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What is Multinational

Multi means many and national means the state. Many states mean that these types of
companies operate in more than one country at the same time. Multinational enterprise is
strongly supported by the emergence of free liberalism and free market concepts. A company
may start in one country, and may spread to other foreign countries, expanding their
investments. Thus, a national industry becomes a multinational company. The significance of
this type of company is that though it spreads to many other countries, there will be a
centralized management system, and the main decisions will always be taken by the home
company. The other foreign corporations will be subsidiaries of the home company. When we
think of the business environment of a multinational company, it may engage in exporting and
importing goods and services, buying and selling licenses in foreign markets, contract
manufacturing, etc.

What is Multinational ?

This is a corporation that has assets and facilities in one or more countries, other than the home
country, and has a centralized office where global management is coordinated. Decision making
hence affects all the subsidiaries globally.

What is Transnational
Transnational corporations are something similar to multinational companies, but there is a
small difference. Transnational corporations also operate in many countries, and there isn’t a
centralized management system. These companies might start in one country, and later on they
might expand to other nations as well. However, they do not have a home company to manage
them and will start as a new company. So, a transnational company does not have subsidiaries.
Since there isn’t a centralized management system, a transnational company may make
decisions suitable to the operating context. They also may not be loyal to the operating country’s
value system but only will look into their expansion of businesses, since they may have no
connection with the particular country. Transnational companies are there all around the world,
and they operate truly at the global level.

What is Transnational?
These are corporations which operate in other countries, other than the home country, and do
not have a centralized management system. Decisions are hence made to suit the operating
zone. Similar firms operating in other countries cannot be referred to as subsidiaries, since the
management system is not centralized. Transnational companies are also not loyal to the
operating country’s value system, but are focused on business expansion.

Definition
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Multinational refers to a corporation that has assets and facilities in one or more countries, other
than the home country, and has a centralized office where global management is coordinated.
On the other hand, transnational refers to a corporation which operates in other countries, other
than the home country, and does not have a centralized management system.

Operations
While multinationals have subsidiaries in other countries, a transnational does not have
subsidiaries in other countries.

Decision making
Decision making in a multinational is made in the mother country and should be effected in all
the subsidiaries globally. On the other hand, decision making in a transnational is made by
individual transnational corporations.

Local markets
Multinationals face restrictions when it comes to local markets since they have centralized
management systems. On the other hand, transnational companies are free to make decisions
independently based on local markets.

Difference between Multinational and Transnational

Definition

Multinational companies operate in more than one country and have a centralized management
system.

Transnational companies have many companies around the world but do not have a centralized
management system.

Operations
Multinational companies own a home company and its subsidiaries.

Transnational companies do not have subsidiaries but just many companies.

Local Response
Since multinational companies have a centralized management system, there will be some
barriers in decision making.

Transnational companies are able to gain more interest in the local markets where they maintain
their own systems.
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What is the Difference Between Multinational and Transnational Corporations

Multinational and Transnational corporations are two different types of businesses. Here’s a
quick overview of the main differences:

Size:

A Multinational corporation is typically larger because it has subsidiary firm in other countries.
However, A Transnational corporation does not have a subsidiary firm.

Focus:

A Multinational corporation typically has a broad focus, such as manufacturing or finance. A

Transnational corporation may have a narrower focus, which is regarding a particular market in
a country or region.
Headquarters: The headquarters of a Multinational corporation are usually located in a major
home country, while the headquarters of a Transnational corporation may be located in multiple
countries.

Internal structure:

A Multinational corporation typically has a number of business divisions, each of which is

responsible for an individual product line, service line or part of the overall business. A
Transnational corporation may have fewer divisions, but each division will be focused on a
particular market.

Research and Development:

Multinational corporations do R & D at the home country and then distribute the product to the
other countries they have their subsidiary firms. However, in the case of a Transnational
corporation the R&D happens in each firm of the country, which helps them be more focused on
a regional market.

Product focus:

Multinational corporations often produce goods and services that can be used in several
different markets. A Transnational corporation may only produce goods or services that can be
sold in a specific market, such as cotton products, snacks, etc.

Decision Making:
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Multinational corporations have centralized management at the home country due to which it
takes time to make a decision. However, as the Transnational corporations do not have
centralized management, then the management of the firm in a particular country can make the
decisions which are faster and more effective than the multinationals.

For more… Link..

https://www.diffzy.com/article/difference-between-tnc-and-mnc-830
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