Multinational Company Requirements

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Discuss the factors that a multinational company needs to consider in setting up a factory in a developing country? (20) A multinational company is any organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries. A factory is an industrial building where workers gather and concentrate resources to manufacture goods and operate machine processing one product to another i.e. value adding. Developing country is a nation that is poor and whose citizens are mostly agricultural workers but it wants to become more advanced socially and economically. It is a nation with a low living standard, undeveloped industrial base, and low Human Development Index (HDI) relative to other countries. Factors needed to be considered in setting up a factory:-

* Natural Routes
* Site Requirement
* Access to the market
* Availability of raw materials
* Skilled labour
* Power Supply
* Industrial Linkage or Strategic Importance
* Government incentives
One of the factors needed to be considered is the Site requirement. In developing country the land rents and values are cheaper so it’s an advantage to the company. The Land must be cheap, flat, undulating, and well-drained so that the construction of the factory is economical and environmentally friendly. The land chosen must be competent enough for alterations when considered necessary. Moreover, the climate and weather conditions at the site are favorable for production of goods throughout the year. Another factor is the access to the Natural Routes. The firm would be of great benefit if there is major land or sea route for transportation of raw materials and industrial goods. Road, Rail and Air Transport are available. This would give speedy and cost-effective transport. Other factors are the access and availability to the market place and raw materials. The distance between the site and market or raw material’s site should be brief...
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