Why do companies go global and who are the winners and losers?

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Why do companies go global and who are the winners and losers?

In this essay I plan to investigate the reasons as to why companies are choosing to go global, while coming to a decision as to who the winners and losers are and why.

         Globalisation has resulted in many businesses setting up or buying operations in other countries. When a foreign company invests in a country, perhaps through the process of building a factory or a shop, this is called inward investment. Companies that operate in several countries are called Trans-National Corporations (TNCs) (or Multi-National Corporations (MNCs)). But before we go any further in this investigation, I shall now explain what TNCs are; you perhaps haven’t come across that term.

            TNCs, are large companies which have offices or factories in several countries around the world and are therefore global because they operate across national boundaries. Examples of TNCs include Nike, Wal-Mart, Microsoft, BP, McDonalds which is among the largest TNC- with nearly 30,000 restaurants in 119 countries    ( ), and many many more. Most TNCs have their headquarters in MEDCs (More Economically Developed Countries) such as Nike which is based in Oregon in USA. The headquarters tend to be based in MEDCs for numerous reasons, and one being the fact that the work done there is often highly skilled and TNCs need to be in a country where a large majority of the people educated come out with a high skill level as that’s where all the ‘designing and administrative’ work of the products is done.  However, having said that, many TNCs are now choosing to locate branches in LEDCs (Low Economically Developed Countries) like Malawi and Bangladesh, where they build their factories and manufacture their goods…but the question now is why, because why cant all the manufacturing of the goods and building of the factories be done in MEDCs instead?

        There are countless reasons as to why this is and they will now be discussed, but in order for us to even get to those ‘countless reasons’, it perhaps is useful to understand what the TNC’s aims are, right?

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The primary aim of any TNC is to make profit and that simply can be fulfilled by them using less money (cutting their costs), which is why LEDCs are attracting many TNCs. But how and why is that?  

 Firstly, its all down to the fact that there are variety of advantages associated with TNCs. For example, they give local people jobs when both their factories are built and the manufacturing of their products begin, they also improve roads and airports as their goods need to be transported fast and efficiently and lastly the money the workers earn can go into ...

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