Incentive

There are many reasons for multi-national enterprises to locate to other countries. One reason is to escape trade tariffs. For example, the decision made by Toyota to produce in the UK was almost certainly to gain access to the European markets without having to pay tariffs. Other MNCs may be seeking the lowest cost location for their production facilities, or be attracted by an abundance of skilled or cheap labour. Other businesses may want to reach foreign markets more effectively; for example Marks & Spencer, Laura Ashley and The Body Shop. Avoiding transport cost is not really an incentive because transportation costs, at least on a large scale, are generally relatively cheap relative to the price of the product. Only heavy or large products may need to be produced in the market they are intended to sell in, products such as building materials.