Multinational Companies keep their cost of production low by:
1. They locate their factories and offices in regions where resources are not available readily but also at cheap prices.
2. The goods and services are not produced in one place but globally. For example, China is known as a cheap manufacturing location and India is known for its highly skilled engineers.
3. Production is organized in a way to gain maximum profits hence in complex ways. For example, Mexico is useful for its closeness to US market. MNCs save 50-60% of the cost this way.
Note: MNCs aim for maximum gain so they divide their production process in places where the labour and resources are most cheap. Hence, its name is ‘Multi-National Company’.
Rate this question :