why Managing TNCs is different ? • International Environment • Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces • Increased difficulty in decision-making • Decision making more complex

8. Why Managing TNCs is different -External Forces contd.. • Competitive • Kind, number, location • Distributive • For distributing goods and services • Economic • GNP, unit labor cost, personal consumption expenditure • Socioeconomic • Characteristics of human population • Financial • Interest rates, inflation rates, taxation

9. Why Managing TNCs is different -External Forces • Legal • Laws governing how international firms must operate • Physical • Topography, climate, and natural resources • Political • Forms of government, and international organizations • Sociocultural • Attitudes, beliefs, and opinions • Labor • Skills, attitudes of labor • Technological • Equipment and skills that affect how resources are converted to products

10. Why Managing TNCs is different-Internal Forces • Factors of Production • Capital, raw materials, and people • Activities of the organization • Personnel, finance, production, and marketing

11. Why Managing TNCs is different-Globalization • The shift toward a more integrated and interdependent world economy • Three components: • The globalization of markets • The globalization of production • The globalization of services Prof. Vikram S Tyagi, JKBS

12. Why Managing TNCs is different-Globalization • Lowering of trade barriers made globalization possible; technology has made it a reality • Since the end of World War II the world has seen advances in • Communication • Information processing • Transportation technology Prof. Vikram S Tyagi, JKBS

13. Global Institutions by purpose -Affecting TNCs

14. Global Natural Resources and sustainability- Affect TNCs Strategy • Location • Topography -Mountains, desserts, bodies of water • Climate • Sources of Energy • Non-fuel Minerals • Environmental sustainability Prof. Vikram Tyagi, JKBS

15. Emerging Role of TNCs in world • There is an unprecedented transfer of power from people and their governments to global Institutions whose allegiance is to abstract free-market principle, and whose favoured citizens are soulless corporate entities • Foreign direct investment: at least 75% of world flows come from TNCs • International trade: 67% of all exports are directly related to TNCs through intra firm operations or trade with third parties • Some TNCs are bigger than some countries Prof. Vikram S Tyagi, JKBS

16. Emerging Role of TNCs in world-10 largest TNCs ($mn) -Nonfinancial Prof. Vikram S Tyagi, JKBS

17. Emerging Role of TNCs in world • Top 50 Financial TNCs • Top 100TNCs from Developing world • Top 50 Financial TNCs ranked by Geographical spread Prof. Vikram S Tyagi, JKBS

18. Growing Power of Indian TNCs Some of Mega acquisitions Acquiring CoAcquired Co Deal in $ bn Tata Steel (2007) Corus 13.6 Vodafone (2007) Hutch Essar 10.9 Bharati Airtel (2010) Zain Africa 10.7 Vedanta (2010) Cairn India 9.6 Hindalco (2207) Novelis 6.0 ONGC Imperial Energy 2.6 Tata Motors Jaguar/Rover 2.3 Jindal Steels El Mutun 2.3 United Spirits Whyte&Mackay 1.2 Essar Steel Agloma steels 1.5

19. TNCs Management Business Model

20. Next Session Please read case study: Evolution of Strategy at P&G (c) Dr. Azhar Kazmi 2008

21. Managing Transnational Corporations - Prof. Vikram Tyagi Prof. Vikram S Tyagi, JKBS