MNC full form

Shuchi BagchiUpdated On: September 27, 2023 04:32 pm IST

MNC full form is Multinational Corporation. MNC is a company that is based in its country of origin but also has offices or factories set up in one or more foreign countries. Multinational corporations are equipped with resources and are capable of investing hefty amounts in foreign countries to set up their businesses. Organizations that expand their business in two or more countries can be called as MNC. In most cases, MNC’s headquarters serves as a hub of global management and administration processes. Usually, all the essential decisions and meetings related to business take place in the country of origin.

What is MNC Full Form?

The full form of MNC is Multinational Corporation or Company: an organization that functions in two or more countries successively. Such organizations have their headquarters in one country, however, they have multiple offices or factories established in other countries according to the business needs. A multinational corporation is set up in other countries to expand the business horizon, reach new markets, set up production facilities at low or minimal cost, increase its customer base and so on. Multinational Corporations (MNC) are sometimes also called Multinational Enterprises (MNE). 

MNC is a large and well-established company with activities involved in more than two or several countries. Every MNC has multiple businesses set-up capable of opening branches abroad and expanding at a rate similar to that of international enterprises. Of course, this may boost national pride, grow the national income and motivate business owners to streamline and channelise their processes of business.

Brief History of MNC

MNCs are the biggest promoters of globalization. The first MNC in history goes back to the year 1600. The British East India Company is the first registered MNC to operate in a country other than its home country, which was established in India. The history of MNC traces back to the era of colonialism. The two main examples were the British East India Company, and the Dutch East India Company (VOC). The process of Mining, Oil Extraction and manufacturing became the prime reason for the establishment of various companies by colonial rule in different countries. The MNC gained the benefit of Economies of Scale.

Various Types of MNCs

Majorly there are four types of Multinational Corporations (MNC full form) that are operating presently:

  1. Multinational Decentralised Corporation: This kind of MNC has its office establishments in two or more countries. However, the management or administration-related decisions are taken up solely by the individual units. These MNCs maintain a prominent presence and administrative power in their home country.
  2. Global Centralised Corporation: Global Centralised Corporation MNCs focus primarily on cost advantages and optimizing resources at cheap rates. These kinds of MNCs outsource or export their operations to developing countries.
  3. International Company: This kind of MNC focuses primarily on the research & development (R&D) of the parent company providing subsidiaries and affiliates to other countries.
  4. Transnational Enterprises: Transnational enterprises are the combination of all previous three categories of MNCs. This approach of MNC is gaining popularity in the current scenario as it enables the expansion of business reach. Various examples of MNCs are: Google, Toyoto, Apple Inc, IBM, Coca Cola, Microsoft, Amazon etc.

Working Process in MNC

Multinational Corporations look for a talented and skilled workforce with the capability to learn and adopt new skills. Many MNCs prefer to hire freshers and train them as per the work criteria and requirement. MNCs offer vast opportunities to learn, earn and personal growth. For working with the setup of  MNC the aspirants should be proficient in English and should have good communication skills along with other soft skills. Many companies make use of modern technologies and strategies for proper recruitment of employees and selecting people who are talented and deserved for the job role. Candidate Sourcing, Application Tracking and Telephonic Interview/Video Call Interview is the modular process of recruitment in MNC.

. Eligibility and Salary in MNC

Eligibility criteria differs from MNC to MNC and from position to position. Moreover, skill set and level of experience are also significant factors in determining the salary in MNC. However, there are no fixed criteria and salaries.  The average Top MNC monthly salary ranges from approximately ? 12,000 per month for New Graduates to ? 50,000 per month for experienced candidates. Salary of an employee in MNC also depends on the past experience, achievements and salary hike in MNCs.

Advantages and Disadvantages of MNC

There are various advantages and reasons for why companies want to become MNCs.

Multinational Corporations have several advantages that help in expanding the business reach and capability. Few of the advantages of MNC are:

  • MNCs can easily meet the global market’s demand with their broader presence in multiple countries
  • The establishment of MNCs in multiple countries reduces the shipping costs and extra charges
  • MNCs increase the buyer’s real purchasing power by producing goods or providing services at lower costs in a competitive market
  • MNCs promote employment opportunities at different levels from freshers to experienced
  • MNCs contribute to government revenue by paying several taxes and increase the GDP growth by increasing Foreign revenue reserves
  • MNCs favor the economic and technological growth of the countries they are set up in strengthening the scientific temper

Few Disadvantages of MNC

Along With various advantages, MNC can have similar disadvantages too.

  • MNCs can develop a monopoly over the market by capturing the largest market share
  • MNCs’ use of natural resources for mass production can affect the environment adversely as the companies produce goods using low standards
  • MNCs can affect the functioning of small businesses by investing in developing countries to take advantage of cheap labor

Characteristics of MNCs

1. Multiple Assets with a Higher Turnover:

Multinational businesses (MNCs) operate mostly worldwide, showcasing that they have a considerable amount of assets in almost every country. Along With that, the turnovers can also be unreasonably high. For example, Apple has a $1 trillion market capitalization, which is more than Saudi Arabia's whole economy.

2. Origin of Control:

MNCs (multinational companies) use the method of unified control. Which means, even if they have branches established in several different countries, their main office will still be located in the nation of origin for the ease of management. Although management and offices are present in the host country, the head office still holds ultimate authority of business management.

3. Technology's Benefits:

Multinational companies (MNCs) can access enormous resources and investment opportunities. Because of this characteristic, they may improve their businesses and goods by utilizing the most advanced technology available. Most companies also spend a large chunk of money on their Research and Development department to develop and discover the newest technological innovation.

4. Administration by Specialists:

Many highly talented and professional people manage the working of multinational companies (MNCs). They have skilled and efficient managers to handle company operations, technology, funding, business expansion, etc. Moreover, they can recruit top personnel to their company due to their reputations and resources.

Various Models of MNC

There are various models of MNCs depending on the type and functions. The process of working is carried out by effective administration from the respective headquarters. The primary model of MNC consists of three distinct types of MNCs- Centralized, Regional, and Multinational. The brief elaboration about the three has been mentioned below:

  • Centralized MNC

In the centralized model of MNC, the companies build headquarters in their home country and then develop, grow, and expand various manufacturing plants and production facilities in other countries. It helps to avoid tariffs and several international trades and lowers production costs.

  • Regional MNC

The regionalized model of MNC is when a company keeps its headquarters in one country that supervises and carries out the administrative functions for the collection of offices that are located in other countries. 

  • Multinational MNC

In the multinational model of MNC, a parent company operates and carries out the function in the home country and puts up branches in different countries. The set branches are more independent in their operations and workings.

Interesting Fact about MNCs

  • Generally, Multinational corporations conduct business in two or more countries.
  • Some research and studies have considered a multinational company to be one that generates 25% or more of its total revenue outside the home country.
  • An MNC can have a positive and wider economic effect on the countries in which it operates. It helps boost the economy, facilitates international trade, and provides employment opportunities by reducing income disparity.
  • Some experts and scholars, in terms of the U.S. economy, believe that outsourcing U.S. manufacturing to a foreign country has a negative effect on the U.S. economy.
  • Investing in a multinational corporation is a way to add and expand international exposure to a portfolio.

FAQs

What is the full form of MNC?

The MNC full form is Multinational Corporation.

What are the different examples of MNC?

The companies that are MNC are: IBM, Microsoft, Apple, Coca Cola, etc due to their greater management skills.

What is the salary of an employee in MNC?

There is no fixed salary structure  in MNC. Salary differs from position to position, skill set, level of experience and company laws.

What are the important skills required to be an employee in MNC?

For working in MNC, the aspirant should have proficiency in English and should have good communication skills as the personality enhancement is the utmost important requirement.

How does Foreign Investment help MNC?

The establishment of MNC, the foreign investment starts to come which boost Indian Economy towards prosperity.

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