Question

How do Multi-National Corporations (MNCs) interlink production across countries? Explain with examples.

Answer 1

MNCs interlink production across countries in the following ways:

• At times, MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two-fold. First, MNCs can provide money for additional investments, like buying new machines for faster production.Second, MNCs might bring with them the latest technology for production.
  
• But the most common route for MNC investments is to buy up local companies and then to expand production.
  
• Large MNCs in developed countries place orders for production with small producers. The products are supplied to the MNCs, which then sell these under their own brand names to the customers. These large MNCs have tremendous power to determine price,quality, delivery, and labour conditions for these distant producers.
  
• Thus, we see that there are a variety of ways in which the MNCs are spreading their production and interacting with local producers invarious countries across the globe.