Which of the following best explains why MNCs might set up production jointly with local companies? 1. MNCs can provide money for additional investments, such as buying new machines for faster production. 2. MNCs typically rely on the outdated technology of local companies to reduce costs. 3. The primary goal of joint production is for the MNC to immediately take over the management of the local company. Select the correct answer using the code given below:

Correct Option The correct option is 1 only Explanation Multinational Corporations (MNCs) often enter foreign markets through various routes, including setting up wholly-owned subsidiaries, acquiring local companies, or entering into joint ventures (joint production) with existing local companies. Joint production allows MNCs to leverage local market knowledge while providing resources to the local partner. Statement-wise Analysis - Statement 1 is Correct: One of the primary benefits of joint production for a local company is the infusion of capital. MNCs provide funds for additional investments, such as purchasing new machines or expanding capacity, which facilitates faster and more efficient production. - Statement 2 is Incorrect: MNCs typically possess advanced technical know-how and global best practices. Rather than relying on the outdated technology of local companies, MNCs usually bring the latest technology to the partnership to improve product quality and production efficiency. - Statement 3 is Incorrect: The primary goal of setting up production jointly (a Joint Venture) is partnership and synergy, where both parties contribute resources (e.g., MNC provides capital/tech; local company provides distribution networks/market access). While MNCs do frequently buy up local companies to expand (Acquisition), the specific strategy of joint production is distinct from an immediate management takeover. Key Takeaway Key Takeaway: The two major benefits of MNCs setting up joint production with local companies are the provision of additional capital for investment and the transfer of advanced technology.

NCERT Class 10 Economics — Chapter 4: Globalisation and the Indian Economy

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Which of the following best explains why MNCs might set up production jointly with local companies?

MNCs can provide money for additional investments, such as buying new machines for faster production.
MNCs typically rely on the outdated technology of local companies to reduce costs.
The primary goal of joint production is for the MNC to immediately take over the management of the local company.

Select the correct answer using the code given below:

Official previous-year question

Verified 1 Aug 2026.

Options

A2 only
B1, 2 and 3
C1 and 3 only
D1 only

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Solution

Correct Option

The correct option is

1 only

Explanation

Multinational Corporations (MNCs) often enter foreign markets through various routes, including setting up wholly-owned subsidiaries, acquiring local companies, or entering into joint ventures (joint production) with existing local companies. Joint production allows MNCs to leverage local market knowledge while providing resources to the local partner.

Statement-wise Analysis

Statement 1 is Correct: One of the primary benefits of joint production for a local company is the infusion of capital. MNCs provide funds for additional investments, such as purchasing new machines or expanding capacity, which facilitates faster and more efficient production.
Statement 2 is Incorrect: MNCs typically possess advanced technical know-how and global best practices. Rather than relying on the outdated technology of local companies, MNCs usually bring the latest technology to the partnership to improve product quality and production efficiency.
Statement 3 is Incorrect: The primary goal of setting up production jointly (a Joint Venture) is partnership and synergy, where both parties contribute resources (e.g., MNC provides capital/tech; local company provides distribution networks/market access). While MNCs do frequently buy up local companies to expand (Acquisition), the specific strategy of joint production is distinct from an immediate management takeover.

Key Takeaway

Key Takeaway: The two major benefits of MNCs setting up joint production with local companies are the provision of additional capital for investment and the transfer of advanced technology.

Your note

More from Chapter 4: Globalisation and the Indian Economy

The term "Containerisation" in the context of globalisation has primarily led to: 1. Huge reduction in port handling costs. 2. Increased time required for the delivery of goods to export markets. 3. Ability to load goods intact onto ships, railways, planes, and trucks. Which of the statements given above is/are correct?

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Which international organisation is primarily mandated to establish rules regarding global trade and ensure their compliance?

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The rapid improvement in which of the following has been the major factor stimulating the globalisation process?

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Which one of the following is NOT a primary factor considered by Multinational Corporations (MNCs) when establishing production units in a country?

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In the context of globalisation in India, which one of the following industries has generally remained resilient compared to others where small manufacturers faced stiff competition?

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Correct Option

The correct option is

1 only

Explanation

Statement-wise Analysis

Statement 1 is Correct: One of the primary benefits of joint production for a local company is the infusion of capital. MNCs provide funds for additional investments, such as purchasing new machines or expanding capacity, which facilitates faster and more efficient production.
Statement 2 is Incorrect: MNCs typically possess advanced technical know-how and global best practices. Rather than relying on the outdated technology of local companies, MNCs usually bring the latest technology to the partnership to improve product quality and production efficiency.
Statement 3 is Incorrect: The primary goal of setting up production jointly (a Joint Venture) is partnership and synergy, where both parties contribute resources (e.g., MNC provides capital/tech; local company provides distribution networks/market access). While MNCs do frequently buy up local companies to expand (Acquisition), the specific strategy of joint production is distinct from an immediate management takeover.