What is mnc? How do the MNCs organize production and why?

MNCs are companies that have their branches or manufacturing units in more than one nation. MNCs establish their factories and offices in regions where cheap labour, raw material and other resources are readily available. This minimizes the cost of production and increases the profit.

MNCs invest in other countries to lower their cost of production in order to earn maximum profits. This investment can be done in three ways. First, the MNC establishes itself on its own in the new country by buying land, constructing its factory and buying machines etc. Second, MNCs set up production by entering into joint ventures with some of the local companies of that country. Third, MNCs can buy a local company having considerable market share in that country. This enables an MNC to expand production on an already-created base.

Hope this helped you
  • 3
It helped me a lot ......thank u
  • 1
U r welcome...
  • 2
MNC stands for multi-national corporation. Among Indian Companies, the Tata Group and the Aditya Birla Group are referred to as MNCs in their countries of operation outside India. Among foreign Companies, Samsung, LG, Sony, Panasonic, GE, Bayer etc are some of the leading MNCs operating across the world.
In order to be competitive, the MNCs source raw material, employ labour and set up production facilities wherever the cost or rate is lowest in order to have economic advantages. They also scale up their production into large volumes in order to attain low cost per unit produced; this is called economic scale of production. The MNCs look to set up base in countries where political, bureaucratic, governmental and other local interference is minimum, the tax system is less stringent and concessions are extended by the local government to encourage industrial growth.  
  • 2
A MNC is a company that owns or controls production in more than one ckountry. MNCs set up offices and factories in region where they get chief labour and other resources. This is done so that the cost of production is low and MNCs can earn greater profits.
  • 2
What are you looking for?