In this example , the MNC is not only selling its finished product globally, but
more important, the goods and services are also being produced globally. As a
result,prodution is organised in increasingly complex ways.the prodution process is
divided into small part and spread our across tge globe. in the above example, china
provides rhe advantage of being a cheap manufacturing location.mexico and Eastern
Europe are useful for their closeness to the market in the US and Europe. Indian has
educated English speaking youth who can provide customercare services.And all this
probably can mean 50-60 per cent cost- savings for the MNC! The advantage of
spreading out prodution across the borders to the multinationals can be truly
immense.
In general, the criteria for selecting a site for operations of MNCs are:
proximitily to the market;avilability of skilled and unskilled labour at low costs;
assured availability of other factors of prodution, government policies that protect
their interests. The money that MNCs spend to buy assets such as
land,building,machunes,hope that these assets will earn profits.
At time,MNCs set up prodution jointly with the local companies in these
countries. Thw local company benefits by the additional inverstments and the latest
technology that the MNCs bring.
but the most common route for MNC investment is to buy these local companies and
then ro expand prodution. MNCs wirh hufe amouts of welth can quiteeasily do so. For
example, cargill Foods,a largw AMerican MNC,has bought over smaller Indian companies
such as parakh Foods.parakh Foods had four edible oil refineries and a
large marketing network un yaeious paet of India,where its brand was well-reputed.
witg rhe takeovers cargil is no the largest producer of edible oil in India.
In Fact, many of the topMNCs have wealth excewding the entire budgets od the
goverments of developing country.with such enormous amount of wealth,imagine the
power and influence of these MNCs!
Theres another way in which MNCs control prodution.Large MNCs in developed
countriesv place Order for prodution with small producers. Garments, foot wear,
sports iteams are examples of industries where prodution is carried out by a large
numbee of small producer around the world. the products are supplied to the MNXs,
whixh then aell them under their own brand name to the customers. These large MNXS
have tremendous power to determine the price, quality,delivery and labour conditions
for these distant producer.Because of the MNCs, prodution in widely dispersed
locations is getting interlinked