Why do TNCs engage in foreign direct investment (FDI)? Assess several factors that contribute to the decision by TNCs to establish operations abroad.

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The Answer is Transnational corporations (TNCs) engage in foreign direct investment (FDI) for several reasons. One of the main factors is to access new markets and customers. By establishing operations abroad, TNCs can tap into new consumer bases and expand their customer reach, ultimately increasing their sales and profits.

Another reason for TNCs to engage in FDI is to take advantage of lower production costs. This could include cheaper labor, resources, or operational expenses in the foreign country, allowing the TNC to reduce their overall production costs and improve their competitiveness in the global market.

Additionally, TNCs may choose to establish operations abroad to mitigate risks and diversify their business. By operating in multiple countries, TNCs can spread their risk across different markets and reduce their dependence on any single market or country, thus making their business more resilient to economic or political fluctuations.

Furthermore, TNCs may engage in FDI to access new technologies, skills, or resources that are not readily available in their home country. By establishing operations in a foreign country, TNCs can benefit from local expertise, innovation, and resources that can enhance their competitive advantage and drive their business growth.

Overall, the decision by TNCs to establish operations abroad is influenced by a combination of factors such as market expansion, cost reduction, risk diversification, and access to new resources and capabilities. These factors contribute to the strategic decision-making process of TNCs as they seek to grow and succeed in the global marketplace.

Why Do TNCs Engage in Foreign Direct Investment (FDI)? Assess