Multinational Company Requirements

Discuss the constituents that a multinational society needs to consider in setting up a factory in a underdeveloped plain? (20) A multinational company is any brass instrument that has its headquarters in one country, simply with operating branches, factories and assembly plants in other countries. A factory is an industrial building where workers gather and center on 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 atomic number 18 mostly agricultural workers but it wants to become more mod socially and economically.It is a nation with a low living standard, undeveloped industrial base, and low gentlemans gentleman Development Index (HDI) relative to other countries. Factors require to be considered in setting up a factory- * Natural Routes * Site Requirement * Access to the market * Availability of raw(prenominal) actuals * Skilled crusade * Power Sup ply * Industrial Linkage or Strategic Importance * Government incentives One of the factors needed to be considered is the Site requirement. In maturation country the primer coat rents and values are cheaper so its 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 elect 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 level would be of bang-up 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 availableness to the market place and raw materials. The distance between the site and market o r raw materials site should be brief and rapid enough for greater, inexpensive and reliable supply of raw materials and industrial goods. The raw materials should be available at an affordable and discounted price. One other factor is the strawman of skilled labor force. Factory should be situated in an area where cheap work-force is on hand. A decent numbers and ample variety of workers are available, with reasonable skilled and knowledge, at or ascend the site.Another factor is the presence of power supply. There should be ample sources of power like electricity and gas, with an comme il faut amount and at cut-rates. The factory should be situated in an area where government may tin incentives and reduce taxes. The incentives could be in form of grants, low interest rates, simplified planning procedures and training. Another factor is industrial linkage or Strategic Reason. The firm should be established in area which is close to linkage industries such as suppliers and custo mers from which some benefit could be gained.It should be apart from similar and correspond organization in order to reduce competition and gain greater market share in that area. Perhaps the major factor that a multinational company needs to consider is the choice of the developing country. The chosen country should have good communication links with the country where headquarters of the multinational firm is located. The country shouldnt be that much meager and poverty-stricken that sales arent lucrative and lodge doesnt prosper. Language, legal and cultural differences with local workers and government officials could lead to misunderstandings.The host country or chosen countrys policies should be favorable and these ethnic and literary divergences are overcome. Consequently, a multinational organization should set up factory in that location which satisfies all these aspects. However, it is unlikely that all the factors will be available at any one particular location. So the location for a factory is to be chosen in such a way, that the total cost of bringing all the inputs together, producing the goods, and distributing the products to the market, are lessen and maximum profit is generated.