Social Science (087) — AI-generated practice question

Local producer retains more independence in the "placing production orders" method.

When an MNC buys up a local company (e.g., Cargill buying Parakh Foods), ownership and control shift entirely to the MNC — the local producer loses its independence completely.

When an MNC only places production orders, the local producer remains an independent business. It continues to own its factory and assets; the MNC simply dictates price, quality, delivery, and labour conditions.

An MNC may prefer buying up when it wants full control, established market networks, or existing infrastructure. It may prefer placing orders when it wants to avoid the cost of setting up/buying factories while still accessing cheap labour.

Source: Chapter 4, Interlinking Production Across Countries

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• The key contrast examiners expect: ownership/control lost (buyout) vs. ownership retained but terms dictated (production orders).
• Use the textbook example of Cargill–Parakh Foods to support the buyout point — examiners reward specific examples.
• For the "why choose one over the other" part, give at least one reason for each method; don't leave it one-sided.
• Avoid over-writing — 3 marks = ~3 distinct points, roughly 70–80 words is ideal.