Question

where multinational companies set up production ​

Answer 1

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There can be many reasons. The three most obvious are:

1⃣The local companies are already in business and understand the rules and laws of that country. It makes the learning curve for the out of country business shorter and easier.

2⃣It is good public relations. It is better to work with local vendors than to come in and set yourself up to compete.

It is usually much more cost effective.

3⃣You aren’t investing capital in a new facility, legal compliance, hiring personnel and all the other things that go with opening a new plant.

Answer 2

Answer:

Multinational Corporations (MNCs) set up their offices and factories only in certain areas with certain available factors to save the cost of production and to gain more consumers and achieve higher profit. MNCs set up offices and factories after due consideration of the following factors:

1. A multinational corporation is set up in those areas where there is easily available raw material in abundance. This will save the cost of procuring raw material and transporting it to their site of manufacturing.
2. It is set up in an area which has good transportation facilities from the manufacturing area to the market area.
3. Another factor considered in setting up of an MNC is the easy accessibility to the market.
4. MNCs are also willing to set up offices and factories in those areas which have favorable government policies.
5. Availability of cheap labour is another factor MNCs must take into consideration. Without cheap labour the cost of production will increase and the selling price will increase too which will not be favourable to the MNC in a competitive market.