MULTINATIONAL & TRANSNATIONAL CORPORATIONS

Multinational Company (MNC) is a company or corporation that has manufacturing or trading interests in two or more countries. Such companies have offices or branches in different countries (host countries) and usually have a centralized head office where they coordinate global management (home country). Although Transnational Company (TNC) works on similar pattern and it is used as an alternative term for multinational companies, yet there is a fine difference between the two. A Transnational corporation is an enterprise consisting of commercial entities in more than one country that are linked by ownership. They operate in such a way that they sustain high level of local responsiveness i.e. by linking local operations to one another and to headquarters, a transnational company attempts to retain the flexibility to respond to local needs and opportunities while achieving global integration. We can say all TNCs could be considered as MNCs but not all MNCs are TNCs, as MNC have a base in more than one country and each base is working and trading independently to each other i.e. they build, market, sell and distribute within each separate country but the TNC have a global set up i.e. multiple bases and cross county distribution, however individual bases such as the UK and France may work together if the British and French audiences have similar needs. This takes advantage of best practices and economies of scale within each country. These two even differ in their terminology. MNC is an American term contrary to TNC which is a European word. Transnational companies are multinational companies that distribute their decision-making, R&D and marketing powers to foreign offices. So each product can look differently, and appeal to a different target audience. MNC operate directly in the foreign country by setting up partners and through the ownership of assets located abroad. For example Nokia mobile co. , though their marketing strategy is worldwide and their products are uniform in nature, the company is considered as Transnational. This is because of the conscious effort they put in understanding the different needs of their customers across the world. Examples: MNC: Unilever, Mc. Donald, Procter & Gamble, Coca Cola, IBM, etc They usually manufacture consumer goods and the product looks THE SAME in each country. It DOES NOT compensate for social differences across national borders. TNC: Shell, Accenture, GlaxoSmithKlien, Nestle, etc Their product looks DIFFERENT in each country as they make products keeping in mind the social differences across the world. Umang.