Multi-National Corporations are large companies established in a particular country and has offices, markets and produces and sells its products in many countries. There are many aspects that MNCs consider while starting a production unit in a foreign country. MNCs work long with local companies to expand production by producing jointly with local companies, purchasing local companies and placing orders with local companies. This has two-fold production benefits to the local companies. They are:
- Additional investment: MNCs can be beneficial to the home country as the huge firms with many resources may bring in their additional share of investment. This is particularly beneficial to the local firms in developing countries that have scarcity in resources. This increases the quantity of resources available to the local firms to expand their production. This additional resources can be used for expanding their production potential.
- New and advanced technology: MNCs have highly sophisticated and advanced techniques and technology for production. They will always develop newer cost-reducing methods of production through consistent spending in research and development. Thus, MNCs bring in with them the latest technology as an investment to the home country. It can be utilised by the home countries to increase their production. The improved techniques can also contribute to the development of new technology in other organisations. Thus it will result in a technology transfer.
