What social forces have led to multinational corporations PDF

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What social forces have led to multinational corporations (MNCs) spreading across the globe? MNCs are companies which do trade among different countries. They are spread along border because it is easy for them in transportation and trading between different countries. MNC setup their industries in different countries where they see cheap raw material, easy excess to market, and excess to skilled and unskilled labor where government take care of them.

MNCs spread out production across the borders, primarily to utilize the cheap labor available elsewhere and also to achieve ease of distribution. Explanation: MNCs have a presence in a large number of countries across the globe. They function to achieve the lowest production cost and economies of scale. Therefore, MNCs intend to locate their production factories in regions that have affordable labor, and conducive trade regulation practices. Secondly, MNCs like Zara also spread their production centers in different countries to achieve ease of distribution. As customers across the globe buy their goods, shipping from one geographic location becomes costly and tenuous.

Key Reasons for the Growth of MNCs There are many reasons why a business may wish to become an MNC and these factors have also fuelled the rapid growth of MNCs in recent decades. These reasons include:

To Operate Closer to Target International Markets Producing closer to target markets has several potential advantages, including reduced transport costs (which will be important for bulky goods) and improved market information and intelligence. Gaining access to lower costs of production Many MNCs have taken advantage of lower production costs from operating in developing economies. In some cases this can be achieved by outsourcing and offshoring production to suppliers based in those economies. However, for other businesses, it is more beneficial to set up their own operations in order to service domestic demand as well as supply demand in the host and nearby countries. Many MNCs now have highly complex supply chains integrating their operations in many economies. Avoiding Protectionism By producing in a host country, an MNC may be able to avoid restrictions on imports such as tariffs and import quotas.....