International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
This fear reportedly led to many minority shareholders selling out,
even though the FIs had not announced their decision. Finally the FIs did
announce that they too were taking up the offer. A major factor influencing
their decision was that, if enough minority shareholders sold out, the
liquidity of the Philips India stock would be drastically reduced. In that case,
they would find it impossible to sell later because there would not be enough
buyers.
For a majority of the shareholders, the offer price was not the critical
factor in their decision to sell. In fact, many of them thought the price was
too low and that Philips had timed its offer cleverly. Royal Philips had
strictly followed SEBI guidelines which state that the offer price should not
be less than the average price of the past six months, Philips made sure that
most shareholders would sell out even if it was not the most attractive
option.
CRITICISM OF MULTINATIONALS IN DEVELOPING
COUNTRIES
1. They do not give enough importance to the society in which they operate.
An example in Union Carbide, which did not show concern for the
people of Bhopal. In South Africa, HIV medicines are sold at an
expensive price irrespective of the cost. When people die out with these
dreaded diseases in some region then MNCs consider that place as a huge
potential for business prosperity.
2. While many Indian companies, such as the Tatas and Birlas allocate
funds for charitable works like hospitals, temples and scholarships for
higher studies, not many MNCs do so, though they generate huge
revenue.
3. They generate profits when the situation is favourable, but will close their
business if any risk is anticipated. E.g., many multinationals pulled out of
South East Asia during the currency crisis, especially in Thailand and
Indonesia.
4. Active participation is needed in developing countries for infrastructure,
especially roads, ports, power plants etc. They enjoy but do not
contribute.
However, most multinationals in India deal in non-essential products
such as soaps, shampoos, lotions and other consumer products. Whether
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