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What is the meaning of Transnational corporation? Concept, Definition of Transnational corporation

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Concepts and meanings of transnational corporation

1 Meaning of multinational company

(Abbreviated as MNE) multinational companies or transnational corporations are multinational companies that not only are governed in their country of origin, but they are also in other countries. Multinational corporations have ability to expand production and other operations around the world, as well as mobilize industrial plants (des locate) from one country to another. Of mergers and alliances between them allow them to reach a growing power and influence in the world economy.
His philosophy has a global concept: maintain a global perspective in their businesses on markets (customers), services and products, under which conceive the world as their target market. These companies are characterized by the employment of both the country of origin and the country where he settled.
The term "multinational" must be understood in what market refers, not to the nature of the company: in fact, usual that will qualify the term "multinational" misleading and preferred to call them "transnational", since, although they operate in several countries, its headquarters and main executives, as well as the origin of its strategy and management in general, will have seating in their country of origin without any influence of its overseas subsidiaries. It argues as well that by the fact that, for example, McDonald's operate in multiple countries it continues to be an American and not "multinational" company.
Multinational enterprises were born as a result of the process of enlargement of the markets. The first company that can be considered precedent for the current multinational was the Muscovy company, an English company founded in London in 1555, dedicated to trade between England and Russia. Another precedent can be found in the companies of the Indies that arose in Great Britain, Holland, Sweden and Denmark in the 17TH century and banking Rothschild that spread to several European countries.
The germ of the current multinational companies emerged in the late 19th century, when a group of companies decided to build factories outside their countries of origin, seeking to reduce transport costs and avoid heavy tariffs established for the importation of their products.

Features of multinational enterprises

• Are spread throughout the territory. They open their doors to people (users) around the world.
• Their owners carry their products or services to communities around the world opening new branches in other continents away from their origin.
• Have plants around the world and work with important quantities of products.
• Use new technologies, industrial organization, marketing and advertising.
• They are investing heavily in research and development for the communities.
• In-depth knowledge of the structures and functioning of the political mechanisms of the countries where they are implanted.
• One of their usual forms of growth is through mergers and acquisitions processes.
• Its products are not terminated in the same plant in which it is iniciandamente. They carry it to another plant in another continent to be finalized. And another to be marketed.


2. Definition of transnational corporation


Multinational enterprise:


• A multinational company is characterized more by way of thinking of its leaders that by its size and location across the planet, which means the integration of its operations at the global level.

• Responsibility to seek, take over and integrate production, marketing, research, development and the best funding opportunities, on a global basis, using the narrow framework of national borders

• Multinational enterprise must be flexible, adaptable and quick in his decisions. These characteristics, the most important is undoubtedly the speed in decision-making.

• The main distinctive feature of the financial management of a multinational company is its ability to move money and profits among its subsidiaries, through internal mechanisms of transfer. This mechanism include: transfer price of goods and services traded within the multinational Assembly, ahead or behind payments between companies that integrate the multinational and by charging expenses and patent rights.

• The primary goal of an international company does not change, they are valid anywhere in which a company has its base and anywhere that operate.

Transnational corporation:


• Company, operating in various countries through subsidiaries that may be legally independent, tends to maximize their profits, or to meet any other objective proposed - under a global perspective of group, and not on each of their isolated legal units.

• The local neglects to expand in the world with quality and good prices. The borders have no importance.

• Management, finance, pricing, advertising, marketing and strategic brand planning, are made with global sense, in the parent company.

• Manufacturing seeking countries that will provide assurances on manufacturing quality and price.

• Transnational corporations control a very important part of the global technology and transferred to those countries where installed its production plants. They have important departments of research, development and innovation.



3 Concept of transnational corporation

Referred to as transnational corporation to that company of great dimensions, dedicated to the production of goods or services, which owns subsidiaries in other countries other than the originating (parent) and thereby they manage to expand its influence and economic gravitation at the global level, by controlling not only good part of the economy and international trade, but also technology and developmentgaining enormous importance in the globalized, capitalist world. With 10% of the share capital of the parent company is already set to a foreign subsidiary company is considered multinational or transnational.
While subsidiaries comply with the laws of the countries where are established, they do so by direct investment entity mother (who is generally conformed with capitals of different national origins). While each subsidiary cannot be a legally independent entity, and adapt to local standards, it always is in view to achieve common to the entire group benefits, and a basically similar policy as they are secondary or subsidiary entities of the central House, for example Banco Santander. In general, are used as synonyms, multinational and transnational company (some considered to be transnational where capital belongs to people of different nationalities), whereas the supranational, especially dedicated to delivering services, based on common standards, above the local rights, for example, the International Association of air transport (AITA).
Multinational or transnational companies thus become real factors of economic power, accumulating capital, bringing progress to areas where are installed, but often ruin local businesses and industries, and although they provide sources of employment, in general are precarious.


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