Preview

Multinational Company Requirements

Good Essays
Open Document
Open Document
654 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Multinational Company Requirements
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

You May Also Find These Documents Helpful

  • Good Essays

    1. The difference between a developing and a developed country are typically based on economics. A developing country usually has a low level of affluent citizens, and higher levels of unemployment. Developing countries also have lower education rates, and often times undeveloped, rural type villages. Developed countries usually have technological advantages, better roads, stable governments, higher education rates, and good health care.…

    • 707 Words
    • 3 Pages
    Good Essays
  • Best Essays

    Analysis of target country: economy, market and demand, trade policies and laws, Culture and political environment…

    • 2902 Words
    • 12 Pages
    Best Essays
  • Powerful Essays

    Assignment 1

    • 3095 Words
    • 8 Pages

    Multinational companies can be defined as “as a business organisation whose activities are located in more than two countries” (Smelser and Baltes 2001, pg 10197-10204)…

    • 3095 Words
    • 8 Pages
    Powerful Essays
  • Satisfactory Essays

    In the global economical scenario the factors governing the supply, demand and even manufacturing location are driven by global factors. The opportunity cost is governed by customer demand in global locations. Proximity to the end user is a key factor in selecting the location of manufacturing facilities or distribution network. This is more important in products where the transportation cost is significant and business is serving a specific customer base.…

    • 337 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Where should we produce the item, right in the shop or some production center? (consider transport cost, nature of goods and selling cost)…

    • 878 Words
    • 4 Pages
    Good Essays
  • Good Essays

    The Cuban Revolution

    • 633 Words
    • 3 Pages

    There are many noticeable differences between a developing and a developed country. Many of these differences come from the history of their social, political, economic, cultural, historical, geographical factors, and international relations. According the UN “a developing country is a country with a relatively low standard of living, undeveloped industrial base, and moderate to low Human Development Index (HDI)” (Educational Pathways International). This means that developing countries lack the basic needs such as water, education, work, food and housing which affect life expectancy. Cuba is a perfect example of a developing country who is struggling with their housing, jobs, and all the basic needs except for education but is expected to…

    • 633 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    In these days, almost of companies in the world desire to becoming multinational corporation. They know that multinational corporation tend to be regarded as more progressive, dynamic, geared to the future than provincial companies. They want to spread their subsidiaries not only all over the country, but also all over the world. Usually, the multinational corporation has headquarters in one country and operates subsidiaries in other countries. However, globalization is going faster, management strategy has a great change.…

    • 426 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    According to Franklin Root (1994), a Multinational company is a parent company that engages in foreign production through its affiliates located in several countries, exercises direct control over the policies of its affiliates, and implements business strategies in production, marketing, finance and staffing that transcend national boundaries. In other words, Multinationals exhibit no loyalty to the country in which they…

    • 511 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Multinational Corporations

    • 11602 Words
    • 47 Pages

    A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation. They play an important role in globalization. The first multinational corporation was the Dutch East India Company, founded March 20, 1602…

    • 11602 Words
    • 47 Pages
    Powerful Essays
  • Good Essays

    Second, the location-specific advantage from other countries is an attracting factor for MNEs to undertake value-add activities at that place. Location advantages include reasonable transportation cost, tariffs, low trade barriers, attractive market size and cheap labour as well as resource. Among them, the market size in host country allows MNEs to enter and have strong development scale at that country. The natural and created resources are both location-specific advantages. For example, the existence of raw materials, cheap labour, plentiful energy, and even…

    • 1308 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Multinational Corporation

    • 729 Words
    • 3 Pages

    The first modern multinational corporation is generally thought to be the Dutch East India Company. Nowadays many corporations have offices, branches or manufacturing plants in different countries from where their original and main headquarters is located.…

    • 729 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    An efficient transport network enables staff to get to work easily. It also allows supplies to be brought in from far afield and permits finished products to be moved to market cheaply and quickly.…

    • 512 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Multinational Corporation is the key element of globalization. MNCs internalize the production across the borders. MNC is a company establishes branches in more than one country. According to Baafi MNC are the ownership or control of productive assets in other countries which makes MNC separated from others, that is why they do overseas business by simply exporting and importing good and services.(Bossman Baafi 2009, 1). Dunning cited in the paper which is unknown that Multinational corporation is “an enterprise that engages in foreign direct investment (FDI) and owns or controls value adding activities in more than one country” (Dunning 1993, 3). There are great number of MNCs around the world such as Toyota, Coca-Cola, IBM, Mercedes, and ETC. according to United Nation Conference on Trade and development, as of 2006, there were 63,000 multinational corporation with over 700,000 branches scattered across the world. (shoo 2011, 1)…

    • 2221 Words
    • 9 Pages
    Powerful Essays
  • Satisfactory Essays

    Ffjh

    • 410 Words
    • 2 Pages

    A country is deemed to be developing or developed mainly on the basis of economics, per capita income, industrialization, literacy rate, living standards etc. A developed country has a highly developed economy and advanced technological infrastructure relative to other less developed nations.…

    • 410 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    First of all, multinational company have big market available in different countries. They have the necessary skill and expertise to sell their products at international level. Any company can enter into a joint venture with a foreign company to sell its products in the international market. It also mean that multinational companies are able to sell far more than other type of company. Entering new markets are always provide advantage of MNCs. In addition, they follow the market, determine the trends and also provide product range according to different kind of consumers. In addition, brand value is increased because people can find the same brand, the same products from the same quality.…

    • 687 Words
    • 3 Pages
    Good Essays