Question

Why do multinational corporations (MNCs) set up their offices and factories in certain areas only? Explain any five reasons.

Answer 1

Answer:

Multinational corporation for MNC set up their offices and factories only in certain areas due to the following reasons:

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 in those areas which have favorable government policies.

5. Availability of cheap labour is also considered.

Answer 2

They are set up in certain areas, due to the easy availability of materials and labour.

• The various factors considered by MNCs are -

1. Being close to the market so that resources are easily available.
2. Skilled and unskilled labour should be readily available at affordable prices at the chosen location.
3. To protect the interests of MNCs, government policies and regulations that are favourable should be present.
4. Raw resources, water, electricity, and transportation should all be available easily.
5. For proper manufacturing and supply to be ensured, safety precautions should be available.

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