What are the factors that multinational companies take into account be

1.	What are the factors that multinational companies take into account before setting up a factory in different countries?
Answer» Before setting up a company or a factory an MNC takes into account the following things. (i) Availability of cheap labour and other resources: MNC’s set up offices and factories for production in various regions of the world where cheap labour and other resources are available in order to earn greater profit. For example: MNC may spread its production activities to the following countries – USA for designing a product, China for manufacturing components etc. By doing so it is able to reduce the cost of production. (ii) Favourable government policy: If the government policies are favourable it helps MNCs. For example: Flexibility of labour laws will reduce cost of production. MNCs are able to hire worker on casual and contractual wages for a short period instead of a regular basis. This reduces the cost of labour for the company and increases its margin of profit.

What are the factors that multinational companies take into account before setting up a factory in different countries?

Answer»

Before setting up a company or a factory an MNC takes into account the following things.

(i) Availability of cheap labour and other resources: MNC’s set up offices and factories for production in various regions of the world where cheap labour and other resources are available in order to earn greater profit. For example: MNC may spread its production activities to the following countries – USA for designing a product, China for manufacturing components etc. By doing so it is able to reduce the cost of production.

(ii) Favourable government policy: If the government policies are favourable it helps MNCs. For example: Flexibility of labour laws will reduce cost of production. MNCs are able to hire worker on casual and contractual wages for a short period instead of a regular basis. This reduces the cost of labour for the company and increases its margin of profit.

What are the factors that multinational companies take into account before setting up a factory in different countries?

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