Large MNCs in developed countries often place orders with small producers in developing countries for goods l…

Question

Large MNCs in developed countries often place orders with small producers in developing countries for goods like garments and footwear, but sell them under their own brand names. How does this arrangement give MNCs power over these small producers, and what are the consequences for the producers?

Accepted Answer

## Model Answer Large MNCs place orders with small producers in developing countries but sell the goods under their own brand names. This gives MNCs **tremendous power to determine the price, quality, delivery, and labour conditions** for these distant producers. Since the small producers depend entirely on MNC orders, they have little bargaining power. **Consequences for producers:** - They are forced to accept low prices set by MNCs. - They must meet strict quality and delivery standards. - Workers face poor labour conditions to keep costs low. - Producers earn very little profit despite doing the actual manufacturing work. Source: Interlinking Production Across Countries, Chapter 4 --- ## Explanation Examiners look for two clear parts: (1) **how MNCs gain power** — by controlling price, quality, delivery, and labour conditions — and (2) **consequences for small producers** — low prices, strict conditions, poor wages. The key phrase from the textbook is "tremendous power to determin…

Social Science (087) — AI-generated practice question