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

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 Prashant Salvan  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

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

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

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

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

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

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

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

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

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

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

Global Institutions by purpose -Affecting TNCs

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

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

Emerging Role of TNCs in world-10 largest TNCs ($mn) -Nonfinancial Ranking Corporation Home Economy Foreign Assets Total Assets 1. General Electric United States 401 290 797 769 2. Royal Dutch Shell United Kingdom 222 324 282 401 3. Vodafone Group 201 570 218 955 4. BP 188 969 228 238 5. Toyota Motor Japan 169 569 296 249 6. ExxonMobil 161 245 228 052 7. Total France 141 442 164 662 8. E.On Germany 141 168 218 573 9. Électricité de France 133 698 278 759 10. ArcelorMittal Luxembourg 127 127 133 088 Prof. Vikram S Tyagi, JKBS

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

Growing Power of Indian TNCs Some of Mega acquisitions Acquiring Co Acquired 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

TNCs Management Business Model

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

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