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Three conditions which should taken care by MNC to set up their production units?
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Three conditions which should taken care by MNC to set up their produc...
MNC decision for set up production units of certain comoditiesin other countries is determined by the following conditions:
1) proximity to markets and availability of buyers.
2) availability of cheap labours skilled nd unskilled.
3) availability of raw materials at low costs.
4) assured profits.
5) support from local companies and manufacturers.
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Three conditions which should taken care by MNC to set up their produc...
Conditions for MNCs to Set up Production Units:


1. Economic Conditions:



  • Market Potential: MNCs should consider the market potential of the target country before setting up production units. They need to analyze the demand and purchasing power of the local consumers to ensure profitability.

  • Cost of Production: MNCs must assess the cost of production in the host country. Factors such as labor costs, raw material availability, infrastructure, and tax policies affect the overall cost. They should choose locations with competitive production costs to maximize profits.

  • Trade Policies: MNCs should be aware of the trade policies and regulations of the host country. They need to evaluate import-export duties, customs regulations, and foreign investment policies to ensure smooth operations and minimize trade barriers.



2. Political and Legal Conditions:



  • Political Stability: MNCs should consider the political stability of the host country. A stable political environment ensures a secure investment climate and reduces the risks associated with sudden policy changes or political unrest.

  • Legal Framework: MNCs need to analyze the legal framework of the host country. They should ensure that intellectual property rights are protected, contract laws are well-defined, and there is a transparent legal system to resolve disputes.

  • Government Support: MNCs should assess the level of government support available in the host country. This may include financial incentives, tax breaks, infrastructure development, and favorable investment policies that encourage foreign direct investment.



3. Social and Environmental Conditions:



  • Local Workforce: MNCs should evaluate the availability and quality of the local workforce. They need to assess the skills, education, and training facilities to ensure they can find suitable employees to meet their production requirements.

  • Social and Cultural Factors: MNCs must understand the social and cultural factors of the host country. They should adapt their production processes and products to align with the local preferences and customs to gain acceptance in the market.

  • Environmental Regulations: MNCs should consider the environmental regulations in the host country. They need to comply with local environmental standards and ensure sustainable production practices to minimize negative impacts on the environment.



By carefully considering these economic, political and legal, as well as social and environmental conditions, MNCs can make informed decisions when setting up production units in foreign countries. This will help them mitigate risks, maximize profitability, and establish a strong presence in the global market.
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Three conditions which should taken care by MNC to set up their production units?
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