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 co-
ordinate 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.