Which of the following is a likely effect on local suppliers when a multinational expands into a country?

Which of the following is a likely effect on local suppliers when a multinational expands into a country?

• A. They always fail
• B. They may become integrated into the MNC's supply chain and grow
• C. They are unaffected
• D. They always gain monopoly power

Answer: (B)

When a multinational expands into a country, local suppliers often gain the chance to enter the MNC’s supply chain. If a local firm can meet the required standards of price, quality, and reliability, it can become a supplier for the MNC. Being part of this network brings regular orders and can enable the supplier to invest in better equipment, technologies, and training, helping the business grow. The typical outcome is growth through integration with the MNC’s purchasing system, rather than all local suppliers failing, staying unchanged, or suddenly gaining monopoly power.

When a multinational expands into a country, local suppliers often gain the chance to enter the MNC’s supply chain. If a local firm can meet the required standards of price, quality, and reliability, it can become a supplier for the MNC. Being part of this network brings regular orders and can enable the supplier to invest in better equipment, technologies, and training, helping the business grow. The typical outcome is growth through integration with the MNC’s purchasing system, rather than all local suppliers failing, staying unchanged, or suddenly gaining monopoly power.