Unit I

MULTINATIONALS
as
GLOBAL INTERMEDIARIES
Arun Kumar Mishra
arunjimishra@gmail.com
9893686820,9752474017
Introduction
• A Multinational Corporation/Company is
an organisation doing business in more than one
country.
• MNC’s engage in various activities like
exporting, importing, manufacturing in different
countries.
• They have worldwide involvement & a global
perspective in its management & Decision
Making.
• These companies have sales offices &
manufacturing facilities in many countries.
Why do domestic co’s become MNC’s?
• To protect themselves from risk &
uncertainty.
• To tap global markets.
• To increase market share.
• To reduce costs.
• To overcome tariffs.
• To have technological advantage
Factors Contributed for the
Growth of MNCs
• Expansion of Market Territory.
• Market Superiorities.
• Financial Superiorities.
• Technological Superiorities.
• Product Innovations
Advantages& Disadvantages of MNCs
Advantages& Disadvantages of MNCs
Control over MNC’s
• Different agencies in India control MNC’s
▫ Department of company Affairs
▫ Reserve Bank of India
▫ Ministry of Industrial Development
▫ Ministry of Finance
 Organization Structure of MNCs
Steps in designing Organisational Structure
• External Environment – Economic, Political &
Legal
• Overall aims & Purpose of the enterprise
• Objectives- specific aims & targets
• Activities – work done & need to be done
• Decisions to be taken across Horizontal &
Vertical dimensions.
• Relationships – from the view point of
communication.
Organization Structure of MNCs
• Organisational Structure – Grouping of
activities, span of management etc.
• Job Structure – job design, job analysis, job
description etc.
• Organisational Climate – working atmosphere
• Management Style – Autocratic, Democratic,
Laissez –faire etc.
• Human Resources – availability by skills,
knowledge, commitment, aptitude etc.
Organization Structure of MNCs
• Vertical/ Tall Organisation
▫ Refers to increase in the length
of the organisation’s hierarchy
chain of command.

• Horizontal / Flat
Organisation
▫ Refer to an increase in breadth
of an organisation’s structure
Approaches to Organisational Structure of
MNC’s

• Product Organisational Structure

• Geographical Organisational Structure
• Decentralised business division
• Strategic business units
• Matrix Organisational Structure
• Team Organisational Structure
• Virtual Organisational Structure
Product Organisational Structure
Geographical Organisational Structure
Decentralised business division
Strategic business units
Matrix Organisational Structure