A SYNOPSIS ON

“PERFORMANCE OF MNC’S”

BY

K. DIVYA SREE

(HALL TICKET NO: 2129-21-672-040)

Synopsis for project to be submitted for the award

of the degree of

MASTER OF BUSINESS ADMINISTRATION

OSMANIA UNIVERSITY

2021-2023

AURORA’PG COLLEGE, NAMPALLY

CHAPTER PLAN
CHAPTER-1
INTRODUCTION
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
METHODOLOGY OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
INDUSTRY PROFILE
COMPANY PROFILE
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
CHAPTER-5
SUGGESTION
FINDINGS & CONCLUSION
BIBLIOGRAPHY
INTRODUCTION
Multinational Companies (MNCs) are large companies that operate in several countries
with their headquarters at a particular country. Multinational Companies as recently have
gain more momentum in terms of investment and playing a greater role in countries’
development, it succeeded in having more attention and more focus.
The first Multinational Companies were established in the year 1920’s. Manymore
came up in the 1950’s and 1960’s as U.S. businesses expanded worldwide and
Western Europe and Japan also recovered to become powerful industrial economies. The
world wide spread of MNCs was a notable feature of 1950’s and 1960’s. This was partly
because high import tariffs imposed by different governments forced MNCs to locate
their manufacturing operations and become ‘domestic producers’ in as many countries as
possible. Multinational Companies are generally operated in the less developed or
developing countries with their head office in the foreign developed countries. They have
been playing a significant role in the economies of those countries where they are operating.
As the two sides of a coin, operation of Multinational Companies has both the advantages
as well as drawbacks to such countries.
Characteristics of Multinationals:
MNCs will always look out for opportunities. They carry out risk analysis, and send their
personnel to learn and understand the business climate. They develop expertise understanding
the culture, politics, economy and legal aspects of the country that they are planning to enter.
The essential element that distinguishes the true multinational is its commitment to
manufacturing, marketing, developing R&D, and financing opportunities throughout the
world, rather than just thinking of the domestic situation.
Some of characteristics of MNCs are:
(i) Mode of Transfer:
The MNC has considerable freedom in selecting the financial channel through which funds or
profits or both are moved, e.g., patents and trademarks can be sold outright or transferred in
return through contractual binding on royalty payments.
Similarly, the MNC can move profits and cash from one unit to another by adjusting transfer
prices on intercompany sales and purchases of goods and services. MNCs can use these
various channels, singly or in combination, to transfer funds internationally, depending on the
specific circumstances encountered.
(ii) Value for Money:
By shifting profits from high-tax to low-tax nations, MNCs can reduce their global tax
payments. In addition, they can transfer funds among their various units, which allow them to
circumvents currency controls and other regulations and to tap previously inaccessible
investment and financing opportunities.
(iii) Flexibility:
Some to the internationally generated claims require a fixed payment schedule; other can be
accelerated or delayed. MNCs can extend trade credit to their other subsidiaries through open
account terms, say from 90 to 180 days. This give a major leverage to financial status. In
addition, the timing for payment of fees and royalties may be modified when all parties to the
agreement are related.
Strategic Approach to Multinationals:
To run a new and potentially profitable project, a good understanding of multinational
strategies is necessary.
The three broad categories of multinationals and their associated strategies are
explained below:
A. Innovation Based Multinationals:
Companies such as IBM, Philips and Sony create barriers to entry for others, by continually
introducing new products and differentiating existing ones. Both domestically and
international companies in this category spend large amounts on R&D and have a high ratio
of technical to factory personnel. Their products are typically designed to fill a need
perceived locally that often exists abroad as well.
B. The Mature Multinationals:
The primary approach in such companies is the presence of economies of scale. It exists
whenever there is an increase in the scale of production, marketing and distribution costs
could be increased in order to retain the existing position or more aggressive.
The existence of economics of scale means there are inherent costs advantages of being large.
The more significant these economies of scale are, the greater will be the costs disadvantage
faced by a new entrant in the same field in a given market.
(i) Reduction in Promotion Costs:
Some companies like Coca-Cola and Proctor and Gamble take advantage of the facts that
potential entrants are wary of the high costs involved in advertising and marketing a new
product. Such firms are able to exploit the premium associated with their strong brand names.
MNCs can use single campaign and visual aspects in all the countries simultaneously with
different languages like Nestle’s Nescafe.
(ii) Cost Advantage through Multiple Activities:
Other companies take advantage of economics of scope. Economies of scope exists whenever
the some investment can support multi-profitable activities, which are less expensive.
Examples abound of the cost advantages of producing and selling multiple products related to
common technology, production facilities and distribution network. For example, Honda has
increased its investment in small engine technology in the automobile, motorcycle, marine
engine, and generator business.
C. The Senescent Multinationals:
There are some product lines where the competitive advantage is very fast.
The strategies followed in such cases are given below:
1. One possibility is to enter new markets where little competition currently exists. For
example Crown Cork & Seal, the Philadelphia-based maker of bottle tops and cans, reacted to
the slowing of growth and heightened competition in business in the United States by
expanding overseas, its set up subsidiaries in such countries as Thailand, Malaysia, and Peru,
estimating correctly that in these developing and urbanizing societies, people would
eventually switch from home grown produce to food in cans and drinks in bottles.
2. Another strategy often followed when senescence sets in is to use the firm’s global
scanning capability to seek out lower cost production sites. Costs can then be minimized by
integration of the firm’s manufacturing facilities worldwide. Many electronics and textile
firm in the United States (US) shifted their production facilities to Asian locations such as
Taiwan and Hong-Kong to take advantage of the lower labour costs.
Reasons for the Growth of MNCs:
(i) Non-Transferable Knowledge:
It is often possible for an MNC to sell its knowledge in the form of patent rights and to
licence foreign producer. This relieves the MNC of the need to make foreign direct
investment.
However, sometimes an MNC that has a Production Process or Product Patent can make a
larger profit by carrying out the production in a foreign country itself. The reason for this is
that some kinds of knowledge cannot be sold and which are the result of years of experience.
(ii) Exploiting Reputations:
In some situation, MNCs invest to exploit their reputation rather than protect their reputation.
This motive is of particular importance in the case of foreign direct investment by banks
because in the banking business an international reputation can attract deposits.
If the goodwill is established the bank can expand and build a strong customer base. Quality
service to a large number of customers is bound to ensure success. This probably explains the
tremendous growth of foreign banks such as Citibank, Grind-lays and Standard Chartered in
India.
(iii) Protecting Reputations:
Normally, products, develop a good or bad name, which transcends international boundaries.
It would be very difficult for an MNC to protect in reputation if a foreign licensee does an
inferior job. Therefore, MNCs prefer to invest in a country rather than licensing and transfer
expertise, to ensure the maintenance of their good name.
(iv) Protecting Secrecy:
MNCs prefer direct investment, rather than granting a license to a foreign company if
protecting the secrecy of the product is important. While it may be true that a license will take
precautions to protect patent rights, it is equally true that it may be less conscientious than the
original owner of the patent.
(v) Availability of Capital:
The fact that MNCs have access to capital markets has been advocated as another reason why
firms themselves moved abroad. A firm operating in only one country does not have the same
access to cheaper funds as a larger firm. However, this argument, which has been put forward
for the growth of MNCs has been rejected by many critics.
(vi) Product Life Cycle Hypothesis:
It has been argued that opportunities for further gains at home eventually dry up. To maintain
the growth of profits, a corporation must venture abroad where markets are not so well
penetrated and where there is perhaps less competition.
This hypothesis perfectly explains the growth of American MNCs in other countries where
they can fully exploit all the stages of the life cycle of a product. A prime example would be
Gillette, which has revolutionized the shaving systems industry.
(vii) Avoiding Tariffs and Quotas:
MNCs prefer to invest directly in a country in order to avoid import tariffs and quotas that the
firm may have to face if it produces the goods at home and ship them. For example, a number
of foreign automobile and truck producers opened plants in the US to avoid restrictions on-
selling foreign made cars. Automobile giants like. Fiat, Volkswagen, Honda and Mazda are
entering different countries not with the products but with technology and money.
(viii) Strategic FDI:
The strategic motive for making investments has been advocated as another reason for the
growth of MNCs. MNCs enters foreign markets to protect their market share when this is
being threatened by the potential entry of indigenous firms or multinationals from other
countries.
(ix) Symbiotic Relationships:
Some firms have followed clients who have made direct investment. This is especially true in
the case of accountancy and consulting firms. Large US accounting firms, which know the
parent companies special needs and practices have opened offices in countries where their
clients have opened subsidiaries.
These US accounting firms have an advantage over local firms because of their knowledge of
the parent company and because the client may prefer to engage only one firm in order to
reduce the number of people with access to sensitive information. Templeton, Goldman
Sachs and Earnest and Young are moving with their clients even to small countries like Sri
Lanka, Panama and Mauritius.
Country Risk:
When making over direct investment it is necessary to allow for risk due to investments being
made in a foreign country. Country risk is one of the special issues faced by MNCs when
investing abroad. In involves the possibility of losses due to country-specific economic,
political and social events.
Among the country risks that are faced by MNCs are those related to the local economy,
those due to the possibility of confiscation i.e. Government take over without any
compensation, and those due to expropriation i.e., Government takeover with compensation
which at times can be generous. In addition there are the political/social risks of wars,
revolutions and insurrections.
Even though none of these latter events are specifically directed towards on MNC by the
foreign government, they can damage or destroy an investment. There are also risks of
currency non-convertibility and restriction the repatriation of income. International
magazines like Euro Money and the Economist regularly conduct country risk evaluations in
order to facilitate MNCs.
Methods of Reducing Country Risk and Control:
1. Controlling Crucial Elements of Corporate Operations:
Most of the MNCs try to prevent operations in developing countries by other local entities
without their cooperation. This can be achieved if the company maintains control of an
element of operations.
For example, food and soft drink manufacturers keep their special ingredients secret.
Automobile companies may produce vital parts such as engines in some other country and
refuse to supply these parts if their operations are seized.
2. Programmed Stages of Planned Disinvestment:
There is an alternative technique to handover ownership and control to local people in future.
This is sometimes a requirement of the host government. There is a calculated move to
involve themselves in stages.
3. Joint Ventures:
Instead of promising shared ownership in future, an alternative technique for reducing the
risk of expropriation is to share ownership with private or official partners in the host country
from the very beginning.
Such shared ownerships, known as joint ventures rely on the reluctance of local partners, if
private, to accept the interference of their own Government as a means of reducing
expropriation.
When the partner is the government itself, the disincentive to expropriation is concerned over
the loss of future investments. Multiple joint ventures in different countries reduce the risk of
expropriation, even if there is no local participation. If the government of one country does
expropriate the business, it faces the risk of being isolated simultaneously by numerous
foreign powers.
Problems from the Growth of MNCs:
Much of the concern about MNCs stems from their size, which can be formidable. MNCs
may impose on their host governments to the advantages of their own shareholders and the
disadvantages of citizens and shareholders in the country of shareholders in the past.
It can be difficult to manage economics in which MNCs have extensive investments. Since
MNCs often have ready access to external sources of finance, they can blunt local monetary
policy. When the Government wishes to constrain any economic activity, MNCs may
nevertheless expand through foreign borrowing.
Similarly, efforts at economic expansion may be frustrated if MNCs move funds abroad in
search of advantages elsewhere. Although it is true that any firm can frustrate plans for
economic expansion due to integrated financial markets, MNCs are likely to take advantage
of any opportunity to gain profits.
As we have seen, MNCs can also shift profits to reduce their total ‘tax burden by showing
larger profits in countries with lower tax rates citizens and shareholders in the country of
shareholders in the past.
It can be difficult to manage economics in which MNCs have extensive investments. Since
MNCs often have ready access to external sources of finance, they can blunt local monetary
policy. When the host Government wishes to constrain any economic activity, MNCs may
nevertheless expand through foreign borrowing.
Similarly, efforts at economic expansion may be frustrated if MNCs move funds abroad in
search of advantages elsewhere. Although it is true that any firm can frustrate plans for
economic expansion due to integrated financial markets, MNCs are likely to take advantage
of any opportunity to gain profits. As we have seen, MNCs can also shift profits to reduce
their total tax burden by showing larger profits in countries with lower tax rates.
Multinational Corporations in India:
MNCs have been operating in India even prior to Independence, like Singer, Parry, Philips,
Unit- Lever, Proctor and Gamble. They either operated in the form of subsidiaries or entered
into collaboration with Indian companies involving sale of technology as well as use of
foreign brand names for the final products. The entry of MNCs in India was controlled by
existing industrial policy statements, MRTP Act, and FERA. In the pre-reform period the
operations of MNCs in India were restricted.
New Industrial Policy 1991 and Multinational Corporations:
The New Industrial Policy 1991, removed the restrictions of entry to MNCs through various
concessions. The amendment of FERA in 1993 provided further concession to MNCs in
India.
At present MNCs in India can—
(i) Increase foreign equity up to 51 percent by remittances in foreign exchange in specified
high priority areas. Subsequently MNCs are free to own a majority share in equity in most
products.
(ii) Borrow money or accept deposit without the permission of Reserve Bank of India.
(iii) Transfer shares from one non-resident to another non-resident.
(iv) Disinvest equity at market rates on stock exchanges.
(v) Go for 100 percent foreign equity through the automatic route in Specified sectors.
(vi) Deal in immovable properties in India.
(vii) Carry on in India any activity of trading, commercial or industrial except a very small
negative list.
Thus, MNCs have been placed at par with Indian Companies and would not be subjected to
any special restrictions under FERA.
Criticisms against MNCs in India:
The operations of MNCs in India have been opposed on the following grounds:
(i) They are interested more on mergers and acquisitions and not on fresh projects.
(ii) They have raised very large part of their financial resources from within the country.
(iii) They supply second hand plant and machinery declared obsolete in their country.
(i v) They are mainly profit oriented and have short term focus on quick profits. National
interests and problems are generally ignored.
(v) They use expatriate management and personnel rather than competitive Indian
Management.
(vi) Though they collect most of the capital from within the country, they have repatriated
huge profits to their mother country.
(vii) They make no effort to adopt an appropriate technology suitable to the needs. Moreover,
transfer of technology proves very costly.
(viii) Once an MNC gains foothold in a venture, it tries to increase its holding in order to
become a majority shareholder.
(ix) Further, once financial liberalizations are in place and free movement is allowed, MNCs
can estabilize the economy.
(x) They prefer to participate in the production of mass consumption and non-essential items.
STATEMENT OF PROBLEM

If underdeveloped countries wants to see develop herself, it will have to import

capital goods, technical know-how, spare parts and raw materials. One method of paying for
such imports is through the stepping up of exports. The exports can be increased either by
producing more or curtailing domestic consumption drastically. But underdeveloped
countries have only limited productive capacity and as such it is not possible to increase
exports substantially. Curtailment of consumption, on the other hand, involves a lot of
sacrifice and it cannot be adopted with much success in democratic countries. Thus foreign
assistance is the one form or the other which became important for speeding up the economic
growth of a country.

NATURE OF STUDY AND AIMS

Horizontally integrated multinational corporations: Horizontally integrated

multinational corporations manage production establishments located in different countries to

produce the same or similar products.

Vertically integrated multinational corporations:Vertically integrated

multinational corporations manage production establishment in certain country/countries to

produce products that serve as input to its production establishments in other

country/countries.

Diversified multinational corporations:

diversified multinational Corporations do not manage production establishments located

in different countries that are horizontally nor vertically nor straight, nor non-straight
integrated.
NEED FOR THE STUDY
In underdeveloped countries like India domestic savings are not enough to ensure
economic development. In such a case some external helps are required in the form of
“foreign aid”. If we turn the pages of history relating to economic development, we find that
every country had to rely on foreign aid for speeding up the economic growth. In the words
of W.A. Lewis, “Nearly every developed state has had the assistance of foreign finance to
supplement its own meager savings during the early stages of its development. England
borrowed from Holland in the seventeenth and eighteenth centuries, and in turn came to lend
to almost every other country in the world in the nineteenth and twentieth Centuries. The
United States of America, now a rich country in the world borrowed heavily in the nineteenth
century and is in turn called upon to become the major lender of the twentieth” It is thus not
the underdeveloped countries alone which need foreign capital for economic development
but even the advanced countries of Europe had to seek external aid in the initial stages
of their development.

SCOPE OF THE STUDY

Multinational corporations (MNCs) are huge industrial organizations having a wide network
of branches and subsidiaries spread over a number of countries. The two main characteristics
of MNCs are their large size and the fact that their worldwide activities are centrally
controlled by the parent companies. Such a company may enter into joint venture with a
company in another country. There may be agreement among companies of different
countries in respect of division of production, market, etc. These companies are to be found
in almost all the advanced countries, with the USA perhaps the biggest amongst them. Their
operations extend beyond their own countries, and cover not only the advanced countries but
also the LDCs.
Many MNCs have annual sales volume in excess of the entire GNPs of the developing
countries in which they operate. MNCs have great impact on the development process of the
Underdeveloped countries.
MNC's plays an important role in boosting up Indian Economy. In support of this we can say,
MNC's bring foreign investors to India and hence helps in globalization of Indian Market.
OBJECTIVE OF THE STUDY
 To study the Initiating a higher level of investment.
 To know how to reduce the technological gap.
 To study the natural resources are utilized in true sense.
 To know the foreign exchange gap is reduced
 To Boosts up the basic economic structure.
 To expand the business beyond the boundaries of the home country.
 Minimize cost of production, especially labour cost.
 Capture lucrative foreign market against international competitors.
 Avail of competitive advantage internationally.
 Achieve greater efficiency by producing in local market and then exporting the
products.
 Make best use of technological advantages by setting up production facilities abroad.
 Establish an international corporate image
RESEARCH METHODOLOGY
The study is both descriptive and analytical in nature. It is a blend of primary data and
secondary data. The primary data has been collected personally by approaching the online
share traders who are engaged in share market. The data are collected with a carefully
prepared questionnaire. The secondary data has been collected from the books, journals and
websites which deal with online share trading.
Secondary data : The secondary data collection method includes:
Websites
Journals
Text books
Method Used For Analysis of Study
The methodology used for this purpose is Survey and Questionnaire Method. It is a time
consuming and expensive method and requires more administrative planning and
supervision. It is also subjective to interviewer bias or distortion.
Sample size : 100

Data collection method : Primary and Secondary.

Duration of study : 45 days.

Analysis : Through percentage method.

LIMITATIONS
In this world of Liberalization, Privatization and Globalization (LPG), it may not be possible
to restrict the goods as well the foreign Multinational Companies, instead it is the time to
invite these MNCs to establish in the home countries and to extract the maximum benefits
from them to strengthen the countries’ economies along with the safeguarding of own
interest.

countries’
economies along
with the
safeguarding of
own interest.
countries’
economies along
with the
safeguarding of
own interest.
 THEORETICAL REVIEW

ADVANTAGES OF MNCS TO THE HOST COUNTRY:

1. Transfer of technology, capital and entrepreneurship.

2. Increase in the investment level and thus, the income and employment in the host

Country.

Greater availability of products for local consumers.

Increase in exports and decrease in imports.

ADVANTAGES OF MNCS TO THE HOME COUNTRY.

1. Acquisition of raw materials from abroad.

2. Technology and management expertise acquired from competing in global markets.

3. Export of components and finished goods for assembly or distribution in foreign markets.
4. Inflow of income from overseas profits, royalties and management contracts.

TYPES OF MULTINATIONAL CORPORATIONS:

1. ETHNOCENTRIC: These are the type of MNCs which have strong orientation
towards home country. This means that home country people are considered as superior and
allocated all key posts.

2. POLYCENTRIC: Just opposite to Ethnocentric polycentric type of MNCs has strong

orientation towards host country where few key people are nationals and remaining are from
the host country.

3. REGIOCENTRIC AND GEOCENTRIC: These MNCs have their concentration in

whole world and they make selection for best employees whether they are from host country
or home country it does not matter.
HOW IS A COMPANY CLASSIFIED AS AN A MNC’S?

Subsidiary in foreign countries

Stakeholders are from different countries.

Operations in a number of countries

High proportion of assets in or/ and revenues from global operations;

The list of top ten MNCs working in Asia follows:

1. Microsoft

2. Nokia

3. McDonald's

4. IBM

5. Coca-Cola

6. Intel

7. Walt Disney

8. Nestle

MNCS: BENEFITS & COSTS

MNCs benefit less-developed countries, but also impose costs on them

MNC investments fuel the local growth-engines:

Higher wage-incomes, stimulating local businesses

Training, human capital build higher-skilled labour force

Contribute to government taxes & fees, or revenues by purchasing and privatizing existing
national assets
COST OF CAPITAL

A firm’s capital consists of equity (retained earnings and funds obtained by issuing stock) and
debt (borrowed funds). The cost of equity reflects an opportunity cost, while the cost of debt
is reflected in interest expenses. Firms want a capital structure that will minimize their cost of
capital and hence the required rate of return on projects.

The cost of capital for MNCs may differ from that for domestic firms because of the
following differences.

Size of Firm: Because of their size, MNCs are often given preferential treatment by creditors.
They can usually achieve smaller per unit flotation costs too.

Access to International Capital Markets: MNCs are normally able to obtain funds through
international capital markets, where the cost of funds may be lower.

International Diversification: MNCs may have more stable cash inflows due to
international diversification, such that their probability of bankruptcy may be lower.

Exposure to Exchange Rate Risk: MNCs may be more exposed to exchange rate
fluctuations, such that their cash flows may be more uncertain and their probability of
bankruptcy higher.

Exposure to Country Risk.: MNCs that have a higher percentage of assets invested in
foreign countries are more exposed to country risk.
Example: The coca cola recent annual report stated “Our global presence and strong capital
position afford us easy access to key financial markets around the world, enabling us to raise
funds with a low effective cost. This posture, coupled with the aggressive management of our
mix of short-term and long-term debt, results in a lower overall cost of borrowing.”

PROFIT OF MNCS IN INDIA

It is too specify that the companies come and settle in India to earn profit. A company
enlarges its jurisdiction of work beyond its native place when they get a wide scope to earn a
profit and such is the case of the MNCs that have flourished here. More over India has wide
market for different and new goods and services due to the ever increasing population and the
varying consumer taste. The government FDI policies have somehow benefited them and
drawn their attention too. The restrictive policies that stopped the company's inflow are
however withdrawn and the country has shown much interest to bring in foreign investment
here.

Besides the foreign directive policies the labour competitive market, market competition and
the macro-economic stability are some of the key factors that magnetize the foreign MNCs
here.
 REVIEW OF LITERATURE
According to Njanja et al. (2013) measuring performance is a key role in Performance of
mncs system, because it will help to build the incentive plans which are communicates the
importance of established goals to the employee. Those employee performance
measurements often calledas key performance indicators of set goals and objectives. They
have been mentioned an example about customer satisfaction which can be measured by
number of loyal customers, customer feedback and timeliness. Flapper et al. (1996) have
cited that KPIs tell what has to be measured and what is the control limit to employee actual
performance.

As cited by Waal and Coevert (2007), KPIs used measure the strategy and procedure like
financing and mortgage of bank. They also mentioned KPIs was prepared after consulting
with the managers who specified that these indicators were most important for theirsteering
of the divisions. Even though Performance of mncs system, internal and external environment
factors affecting for KPIs results. KPIs haveless important with the development of appraisal
method; at present important part is the feedback (Upadhaya et al., 2014).

Jan et al. (2004, p.80) cited PMS is a ‘continuous process of determining goals of the
organization and transmitting of feedback’ and its purpose is to differentiate good
performance and poor performance.
According to Boipono et al. (2014) main aim of PMS is to improve accountability,
performance, communication, efficiency and effectiveness among civil servants or
employees. Furthermore they have been said PMS has no room for unplanned or unintended
results but it can be failed due to lack of feedback, poor leadership and difficulties in
implementing the system. Jan et al. (2004) brings out the importance of PMS is improving
organizational performance, which in turn, improves employee performance and it enable
strategies to an organization to achieve goals in a desired fashion.Therefore PMS is effective
when there is continuous feedback to the employees, set goals for them and giving proper
training to the employees.

As cited by Gelade (2003) PMS have a significant influence on employee turnover and
productivity, and on short and long term corporate financial performance. Furthermore they
have been said HRM effectiveness is linked with financial performance as indexed by
productivity, productivity associate with performance of employee and employee
performance connected with PMS then ultimately PMS is the root cause which determining
overall performance of an organization. According to Vijay and Jayachitra (2000) PMS
should be well planned in advanced and should executed it in systematic way then it enable to
provide determined training and development need which improve the performance of
employees. As cited by Waal and Coevert (2007)PMS is valuable to an organization and its
managers and ithas a positive impact on performance driven behaviorbesides they clearly
state that PMS cannot be designed without taking into account human behavior. Therefore
behavioral factors are taken into account during the implementation and use of a PMS which
enables the higher the chance to have a successful system and higher performance results of
the organization.

According to Waal and Counet (2009) PMS will be threatened with the same problems over
and over again, resulting in inefficiency, longer project lead times and negated and
terminated systems. They have been identified 31 problem categories which are negatively
effect on PMS. Below given are the brief summarizations of those categories,

Armstrong and Baron (1998) precise how it is undetermined when the beginning of the
formal reviewing of performance came into influence during the 1920s US officers in the
army services were rated, this soon shadowed into US and UK factories. Meritrating came
into effect in the 1950s and 1960s in the US and UK and this rapidly becameacknowledged as
performance appraisal. Throughout the 1960s and 1970s managementby the setting of
objectives (MBO) came into effect. In the 1970s, Performance of mncs was first used as a
term. In the late 1980s it became known andacquaintedprocedure (Armstrong and Baron,
1998).

INDUSTRY RECOGNITIONS:

• In the Leaders Category in ‘The 2009 Global Outsourcing 100’ (IAOP’s

Annual Listing of the World’s Best Outsourcing Service Providers)

• Ranked 2nd in Telecom Software providers of India by Voice & Data,

2008 (V&D 100 Ranking)

• Business Week Award for Asia’s Best Performing Companies, 2008.

• “Growth Excellence Award” by Frost & Sullivan, 2008.

• Ranked 6th largest software exporter from India (NASSCOM, 2008).

• Winners of “Best Billing Solution” Category at “Billing and OSS World

(B/OSS) Excellence Awards 2008”

• Ranked 12th Largest TOMS vendor by Gartner in “Market Share:

Telecoms Operations Management Systems – Worldwide, 2006-2007”

published in 2008.
HISTORY

Tech Mahindra was incorporated as a joint venture between Mahindra & Mahindra and BT
plc in 1986 under the name of ‘Mahindra-British Telecom’. Later, the name was changed to
‘Tech Mahindra’, in order to reflect the diversification and growth of the client base and the
increased breadth of our service offerings.

Acquisition of Satyam Computer Services Ltd.

After the Satyam scandal of 20013-14 Tech Mahindra bid for Satyam Computer Services,
and emerged as a top bidder with an offer of Rs 58.90 a share for a 31 per cent stake in the
company, beating a strong rival Larsen & Toubro. After evaluating the bids, the
[9]

government-appointed board of Satyam Computer announced on 13 April 2013: "its Board of

Directors has selected Venturbay Consultants Private Limited, a subsidiary controlled by
Tech Mahindra Limited as the highest bidder to acquire a controlling stake in the Company,
subject to the approval of the Hon'ble Company Law Board." Through a subsidiary, it has
emerged victorious in Satyam sell-off, a company probably two times its size in number of
people. This was one of the largest merger deals in India's tech industry.
Merger with Mahindra Satyam
Tech Mahindra announced its merger with Mahindra Satyam on March 21, 207, after the
boards of the two companies gave their approval, to create a 2.5 billion $ IT Company. The
two firms had received the go-ahead for the merger from the Bombay Stock Exchange and
the National Stock Exchange. On June 11, 2013, Andhra Pradesh High Court gave its
approval for the merger of Mahindra Satyam with Tech Mahindra, after the Bombay high
court had already given its approval. Vineet Nayyar said that technical approvals from the
Registrar of Companies in Andhra Pradesh and Maharashtra are required which will be done
in two to four weeks, and within eight weeks, the new merged entity would be in place. The
new organisation would be led by Anand Mahindra as Chairman, Vineet Nayyar as Vice
Chairman and C. P. Gurnani as the CEO and Managing Director. On June 25, 2018, Tech
Mahindra announced the completion of its merger with Mahindra Satyam to create the
nation's fifth largest software services company with a turnover of USD 2.7 billion. Tech
Mahindra got the approval from the registrar of companies for the merger at 11:45 pm on
June 24, 2013. July 5, 2018 has been determined as record date on which the Satyam
Computer Services ('Mahindra Satyam') shares will be swapped for Tech Mahindra shares
under the approved scheme. Mahindra Satyam (Satyam Computer Services), was suspended
from trading with effect from July 4, 2013, following the merger. Tech Mahindra completed
share swap and allocated its shares to the shareholders of Satyam Computer Services on July
12, 2018. The stock exchanges have accorded their approval for trading the new shares
effective July 12, 2013. Tech Mahindra posted net profit of Rs 686 crore for the first quarter
ended June 30, 2018, up 27% compared to the corresponding quarter last year. By March
2016, Tech Mahindra's post-tax earnings had surged past that of M&M.