- What is a transnational company?
- Characteristics of a transnational company
- Differences between transnational and multinational company
- Criticisms and arguments in favor
- Examples of transnational companies
We explain what a transnational company is, its characteristics and various examples. Also, the arguments for and against these companies.
What is a transnational company?
A business Transnational or international company is a large corporation that carries out its activities of production, distribution and marketing of goods and services beyond the borders of the country of its foundation. This means that as an organization it can be spread across very different geographies, thus taking advantage of the advantages of producing in different countries, given the labor and financial inequalities on the planet.
Transnational corporations are a phenomenon of the economic globalization, first appeared around the 18th century, during the expansion mercantilist of the powers imperials of Europe towards Asia, Africa Y Oceania. However, its point of greatest boom occurred in the second half of the 20th century, and was focused on the United States.
Given their enormous economic and financial capacity, which in many cases allows them to manage budgets greater than the GDP of many countries, transnational corporations are an important contemporary economic actor, capable of influencing global markets as well as the decisions of governments local and regional. For that reason, they have many detractors and defenders, and are considered a reflection of the virtues and risks of productive globalization.
Characteristics of a transnational company
Transnational corporations are characterized by the following:
- Although they are founded in a specific country, they have a presence in numerous foreign territories, either through subsidiary companies, franchises or secondary offices dependent on the main one.
- They are dedicated to different areas that range from the supply of technological goods and services, to the manufacture and commercialization of personal consumption goods, such as clothing, footwear, appliances, cell phones, among others.
- They are large corporations, with thousands of employees in its different locations, which grow through mergers and acquisitions with other similar companies.
- They operate internationally, taking advantage of the comparative advantages of operating in different regions of the world.
Differences between transnational and multinational company
There is no consensus as to what differentiates a multinational company from a transnational company, and there are those who affirm that these are two different terms to define the same thing.
On the other hand, it is possible to distinguish between international companies that distribute their productive apparatus (such as factories or warehouses) in different parts of the world, and those that use their capital to found subsidiary companies or associated companies that are dedicated to an autonomous sector, although under the tutelage of the original company. Some sources state that the first case would be that of a multinational company, while the second would be that of a transnational company.
If so, transnational companies would be a less centralized model of multinational company.
Criticisms and arguments in favor
Transnational corporations receive much criticism and also have defenders who consider them a vital element for global development. Some are:
| critics | arguments in favor |
|---|---|
| They exploit the workers local using the workforce cheap and often Labor laws lax, to maximize their production. | They provide employment to large populations in depressed or low-income nations, which helps reduce unemployment. |
| They compete unfairly with local producers and establish monopolies international centers that concentrate wealth. | They encourage technology transfer and industrial development in third world nations. |
| They are often responsible for ecological and economic disasters at the local level, without being responsible to the world. | They are important sponsors of scientific-technological research, as well as sporting, cultural and social events at an international level. |
| They promote global economic inequality, as their profits always go back to their country of origin. | promote the free market globalization and the international flow of services and goods. |
| They exert a difficult influence to combat in local governments, which favors the corruption and impoverishes the quality of life of the people. |
Examples of transnational companies
Some examples of transnational corporations are:
- Nestle. It is a company of Swiss origin dedicated to producing processed foods, culinary ingredients and sweets. It has 98% of its stores, 91% of its total assets, and 97% of its workforce in foreign nations.
- Procter & Gamble. It is an American company founded in 1837 that is dedicated to the production of various goods, such as pet food, personal hygiene items or household cleaning items. It has a presence in almost 160 countries and is the owner and marketer of almost 300 international brands, such as “Gillette” or “Tampax”.
- PepsiCo. It is an American company dedicated to the field of beverages and snacks, it is famous for its product brand "Pepsi", and for being the great competitor of "Coca-cola".It is present in more than 200 countries through a system of subsidiary companies.
- Bayer. It is a German pharmaceutical company and famous in the world for its original brand of aspirin. This corporation was part of the German conglomerate IG Farben until the end of World War II. Today it consists of a group of associated companies with offices in numerous countries around the world.
- Huawei. It is a Chinese company technology Y telecommunications based in Shenzhen. It was founded in 1987 and since then it has deployed its products in more than 170 countries and has offices in different countries in Latin America and Asia.