The Role Transnational And Multinational Companies Have Played On Essay

The Role Transnational And Multinational Companies Have Played On Globalization - Essay Example The world has seen a tremendous increase in the global transactions and foreign trade in the recent years. The main reason behind this is that now more and more countries are getting engaged in trading with each other in order to increase their profit or sales or protecting them from being eroded by competition. The main objectives which are influencing the companies to engage in international business are the expansion of sales, acquiring resources, minimizing competitive risk and diversification of sources of sales and supplies (Johnson & Turner, 2003). Besides these, there are other few factors like economic factors, cultural factors, technological factors, and social factors which have the influence to a greater extent. The emergence and activities of transnational and multinational enterprises had impacted to a huge extent on the concept of globalization. Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labor standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.