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IB0012-Management of Multinational Corporations

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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. ‘The eclectic theory is an analytic approach towards understanding foreign direct investment as well
as the organizational issues of MNCs pertaining to international production.’ Critically examine this
Answer. Multinational corporations have existed since the beginning of overseas trade. They have
remained a part of the business scene throughout history, entering their modern form in the 17th and
18th centuries with the creation of large, European-based monopolistic concerns such as the British East
India Company during the age of colonization. Multinational concerns were viewed at that time as agents
of civilization and played a pivotal role in the commercial and industrial development of Asia, South
Q2. What do you understand by global sourcing? What are the different forms of global sourcing?
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
Q3. Why is a good organizational structure needed? Also discuss the benefits of a good organizational
Answer. Businesses require structure to grow and be profitable. Designing an organization structure helps
top management identify talent that needs to be added to the company. Planning the structure ensures
there are enough human resources within the company to accomplish the goals set forth in the company’s
annual plan.
Reporting Relationships
Reporting relationships must be clear so all members of the organization understand what their
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
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
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
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