IGNOU MS 97 2017 - What effects do MNC operations usually have on the management of domes

Question

What effects do MNC operations usually have on the management of domestic firms ? Discuss in light of the Indian experience, citing relevant examples.

20 Apr 2018

Answer :

Word Count : 602

Multinational corporations (MNCs) play a significant role in the global economy, and their operations can have both positive and negative effects on the management of domestic firms in their host countries. In the case of India, MNCs have had a profound impact on the domestic business landscape, and this impact can be analyzed by considering various aspects:

1. Competition and Market Dynamics:
MNCs bring fierce competition to domestic firms, which can be a double-edged sword. On one hand, it compels domestic firms to improve their products, services, and operations to remain competitive. For example, when global retail giants like Walmart and Amazon entered the Indian market, domestic retailers had to enhance their supply chains, technology, and customer service to keep up.

On the other hand, intense competition from MNCs can lead to the marginalization or even closure of some domestic firms, particularly smaller ones. This was evident in the case of local bookstores and traditional retailers struggling to compete with online giants.

2. Technological Advancement:
MNCs often introduce advanced technology

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