IB0012-Management of Multinational Corporations

Winter-2015
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Master of Business Administration- MBA Semester 3
IB0012-Management of Multinational Corporations-4 Credits
(Book ID: B1906)
Assignment (60 Marks)
Note: Answer all questions must be written within 300 to 400 words each. Each Question carries 10
marks 6 X 10=60.
Q1. What are the benefits of MNCs to home and host countries?
Answer. Following are the main features of MNCs:
 Location – MNCs has their headquarters in home countries and have their operational division
spread across foreign countries to minimize the cost.
 Capital Assets – Major portion of the capital assets of the parent company is owned by the citizens
of the company’s home country.
 Board of Directors – Majority of the members of the Board of Directors are citizens of the home
country.
 MNCs are large - sized corporation and exercise a great degree of economic dominance.
Q2. What do you understand by global sourcing? What are the different forms of global sourcing?
Elucidate.
Answer. Global Sourcing
A procurement strategy in which a business seeks to find the most cost efficient location for
manufacturing a product, even if the location is in a foreign country. For example, if a toy manufacturer
finds that manufacturing and delivery costs are lower in a foreign country due to lower wages of foreign
employees, the company might close the domestic factory and use a foreign manufacturer. Global
sourcing generally refers to sourcing outside of a company's traditional market. Two quite different
strategic
Q3. What is the need and importance of global strategy for MNCs?
Answer. ‘Global Strategy’ is a shortened term that covers three areas: global, multinational and
international strategies. Essentially, these three areas refer to those strategies designed to enable an
organisation to achieve its objective of international expansion.
To create a successful global strategy, managers first must understand the nature of the global
industries and the dynamics of global competitions.
Q4. How is the performance of employees assessed and appraised in multinational corporations?
Explain in brief.
Answer. Organizations have indentified the importance of performance appraisal and it has been found in
the cases of all big multinational companies that they have implemented the performance appraisal
systems to enhance the productivity of their employees. There are varieties of different perspectives that
evident the importance of performance management and its measurement (Whitney, 1994). Organization
should present true and fair views of performance appraisal to gain trust of the employees, their loyalty
and job satisfaction are the main core of any organizational success. So, it results in counter of an
organization that employees are demoralized and also lose their loyalty, which affects the organizational
Q5. What are the main reasons pertaining to the inadequate attention towards issues relating to labour
relations in MNCs?
Answer. Following are the Key Issues in International Industrial Relations (IIR)
Issue 1: Who should handle Labour Relations – Headquarter or the subsidiary in the concerned country the
national dissimilarities in economics, political, and legal systems create diverse labour-relations system
across countries, MNCs HQs typically delegate the control over labour relations to their foreign
subsidiaries. Having said that, the participation of the MNC headquarters in host-country labour relations
is impacted by 4 key elements:
Q6. Write short notes on:
a. Indian MNCs
b. FDI and MNC
Answer. a. A multinational company or corporation (MNC) is a company that manages its operations,
production or service delivery 'from' and 'to' more than one country. Apart from playing an important role
in globalization and international relations, these multinational companies even have notable influence on
a country's economy (both home and host) as well as the world economy.
As far as India is concerned, a number of multinational companies have shown interest in the Indian
market. It is obvious that foreign companies come and settle in India to earn profit. As India has a wide
Winter-2015
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