 Hello learners. In this class, we are going to discuss a unit of the paper business organization and business ethics of become first semester. The name of the unit is multinational corporation. In simple term, a multinational corporation is a corporation which operates in different countries. That means a corporation which has its registered office in one country and it has its business operation in different countries or in different parts of the world. Those companies are known as multinational companies. You might be hearing the name of many companies like Sony, LG, Hyundai, Honda, etc. All these companies are multinational companies which operate in many countries of the globe. In simple word, a multinational corporation is a corporation which operates in different countries. Now, if we talk about types of multinational companies, we can divide multinational corporations into three types. Number one, ethnic and ethnic, number two, polycentric, number three, geo-centric. Now, these ethnic and ethnic multinational corporations generally more concentrate towards the home country. That is the country of origin. The country in which the corporation originates, they concentrate on that country. They give preference to the people of those countries. They try to generate more employment for that country. So, those types of multinational corporations are known as ethnic and ethnic multinational corporations. Number two is polycentric. Polycentric multinational corporations are just opposite to the ethnic and ethnic multinational corporations. Polycentric multinational corporations give importance to the host country or that is the country in which MNC operates. In those countries, they try to generate employment and they give preference to the host country. That is the country in which the company operates. And number three is polycentric. A polycentric multinational corporation give importance to the global operations. They make decisions on global perspective. They neither give preference to the home country nor the host country. They give preference to the world as a whole. So, these three are the types of multinational corporations. Now, the objectives of multinational corporations. Why a company want to operate in different countries? What are the objectives? The number one objective is to earn maximum profit. So, to earn maximum amount of profit a company tries to expand its business operation in different parts of the country. Number two is in search of SIPP labor or in search of SIPP infrastructure. In developed countries, the cost of labor, the cost of infrastructure is very huge, very high. So, the corporation search for alternatives and they establish their business operations in other countries where the labor are SIPP. So, next objective is to achieve efficiency. The multinational organizations, the multinational corporations try to achieve maximum efficiency by employing efficient person, efficient worker by using the latest R&D, the latest technology. They try to increase their efficiency. Next objective is by operating in different countries, a company can create a global image. So, that is another objective of multinational corporation that is to create a global image. Like if you talk about Sony. So, Sony has a global image. Every country knows about Sony. So, that is one objective. Next objective is to capture the market. So, we know that nowadays the entire globe is a market. So, this MNC tries to explore the market every knock and corner of the globe. The next objective is use of technology, advanced technology. Since multinational corporations invest a huge amount in the research and development that is R&D. So, they always try to find out the best technology and that is one objective of going multinational. Now, characteristics of a multinational organization. The multinational organization has some characteristics, fissures. If we talk about the fissures, number one fissure is big size. These MNCs are huge in size. They have huge capital investment. They have numbers of production facilities throughout the globe. Like if we take again example of Sony, Samsung, then Hyundai, Honda. We will see that these companies are very large. They invest huge amount of capital. They have production facilities throughout the globe. They have corporate offices throughout the globe. So, MNCs are very big in size. Number two is international operation. That is to be an MNC, it must operate in more than one country. So, if you talk about the MNCs or if you look at the MNCs, we will get that or we can see that it has international operation. It operates in many countries. Next characteristics is use of advanced technology. So, these MNCs, all MNCs, their technologically they are very developed because their research and development team is very strong. They invest a very huge amount. They even provide financial assistance to many research organization to conduct research for the company, product and their technologies. That is why their technology is very advanced. They use advanced technology. Next characteristics is high efficiency. Since the MNCs are having maximum amount of capital, they are having good technology, they are having efficient people in their hands. So, their operational efficiency, the level of efficiency is very high. Next objective is quality. All MNCs are very conscious about their qualities because to operate throughout the globe, their product must be of good quality. So, they never compromise in quality. They always try to produce good quality product and they try to explore the new market by making available good product or quality product. The next characteristics is most of the MNCs are originated in developed countries. Like if you talk about big, big companies like Sony, like Samsung, then Apple, all these companies are originated in developed countries. Because of the reason MNC requires huge amount of investment which is available only in developed countries. MNCs requires or MNC they use high technology or advanced technology can be developed by investing huge amount of money or by investing huge capital. So, that is why these MNCs are originated in developed countries or rich countries. We will get all the most of the MNCs originated in UK, US, Korea, Japan, China. So, this is another characteristics. Now, if you talk about advantage or disadvantage of MNCs, so, we will get two thoughts. One is in favor of MNCs, another is against the MNCs. MNCs are good as well as bad for a country or for a society, for an economy. Like there are two countries. One is host country, one is home country. If you talk about MNC, the country where the MNC is originated that is called home country, the country where MNCs are operating that is called host country. So, there are both advantages and disadvantages to both the countries. So, if you talk about the advantages, first we will talk about the advantages to the host country. Now, for a host country, there are many advantages. MNCs bring many advantages to a host country. Number one is when MNC or when corporation come to a country, it gives employment, it brings investment, it increase the level of income of that country. So, that is one big advantage to a host country. That is when a MNC comes into a country or when one MNC start functioning in a country, number one it gives employment opportunities to its citizen, number two it brings investment to the country and number three it increase the level of income of the citizen of that country. So, which is very important especially for developing and less developed countries. In developing countries or less developed countries, there are lack of employment, there are lack of capital, there are income level is very low. So, if MNC comes to one developing country or one less developed country, so it brings all these things. Next advantage to host country is as we already talked that MNCs use high technology, MNCs use very advanced technology. So, when one MNC come to one country, it brings the technology with them. So, thereby the country is technologically developed. The next advantage to host country is MNC brings technological skill then entrepreneurial skill and management experience with them and thereby they improve the condition of host countries. Another advantage of MNC to the host country is it increase the volume of business in that country. So, when one MNC come automatically the business value of that country increases and that is one advantage to the host country. Next advantage to host country is it create competition in the market of that country and when competitions comes in the market, the quality of the product and services automatically improves. So, that is another benefit to the host country. Another advantage to the host country is when one MNC come into the operation or when one MNC come to one country, it increase or volume of export of that country. So, what happen suppose Sony comes to India and they start producing product of Sony in India. So, what will happen products will be exported to other countries from India and thereby India will gain foreign exchange reserve or India will earn foreign exchange reserve. So, that is one big advantage for a developing country or less developed country, it brings foreign exchange reserve. Another advantage is it increase the industrial and economic development. So, as you know that this underdeveloped countries or developing countries, they are lacking of industrial development due to lack of capital, due to lack of infrastructure. So, when MNC comes in a country, they improve or they increase the industrial and economic development of that country. Next is like any other company or like any other income generating persons, those MNCs are also need to pay tax to the country in which it operates. So, when MNC comes into a country, it improves the situation of national executor by paying tax. The next advantage to the host country is it improves the standard of life by many way. Number one, it starts producing good quality product in that country, thereby making the product available to the local consumers in the local market. Number two, by giving employment to its local people, MNC improve the level of income and thereby level of living standard of living. So, in that way, MNC improves the living standard of the people. Next advantage is it gives high return or high rate of dividend to its investors and motivate the people to invest more and more. So, that is another advantage to the host country. So, all these are advantages brought by one MNC to the host country. Next, we will discuss about the advantage it brings to the home country, how one MNC helps or how one MNC bring advantage to its home country, that is the country in which it originates. Number one advantage is it explore or it expand the market of the product to the whole globe. The entire globe become market for their product. Number one, number two is create employment opportunities to the people of home country. Basically, their corporate offices are located in the home country and in all the countries where they are operating, they employ their home country's people in key positions. So, it creates employment opportunity to the home country. The next advantage of MNC to its home country is it increase the responsibility, industrial responsibility of that country. When it goes for operating in many countries, the responsibility of the home country automatically increases. The most important advantage to the home country is the MNC's brings foreign exchange to the home country in terms of remittance of income or profit. Now, we talked about many advantages of MNC's, but it is not always true that MNC's only brings advantage to both home and host countries. It has many disadvantages. It face many criticisms. Now, if we talk about the disadvantages of MNC's to the host countries, number one is the technology it brings, that is the technology brought by the MNC's to the host countries are always the absolute technologies. The MNC's never brings the new technology and latest technology to the host country, that is the latest technologies are used in home country. So, number one is they always bring the absolute technology to the host country. So, that is one disadvantage. The next disadvantage or the next criticism against MNC's is that by using capital intensive technology, they reduce the employment opportunity, that is instead of human, they use machineries for producing goods. So, in that case, it reduce the scope of employability or a scope of employment. Another criticism against the MNC's are it creates threat to the host country. It may create because the MNC's are very huge, they are very powerful, they have capital with them. So, they may create threat to the sovereignty of the host country. The greatest example is ruling of India by East India Company. East India Company which came to India to do business and slowly, slowly, they acquire the whole India and they rule India for more than 200 years. So, that is the greatest threat. If the company is very big and the country is weak, then they may try to acquire the country. The next criticism is the MNC's, they generally, they try to create monopoly in the developing country or developed country since they have a very huge capital, they have a very huge production facility. So, they produce good quality product and thereby, they eliminate the product of host country, the domestic product of host country and they try to, the MNC's try to establish monopoly. Another criticism against MNC's are that it comes to a country only for profit, not for social or economic development of that country and they stick to that objective only. So, they try to maximize their profit only. They are not concerned about social development and economic development of that host country. The next disadvantage or criticism is somehow MNC's tries to influence the politics and administration of the host country. Again, that is due to their power, due to their capital. So, they try to or they, they try to influence the political system of host country. Next, criticism is this MNC remits a huge amount of fund from the host country as profit to the home country. So, it creates outflow of fund from the host country to the home country. Now, all these were disadvantages or criticism against MNC for host country. It's not like that MNC's create problem for host country only. There are many criticism against the MNC for home country also. Number one is MNC shift its capital and technology from the home country to the host country. That is one criticism against the MNC. Number two is one MNC may not create employment opportunities in the home country. It may, it may not employ people from its home country. It may employ, it may employ people from the host country or other country where it is safe because the ultimate objective of MNC is to maximize profit. Another very important criticism against the MNC's are that generally MNC produce non-essential items which are not essential for day-to-day living rather they give importance to the non-essential items and luxury item. So, all these are advantages and disadvantages of MNC's we discussed. So, if you talk about India or if you talk about developing countries out of our discussions it is evident that MNC's create employment opportunities. MNC's are increasing the employment level, increasing the income level and increasing the investment level in the host countries or in a country like India but at the same time it creates many trade. Nevertheless MNC's are very important nowadays because this MNC's since it operates in a large scale so it it really brings many economic benefit to a country. Thank you. Thank you learners. For further if you want to generate or if you want to study more about MNC's then you can consult the book written by R. K. Leahy. The name of the book is Economic Development and Planning published by Kallini publishers. In that book you can get a detailed note about MNC's. Thank you.