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Social Science (087) — AI-generated practice question

AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.

Q1. [1] medium thorough-understanding
[short_answer] MNCs often prefer to buy existing local companies rather than setting up entirely new factories. Give two reasons why this strategy is more advantageous for an MNC seeking to quickly establish its presence in a new country.
  1. A Local companies always have better technology than MNCs.
  2. B MNCs lack the financial resources to construct new facilities.
  3. C Acquiring local companies gives MNCs instant access to established production capacity, supply networks and market presence.
  4. D Governments in developing countries legally prohibit MNCs from constructing new factories.
Generated by claude-sonnet-4-6 · 2026-06-26 13:25 · grounding rag
Model Answer

Option C is correct. Buying a local company gives an MNC instant access to its existing production capacity, established supply networks, distribution channels, and market presence, saving time and setup costs.

Source: Interlinking Production Across Countries, Chapter 4

Explanation

The textbook explicitly states that "the most common route for MNC investments is to buy up local companies and then to expand production," using Cargill–Parakh Foods as the example (ready refineries + marketing network). Options A, B, and D are factually incorrect per the chapter. Examiners expect you to identify the correct option and briefly justify it using the textbook example or reasoning.

Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.