Multinational Corporations

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  • Q1

    How do the local companies start to gain by setting up production jointly with the MNC?

    Marks:3
    Answer:

    The local companies start to gain by their joint venture with MNCs in two ways:

    First MNC can provide money for additional investment like buying new machines for faster production.

    Secondly, MNC bring with them the latest technology for production in the country. It foster the economic development in the country.

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  • Q2

    What is the result of foreign trade? State the importance of foreign trade.

    Marks:3
    Answer:

    Foreign trade results in connecting the markets or integration of markets in different countries. It creates an oppurtunity for the producers to reach beyond the domestic markets,i.e., markets of their own countries. Producers can sell their product not only in markets within the country but can also compete in markets located in other countries of the world.

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  • Q3

    Why do MNCs sometimes buy local companies?

    Marks:3
    Answer:

    The MNCs buy local companies due to following reasons:

    • With the local collaboration they can easily expand their production on the country.
    • They can make use of their huge wealth in exploiting the brand name of the local companies thereby they not only capture their market but also taking new ventures safely by exploiting the experience of the trained people.

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  • Q4

    What do you mean by MNC ?

    Marks:1
    Answer:

    An MNC is a company that owns or controls production in more than one nation. MNCs set up offices and factories for production in regions where they can get cheap labour and other resources.

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  • Q5

    What do you mean by foreign investment ?

    Marks:1
    Answer:

    Investment made by MNCs is called Foreign investment.

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