NCERT Solutions for Class 10 Social Science History Chapter 4
Social Science Class 10 Economics
Globalisation and the Indian Economy 4
Important NCERT Questions Based on new NCERT Books for Session 2022-2023
Questions No: 4
What are the various ways in which MNCs set up, or control, production in other countries?
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Multinational Corporations (MNCs) are coming up with factories or production units close to markets where they have easy availability of desired type of skilled or unskilled labour at low costs along with other factors of production. After ensuring these conditions MNCs set up production units in the following ways:
• MNCs are having tie-ups with local companies to capture large market share.
• Acquire the local companies and then expand its production with the help of advances technology they possess.
• They delegate orders to small producers and sell these products under their own brand name to the customers worldwide at a much higher price.
• They get cheap labour to work for them in masses and produce large volumes to sell.
• Through the above ways, MNC’s are exerting a strong influence on production at distant locations.
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MNCs set up, or control, production n other countries in the following ways:
(i) MNCs set up production on the basic of the following factors:
(a) Closeness of the place too the markets.
(b) Availability of skilled and unskilled labour at low costs.
(c) Availability of other factor of production i.e. raw material etc.
(d) Government’s favourable policies.
(ii) After assuring above conditions, MNCs set up factories and offices for production. They but asset such as land, building, machines and other equipments.
1. Setting up Branches or Subsidiaries: MNCs can start their own branches or subsidiaries in other countries. They build new facilities or buy existing companies to produce goods there.
2. Licensing and Franchising: MNCs give permission to local businesses in other countries to produce and sell their products using the MNC’s name and technology. The MNC keeps control over quality and standards.
3. Contract Manufacturing: MNCs hire local manufacturers in other countries to produce goods for them. This helps MNCs benefit from local expertise without owning production facilities.
4. Outsourcing: MNCs might give parts of their production work to other companies in foreign countries. For example, they might hire another company to make specific parts of their product.
5. Joint Ventures: MNCs form partnerships with local companies in other countries to work together on production. This allows them to share resources, skills, and risks.
6. Offshore Production: MNCs establish production facilities in countries where costs are lower or regulations are favorable. This helps them save money and take advantage of different conditions.
7. Supply Chain Management: MNCs control production by managing suppliers, manufacturers, and distributors across different countries to make sure everything works smoothly.
These methods allow MNCs to expand their production globally, access new markets, and benefit from different resources and expertise in various countries.