Question

With the help of suitable example explain how the mnc have influenced production in the local areas?

Answer 1

Employment

The pool of available employees for your small business could shrink if a multinational company opens a location near you. Because these large companies can hire many people, you may find yourself with fewer applicants. This can mean you have to raise wages to attract talent. In addition, you may have to offer better benefits to compete with the offerings of a multinational.

Crowding Out Competition

A multinational may be able to afford to offer lower prices than yours. A large company can do this if it anticipates selling more products to make up for the lower profit margin on each one. In addition, multinationals often get discounts from suppliers for buying in bulk, which can help them offer lower prices. A multinational may also compete by flooding the local market with advertising designed to capture customers that have been buying from local businesses. You can counter this competition by emphasizing that you are a member of the community and strive to customize your offerings to meet local needs instead of generic tastes.

Working Conditions

A large international company may build new stores and office buildings, thus providing employees with modern surroundings you may not be able to offer. This can include the latest technology, such as worker-friendly lighting and ergonomically built computer keyboards. In addition, air conditioning may be new and safety equipment may be abundant. Though you may maintain safety conditions that meet government standards, employees may perceive that the multinational offers safety provisions above and beyond the minimum requirements. Employees of the multinational may also find their surroundings more comfortable and employee-friendly. However, you can combat this with some simple upgrades and new policies that favor employees, such as providing daycare, holding company social events and offering flexible scheduling.

Technology Transfer

When a multinational business operates in your area, it is likely to use updated technology for business processes, from inventory control to marketing, customer service, processing orders and accounting. This can give the multinational efficiency that you lack. "Technology transfer" occurs when employees learn the new technology and begin relying on it. They come to see the new technology as the standard. You may have trouble attracting and retaining talent that sees your methods as outdated,