What are the Main Characteristics of Global or Multinational Companies?

A multinational or transnational company is the company that conducts its business activities on an international scale. In the beginning, it was established in a country of origin, but with the passage of time it spread to more countries in the world, this through related companies.

It is constituted by a base or parent company, which is the one that is established in a country under its local laws. There are different ways in which transnational companies are formed, either by groups of a particular company, or by mergers.

These transnational companies have a focus on doing business globally, seeking to maximize their profits as a whole. They have commercial strategies that are controlled and designed, from the parent branch, but with the objective of taking advantage of the comparisons they have, this related to their production costs, the behavior of local consumers, tax regime and distribution chains in general.

Once it is explained that it is a transnational company, we can delve into what corresponds to us, which is. What are the main characteristics of global or multinational companies? we are going to explain each point that characterizes international companies.

They are decentralized

This may vary depending on the company, due to its magnitude, multinational companies in addition to their headquarters, they have other points of great importance, where depending on each company decisions can be made or not. Now we will see a category of companies with respect to their degree of decentralization.

distribution concept map

Polycentric

This type of company, have more than one center where they are taken decisionsThis is beneficial, because the parent center will not understand the local situation as well.

Geocentric

In this, decisions are only made at the head office. There is another similar type which is called ethnocentric, in the latter the culture of the headquarters is considered to be superior to that of the other headquarters.

Partner with local companies

Transnational companies constantly decide to associate or buy from other local companies, this because they have the same products aimed at the same public. In these cases, transnational companies decide to buy or partner with local businesses, this in order to monopolize the market in that region.

How they distribute

In general, a large part of the production of transnational companies, start in the country where the head office is located, but the assembly takes place in the headquarters of each country. This is also related to the laws of each country, where they require that part of the production be in national territory, this helping to generate jobs.

They are aware of the regulations of each country where they are present

In the plan of transnational companies, there is the know the rules, customs and laws of the countries where they are. Beyond globalized standards, such as product quality, company goals, compliance with social standards and coexistence. They have to comply with the legislation of each countryIn this way they can be successful in the nation.

hand signing a paper

They have variety in their products

In addition to wanting to have a large market share, transnational companies have and expand a wide range of productsA clear example is Yamaha, which has everything from musical instruments to electronic devices. This depends on what the company’s strategy is, and the market analysis they have done.

It should also be noted that the existence of transnational companies has been criticized, claiming several disadvantages that these can bring. Because, these cause great ecological damage due to imports in large cargo ships, they damage the economy because the market belongs to a small group of companies, therefore, if one of them falls, the economy collapses and eliminate diversity cultural.

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