This in an increase in their potential consumer

This essay is going to describe the effects of globalization on
multinational corporations. In order to completely understand these effects we
should firstly get familiar with the above-mentioned concepts. So,
globalization is the creation
of international rules by the governments and corporations in order to
facilitate and regulate trade between nations clearing the way for the exchange
of goods and services, thereby increasing their profitability. Whereas a multinational corporation (MNC) is usually a
large corporation incorporated in one country which produces or sells goods and
services in various countries having as main characteristics its large size and
the fact that the worldwide activities are centrally controlled by the parent
company. As globalization facilitates the
trade between nations, its effects on multinational companies are mostly
positive. Some of these positive effects that are going to be described in the
following paragraphs are the fact that globalism helps the MNCs having easier
access to the market, enables them to form partnerships more easily and they
profit lower taxes.

     Let’s firstly describe how globalization
helps MNCs have easier access to the market. Before we said that globalization
regulates trade between nations and consequently without it the markets of
different nations wouldn’t be so approachable for the MNCs. Later on, the
agreements made between nations help to reach out foreign costumers resulting
in an increase in their potential consumer base by millions. However, the MNCs
don’t only get to connect with foreign buyers but they are also able to hire
foreign employees and overcome problems in coordination, the language for
example. As having branches all over the world communication is a key point and
they are obliged to hire employees with general knowledge in different
languages and that know the local market well. Moreover they can pay their
foreign employees based on the average wages that country has, which may result
lower than in the country where the parent company operates. All of the above
result in an increase in the MNCs profits.

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     Using some of the above-mentioned
agreements this paragraph will continue to explain another positive effect globalization
has on MNCs, such as the convenience of the corporations to form partnerships
and stretch across the continents. An important example is Wal-Mart which has
operations in 28 countries, including over 11,500 stores having over 2.3
million international employees (Wal-Mart Corporate, retrieved January 2018,
from ). In the series of
advantages that the presence in a foreign country has, we mention first the
fact that it allows the corporation to meet the country’s demand for its
products without the transaction costs associated with long-distance shipping.
As other examples there can be mentioned Adidas, Nike, Coca-Cola, Toshiba,
Samsung, etc. Also an important fact to mention is that based in a recent
research (Ultius, retrieved March 26.2013, from ) it doesn’t matter
whether the corporations are developing themselves in developed or developing
countries because the impact globalization has on them is equally positive.
This means that the country is responsible in helping to arrive in an argument
with any other country and also create other facilities. While most of the
responsibility falls to the corporation itself, so the success depends on them

Another important profit of MNCs from globalization we have to describe
is their profit in the tax policy. So, let’s recall what we said before: the
country where the corporation operates is responsible that if possible to create
facilities. Some facilities mentioned before were connecting markets or
decreasing their expenses in the wages of their employees, which is similar to
the profits in the tax policy the country enables. For example the country
where the corporation operates may adapt some tax policy which may be unfavorable
and in the moment the cooperation opens some other branches in another country it adapts the tax policy of
that country and whom may also allow corporations to lower their tax rates by
moving their branches offshore. No doubts that all these decrease costs and
contribute in the profit of the MNC.

     Taking together all the effects of
globalization upon the multinational corporations which are stated above we can
notice that they are all connected to each other in a chain form. It is the
globalization that enables countries to cooperate and then have the expected
effects on MNCs. To conclude as long as multinational
corporations continue to seek new markets across borders to achieve the
objective of profit maximization, globalism
will continue to positively affect them.