Hello everyone, in the previous topic we were talking about Datatype and Variable in Java. Today we are going to talk about Industrial Policy Resolution, Multi-National Corporations, Public Enterprise Policy Under New Economic Policy, and SSI Policy.
Contents
Industrial Policy Resolution
The Industrial Policy Resolution was adopted in 1956. This resolution formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist pattern of society. This resolution classified industries into three categories.
The first category comprised industries that would be exclusively owned by the state; the second category consisted of industries in which the private sector could supplement the efforts of the state sector, with the state taking the sole responsibility for starting new units; the third category consisted of the remaining industries which were to be in the private sector.
Although there was a category of industries left to the private sector, the sector was kept under state control through a system of licenses. No new industry was allowed unless a license was obtained from the government.
This policy was used for promoting industry in backward regions; it was easier to obtain a license if the industrial unit was established in an economically backward area. In addition, such units were given certain concessions such as tax benefits and electricity at a lower tariff. The purpose of this policy was to promote regional equality.
Even an existing industry had to obtain a license for expanding output or for diversifying production (producing a new variety of goods). This was meant to ensure that the number of goods produced was not more than what the economy required. A license to expand production was given only if the government was convinced that the economy required a larger quantity of goods.
Multi-National Corporation (MNC)
An MNC is a company that owns or controls production in more than one nation. MNCs set up offices and factories for production in regions where they can get cheap labor and other resources. This is done so that the cost of production is low and the MNCs can earn greater profits.
In other words, we can define MNC as “A corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment, firms that participate in international business, however large they may be, solely by exporting or by licensing technology are not multinational enterprises”.
The various benchmarks sometimes used to define “multi-nationality” is that the company must-
- Produce or rather than just distribute abroad as well as in the headquarters country.
- Operate in a certain minimum number of nations.
- Derive some minimum percentage of its income from foreign operations.
- Have a certain minimum ratio of foreign to a total number of employees, or of the foreign total value of assets.
- Possess a management team with geo-centric orientations.
- Directly control foreign investments.
How Multinational Corporation Evolved
The dynamics of international business created a great need for the evolution of Multinational corporations. A multinational corporation is a company engaged in producing and selling goods or services in more than one country. It normally consists of a parent company located in the home country and a few or more foreign subsidiaries.
Some MNCs have more than 100 foreign subsidiaries scattered around the world. It is the globally coordinated allocation of resources by single centralized management that differentiates the multinational enterprise from other firms engaged in international business.
MNCs make decisions about market-entry strategy; ownership of foreign operations; and production, marketing, and financial activities with an eye to what is best for the corporation as a whole.
The true multinational corporation emphasizes group performance rather than the performance of its individual parts.
There are different types of multinational companies, they are-
Raw-Material Seekers
Raw-material seekers were the earliest multinationals and their aim was to exploit the raw materials that could be found overseas. The modern-day counterparts of these firms, the multinational oil and mining companies such as British Petroleum, Exxon Mobil, International Nickel, etc.
Market Seekers
The market seeker is the archetype of the modern multinational firm that goes overseas to produce and sell in foreign markets. Examples include IBM, Toyota, Unilever, and Coca-cola.
Cost Minimizes
Cost minimizes is a fairly recent category of firms doing business internationally. These firms seek out and invest in lower-cost production sites overseas.
For example- Hong Kong, Malaysia, Taiwan, and India remain cost-competitive both at home and abroad. MNCs have to follow the changes in macroeconomic factors, environmental and social issues, and business and industry developments. These factors will all profoundly shape the corporate landscape in the coming years.
Characteristics of Multinational Corporation
The following are the common characteristics of multinational corporations-
Very High Assets and Turnover
To become a multinational corporation, the business must be large and must own a huge amount of assets, both physical and financial. The company’s targets are high, and they are able to generate substantial profits.
Network of Branches
Multinational companies maintain production and marketing operations in different countries. In each country, the business may oversee multiple offices that function through several branches and subsidiaries.
Control
In relation to the previous point, the management of offices in other countries is controlled by one head office located in the home country. Therefore, the source of command is found in the home country.
Continued Growth
Multinational corporations keep growing. Even as they operate in other countries, they strive to grow their economic size by constantly upgrading and by conducting mergers and acquisitions.
Sophisticated Technology
When a company goes global, they need to make sure that their investment will grow substantially. In order to achieve substantial growth, they need to make use of capital-intensive technology, especially in their production and marketing activities.
Right Skills
Multinational companies aim to employ only the best managers, those who are capable of handling large amounts of funds, using advanced technology, managing workers, and running a huge business entity.
Forceful Marketing and Advertising
One of the most effective survival strategies of multinational corporations is spending a great deal of money on marketing and advertising. This is how they are able to sell every product or brand they make.
Good Quality Products
Because MNCs use capital-intensive technology, they are able to produce top-of-the-line products.
Top 10 MNCs in India-
- Apple India Pvt. Ltd.
- Amazon Development Centre India Pvt. Ltd.
- Citibank India
- Coca-Cola India Pvt. Ltd.
- Google India Pvt. Ltd.
- Hewlett-Packard India Sales Pvt. Ltd.
- IBM India Pvt. Ltd.
- Microsoft India Corporation India Pvt. Ltd.
- PepsiCo India Holdings Pvt. Ltd.
- Sony India Pvt. Ltd.
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General FAQ
What is industrial policy resolution?
The Industrial Policy Resolution was adopted in 1956. This resolution formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist pattern of society.
What is Multi-National Corporation?
An MNC is a company that owns or controls production in more than one nation. MNCs set up offices and factories for production in regions where they can get cheap labor and other resources.
What are the benchmarks for multi-nationality?
The various benchmarks sometimes used to define “multi-nationality” is that the company must-
1. Produce or rather than just distribute abroad as well as in the headquarters country.
2. Operate in a certain minimum number of nations.
3. Derive some minimum percentage of its income from foreign operations.
4. Have a certain minimum ratio of foreign to a total number of employees, or of the foreign total value of assets.
5. Possess a management team with geo-centric orientations.
6. Directly control foreign investments.
How Multinational Corporations Evolved?
The dynamics of international business created a great need for the evolution of Multinational corporations. A multinational corporation is a company engaged in producing and selling goods or services in more than one country. It normally consists of a parent company located in the home country and a few or more foreign subsidiaries.
What are the different types of multinational companies?
There are different types of multinational companies, they are-
1. Raw-Material Seekers
2. Market Seekers
3. Cost Minimizes
What are Raw-Material Seekers?
Raw-material seekers were the earliest multinationals and their aim was to exploit the raw materials that could be found overseas. The modern-day counterparts of these firms, the multinational oil and mining companies such as British Petroleum, Exxon Mobil, International Nickel, etc.
What are Market Seekers?
The market seeker is the archetype of the modern multinational firm that goes overseas to produce and sell in foreign markets. Examples include IBM, Toyota, Unilever, and Coca-cola.
What is Cost Minimizes?
Cost minimizes is a fairly recent category of firms doing business internationally. These firms seek out and invest in lower-cost production sites overseas.
What are the characteristics of Multinational Corporations?
The following are the common characteristics of multinational corporations-
1. Very High Assets and Turnover
2. Network of Branches
3. Control
4. Continued Growth
5. Sophisticated Technology
6. Right Skills
7. Forceful Marketing and Advertising
8. Good Quality Products
Which are the top 10 MNCs of India?
Top 10 MNCs in India-
1. Apple India Pvt. Ltd.
2. Amazon Development Centre India Pvt. Ltd.
3. Citibank India
4. Coca-Cola India Pvt. Ltd.
5. Google India Pvt. Ltd.
6. Hewlett-Packard India Sales Pvt. Ltd.
7. IBM India Pvt. Ltd.
8. Microsoft India Corporation India Pvt. Ltd.
9. PepsiCo India Holdings Pvt. Ltd.
10. Sony India Pvt. Ltd.
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