Do you have doubts about what are the transnational companies?. Then you should read the following article, in which we will explain everything about this type of company, its operation and something else. Join us!
What are transnational companies?
In short, a transnational, multinational, international, or transnational company is a company that has a main branch in a country, and that is registered as a company of that country, but that, thanks to its popularity or resource capacity, has transferred national barriers and has branches in more than 1 country.
They are a very fundamental part of the global economy, because they are a strong trade power in various regions of the globe, as well as they can provide not only products or services, but also good capital for the state economy.
Characteristics of transnational corporations
There are many characteristics that this type of company possesses, however we will mention some, which we consider the most important:
- They spread internationally, they have branches in various places around the world. Its entrepreneurs take their products or services to practically any territory, opening new branches, and even on several continents.
- Most of the time, companies that use products as merchandise tend to have a very considerable economic traffic of them, selling vast amounts all over the globe.
- Due to their great success, they are usually companies with high enough capital to afford to have high-end machinery, or products, or even personnel.
They use new technologies, industrial organization, marketing and considerable advertising because they need this to be able to make themselves known outside their place of origin. - They are strong investors in research and development for the communities, due to all the interaction they have with different types of countries and cultures.
- They usually have a sufficiently good knowledge of the structures and functioning of the political mechanisms of the countries where they are established, because if they did not meet this requirement, they would practically not be able to establish a market in places beyond their reach, knowledge and customs. .
- They usually grow through mergers and acquisitions. Although something that should not be overlooked is their advertising and the number of people they handle as customers.
Types of transnational companies
There are two main ways of classifying multinational companies:
According to its structure
- Horizontally integrated corporations: The idea of this type of company is a company that has a standard of products or services. And that is governed only and solely by that principle, no matter where you are.
- Vertically integrated corporations: The idea of this type of company is a company that has a main branch style, where there is usually the standard and where its products are worked, and from which, then, they are distributed to the other branches. They mainly produce intermediate goods in certain countries, which serve as supplies for final production in other countries.
- Diversified corporations: They are the combination of the two types mentioned above, the functionality is similar to both.
Examples of this type of company
- McDonald's, Coca-Cola, Company, BHP Billiton and Mercadona.
- Timex, General Motors, Adidas and Nutella.
- Alstom; Altria Group; Novartis and Samsung.
According to its degree of decentralization
These companies are classified as follows:
- Ethnocentric: Concentrates its operation in its country of origin, and then only works in a basic way in branches in other countries.
- Polycentric: A little different from the previous one, try not to have only one strict way of doing things.
However, it always maintains its roots, transferring a greater degree of freedom to the subsidiaries, giving it enough freedom to consider itself different, but it is not a completely different product or service. - Geocentric: Finally, this type of company takes freedom to the maximum, so that each branch has its own business policy, in which each subsidiary is responsible for each decision it makes, although the one who always appears is the main company.
Importance of transnational companies
We all know what are transnational corporations, are incredible examples of how high a company's ambition can go to be able to market in different parts of the world and be a market monster.
We all know Mc Donald's, Nutella, Samsung, iPhone, Toyota, Niisan, and every entrepreneur, without a doubt, intends to go as far as them.
Thanks to this type of company, it is possible to extend marketing, deliver a product that is in "X" country and deliver it to another, so that more users benefit from it. Form of globalization, so we can access different products without having to travel to another place.
If you want to know a little more about how companies work and their different levels, then you should visit this interesting article: Classification of companies.
Thank you very much for reading this article, we hope it has served you, if you wish, we invite you to watch the video that we leave below if you want more information. We hope to see you again on a next occasion.