1. Introduction: Definition of Multinational Corporations (MNC)
Multinational Corporations (MNC) have emerge in the last two or three decades. It is a large organization which produces and distributes goods and services across national boundaries. MNC involve the process of capital in the form of Foreign Direct Investment (FDI). Beside, it also has production facilities or other fix assets in at least one foreign country and makes its major management decisions in a global context. There are some examples of MNC, car manufacturers like Toyota, and Honda, oil companies like Shell, and BP, and technology companies like Microsoft, and Canon.
The reasons of MNC expand their business into different countries are because within the last 20 years, the labor cost in Britain has raised dramatically. Most of the MNC find it is cheaper to import goods instead of produce them in the United Kingdom. Besides, most of the MNC do their production work in developing countries where the labor cost is cheaper than in the West. In developing countries, there is a great deal of labor but there are not many jobs offer, and their standard of living is low, thus their labor cost is low. Also, there are other reasons why MNC do their business in more than one country. The export taxation has increased and this had caused their manufacture and profit had declined. In addition to this, by doing business in developing countries, MNC can reduce transport and distribution cost and secure supplies of raw materials. Besides, unlike in their home country, most of the developing countries are lack of laws regarding minimum wages, unionization, and safety standards. Therefore, MNC can easily avoid trade barriers and trade tariff. For example, Toyota has markets their car to the Europ ...