e ● Production was largely organised within countries. ● Raw material, food stuff and finished products.
ot ● Trade was the main channel connecting distant countries.
N After ● Coming up of companies called multinational corporations (MNCs).
r's ● Owns or controls production in more than one nation What are MNCs? de Multinational corporations are the large companies which own or control production in more than one nation. They set up offices and factories for production in regions where they can get cheap labour and other resources, so that they can earn greater an profits. ex Al e nc ui Q
Interlinking Production across countries
MNCs are Interlinking Production Across Countries
Factors’ MNCs consider before setting up any production units
● Is it close to the markets . ● Is there skilled and unskilled labour available at low costs. 2 ● Whether the availability of other factors of production is assured. ● MNCs might look for government policies that look after their interests.
Having assured of these conditions MNCs invest in countries. → Foreign
Investment
s Ways through which MNCs set up their production are
e 1. MNCs set up production jointly with some of the local companies of these
ot countries
N Benefits to Local Company ● Get money for additional investments.
r's ● MNCs might bring with them the latest technology for production.
Benefits to MNC’s de Share its latest technology with the local company, which reduces costs and risks and facilitates knowledge transfer and development of skills and an capabilities for both parties ex
2. MNCs buy up local companies and then expand production.
MNCs with huge wealth normally do this. Eg- Parakh foods was bought up by Cargill foods. Al
3. Large MNCs in developed countries place orders for production with small e
producers. ● Garments, footwear, sports items are examples of industries where production is nc
carried out by a large number of small producers around the world.
● These products are then sold under the brand name of MNCs. ui
➔ These large MNCs have tremendous power to determine price, quality, delivery, and labour conditions for these distant producers. Q
