Read the source given below and answer the following questions -
Ford Motors, an American company, is one of the world’s largest automobile manufacturers with
production spread over 26 countries of the world. Ford Motors came to India in 1995 and spent
Rs. 1700 crore to set up a large plant near Chennai. This was done in collaboration with Mahindra
and Mahindra, a major Indian manufacturer of jeeps and trucks. By the year 2004, Ford Motors
was selling 27,000 cars in the Indian markets, while 24,000 cars were exported from India to South
Africa, Mexico and Brazil. The company wanted to develop Ford India as a component supplying
base for its other plants across the globe.
Answer the following MCQs by choosing the most appropriate option
The passage given above relates to which of the following options? (1)
A. Increased employment
B. Foreign investment
C. Foreign collaboration
D. International competition
Answers
Answer:
Question 1: Would you say Ford Motors is a MNC? Why?
Answer: Ford Motors has production facilities spread over 26 countries of the world. Hence, it can be termed an MNC.
Question 2: What is foreign investment? How much did Ford Motors invest in India?
Answer: The investment which comes from abroad is called foreign investment. Ford Motors had invested Rs. 1700 crore.
Question 3: By setting up their production plants in India, MNCs such as Ford Motors tap the advantage not only of the large markets that countries such as India provide, but also the lower costs of production. Explain the statement.
Answer: The cost of labour is cheaper in India; compared to the developed countries. This means that an MNC can save lot of money on wages and salaries by setting up production plants in India. This helps in lowering the cost of production. India itself is a large market with sizeable population of middle class and upper class and hence provides a big market for many products.