Question

What are the various ways in which MNCs set up, or control, production in other countries?

Answer 1

An MNC is a company that owns or controls production in more than one nation. Following are various ways in which MNCs set up or control production in other countries:

a) MNCs set up offices and factories for production in regions where they can get cheap labour and other resources

b) MNC is selling its finished products globally across various countries and the goods and services are also being produced globally across various countries. The production process is divided into small parts and spread out across the globe.

c) MNCs set up production jointly with the local companies

d) The most common route for MNC investments is to buy these local companies and then to expand production. For example- Cargill Foods, a large American MNC, has bought over smaller Indian companies such as Parakh Foods.

e) Large MNCs in developed countries place orders for production with small producers.