QUESTION-ANSWERS
Q. Why do MNC’s set up production jointly(with local companies)?
Ans.The benefits to the local company of such joint production is two-fold.
MNC’s can provide money for the additional investments like buying new machines for faster production.
2.MNC’s might bring them latest technology for production.
Q.What are the various ways by which MNCs spread their production?
Ans.There are variety of ways in which MNC’s are spreading their production and interacting with local producers in various countries across the globe. They do this by various means:
--By setting up partnerships with local company..
--By closely competing with local companies or buying them -the most common route for MNC investments is to buy up local companies and to expand production. With their huge wealth they can easily do so..
-- By using local companies for supply - Large MNC’s in developed countries place orders for production with small producers.Eg., garments, footwear, sports item etc. The products are supplied to MNC’s which then sell these under their brand names ti the customers.
As a result, production in these widely dispersed locations is getting interlinked.
MNC’s are exerting strong influence on production at these distant locations.
Q.List the various ways by which MNCs control production in other countries.
Ans. MNC’s have enormous wealth and at times even bigger than the budget of the developing countries.
--Another way in which they control production is that MNC’s in the developed countries place orders for production with small producers .
--The products are supplied to the MNC’s, which then sell these under their brand names to the customers.
--These MNC’s have enormous power to determine price, quality, delivery. and labour conditions for these distant producers.
FOREIGN TRADE:
History of Foreign Trade:--Various trade routes connecting India and South Asia to markets both in the East and West & extensive trade that took place along these routes.
--It was trading interest which attracted various trading companies such as East India Company to India.
Q. What is the function or purpose of foreign trade?
Ans.--Foreign trade creates an opportunity for the producers to reach beyond the domestic markets i.e., markets of their own countries.
--Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
—For the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.
EFFECTS OF FOREIGN TRADE:
There are various positive & negative effects of foreign trade. Its positive effects are
--With the opening of trade, goods travel from one market to another.
-- Choice of goods in the markets rises.
--Prices of similar goods in the two markets tend to become equal.
Producers in the two countries now closely compete against each other even though they are separated by thousands of miles.
Foreign trade thus results in connecting the markets or integration of markets in different countries.The economies of various countries are getting interlinked.
Effects of Foreign Trade through the sale of Chinese toys in the Indian Markets:
Ans.The benefits to the local company of such joint production is two-fold.
MNC’s can provide money for the additional investments like buying new machines for faster production.
2.MNC’s might bring them latest technology for production.
Q.What are the various ways by which MNCs spread their production?
Ans.There are variety of ways in which MNC’s are spreading their production and interacting with local producers in various countries across the globe. They do this by various means:
--By setting up partnerships with local company..
--By closely competing with local companies or buying them -the most common route for MNC investments is to buy up local companies and to expand production. With their huge wealth they can easily do so..
-- By using local companies for supply - Large MNC’s in developed countries place orders for production with small producers.Eg., garments, footwear, sports item etc. The products are supplied to MNC’s which then sell these under their brand names ti the customers.
As a result, production in these widely dispersed locations is getting interlinked.
MNC’s are exerting strong influence on production at these distant locations.
Q.List the various ways by which MNCs control production in other countries.
Ans. MNC’s have enormous wealth and at times even bigger than the budget of the developing countries.
--Another way in which they control production is that MNC’s in the developed countries place orders for production with small producers .
--The products are supplied to the MNC’s, which then sell these under their brand names to the customers.
--These MNC’s have enormous power to determine price, quality, delivery. and labour conditions for these distant producers.
FOREIGN TRADE:
History of Foreign Trade:--Various trade routes connecting India and South Asia to markets both in the East and West & extensive trade that took place along these routes.
--It was trading interest which attracted various trading companies such as East India Company to India.
Q. What is the function or purpose of foreign trade?
Ans.--Foreign trade creates an opportunity for the producers to reach beyond the domestic markets i.e., markets of their own countries.
--Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
—For the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.
EFFECTS OF FOREIGN TRADE:
There are various positive & negative effects of foreign trade. Its positive effects are
--With the opening of trade, goods travel from one market to another.
-- Choice of goods in the markets rises.
--Prices of similar goods in the two markets tend to become equal.
Producers in the two countries now closely compete against each other even though they are separated by thousands of miles.
Foreign trade thus results in connecting the markets or integration of markets in different countries.The economies of various countries are getting interlinked.
Effects of Foreign Trade through the sale of Chinese toys in the Indian Markets:
Chinese toys in India.
Chinese manufacturers got an opportunity to export plastic toys to India.
Benefits to India and China:
a).Benefits to China:
Chinese got an opportunity to trade and expand their business.
--As they were selling it at high selling price, they got high profits.
--Within an year 70-80% of toys shops have replaced Indian toys with Chinese toys.
b).Benefits to India:
Chinese manufacturers got an opportunity to export plastic toys to India.
Benefits to India and China:
a).Benefits to China:
Chinese got an opportunity to trade and expand their business.
--As they were selling it at high selling price, they got high profits.
--Within an year 70-80% of toys shops have replaced Indian toys with Chinese toys.
b).Benefits to India:
Indian buyers have more choices now.
--Prices are cheaper now.
--designs are new.
--But due to the cheaper prices & new designs , the Indian toy makers face losses, as their toys are selling much less.
--Prices are cheaper now.
--designs are new.
--But due to the cheaper prices & new designs , the Indian toy makers face losses, as their toys are selling much less.
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