MNCs And Globalization

Globalization has accelerated in recent years, a development that has significant implications for the regulation and governance of international business, trade and investment. International business implies no fundamental shift in the underlying principles of trading or business functions but simply more cross-border transactions. In simpler terms it includes all commercial transactions – private and governmental – between two or more countries. Private companies undertake such transaction for profit; governments may or may not do the same in their transactions. The world has seen a tremendous increase in the global transactions and foreign trade in 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 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 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, and multinationals have played an important role. 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.