Very Short Question and Answers - Production Across Countries
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It means that goods and services are produced by combining resources from different countries, with various stages like raw material sourcing, manufacturing, assembly, and sales happening in different parts of the world.
An Apple iPhone: designed in the USA, assembled in China, camera lens from Japan, processors from South Korea, and screens from Vietnam.
Companies spread out production to take advantage of lower costs, specialized skills, access to better technology, and proximity to specific resources or markets.
MNC stands for Multinational Corporation.
Examples include Coca-Cola and Nestlé.
MNCs set up factories and offices in multiple countries, spread technology and investment, create global production and supply chains, and connect markets worldwide.
MNCs facilitate exchange of goods (import/export), capital (investments), and technology (sharing know-how and skills).
The clothing industry sources cotton from India, makes fabric in Bangladesh, dyeing in China, stitching in Vietnam, packaging in Sri Lanka, and sells worldwide.
Car parts like tyres may be made in Thailand, chips in South Korea, engines designed in the UK, with design in Germany and assembly in India or Mexico.
Positive impacts include job creation, access to better technology, access to global markets, and higher quality products.
Local industries may face tougher competition from global firms, and there is a risk of losing cultural uniqueness.
MNCs bring latest technology and know-how to the countries where they set up factories, thus improving local industrial processes.
The headquarters is the main office of an MNC, usually located in one country, while branches or factories are set up in various countries around the world.
Tata Motors produces cars in India, the UK, South Africa, and Thailand, and sells them in Africa, Europe, and South America.
MNCs provide training to local employees, transfer best practices, and share advanced management techniques across countries.
They do this to take advantage of lower labour costs and skilled workforce.
Globalisation increases interconnectedness, allowing the movement of goods, services, capital, and technology across borders, which makes global production possible.
PepsiCo processes potatoes grown by Indian farmers using American technology to make Lay’s chips in India.
It means that countries are interconnected, and products are made using resources, technology, and labour from many places, making them truly international.
MNCs provide a wider variety of goods and services from around the world, giving consumers more choices and access to better products.