What are Transnational Companies, Characteristics and Disadvantages? Examples


Today many companies have goals to expand their operations, and for this they establish operational and tactical strategies to achieve their objective. In this article we will explain what are the transnational companies, characteristics and disadvantages? so let’s get to it.

What is a transnational company?

A transnational company is one that conducts business at an international or cross-border level, always having a core network in a specific country. In addition, it extends its functions by establishing branches in other parts of the world, creating opportunities for commercial activities. You may also have partnerships with other companies and have a percentage of shares on some sales in the country that exists.

Transnational companies have a consolidated objective in globalization and seek to reach the maximum of their capabilities, giving a more complete utility. And to achieve this type of approach, commercial strategies are established that have a design controlled from the central office of origin.

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Also, look for opportunities to take advantage of corporate advantages that has to do with products, local consumers, tax order and distribution channels or chains.

Characteristics of the transnational company

Transnational companies or companies have a series of unique characteristics, then we explain what they are, in the following diagram.

characteristics of transnational companies

  • The companies that make up a commercial group aim to optimize your collective profits to the maximum.
  • Transnational corporations have their headquarters in a single point on the globe.
  • What’s more, own branches or shares with other companies in other parts of the world.
  • The companies that are part of a company are managed by means of a single commercial policy defined at the headquarters.
  • Its control is more decentralized than multinational companies.
  • When settling in a specific country, entrepreneurs look for the advantages that exist in them, likewise, they try to use the resources that exist within the country.

Disadvantages of transnational companies

On the other hand, there are disadvantages in this type of company, which according to analysts have adverse effects, we see some of them.

  1. These types of corporations tend to be in many cases, exploiters of a country’s natural resources, paying a salary below world levels or standards.
  2. The transnationals usually employ only a percentage of the workforce exactly 3%, generating a job decline in almost all the areas they operate. They also harm workers’ rights.
  3. These companies have an absorbing economic power, since, they are established as buyers of actions and leaving aside the labor markets.
  4. These, as already mentioned, irresponsibly exploit natural resources, but not make investments in environmental recoveryInstead, all the money is directed to the central and they do not provide support to the national economy.
  5. Because there is no law regulating the shares of these companies, the economy of a country is drastically affected.
  6. In these types of companies, force is not exercised under the laws of international workers’ law, and the human resources department is scarce in these aspects, preventing the activity of multinational companies from being regulated.

Examples of transnational companies

The idea of ​​forming and designing companies with a focus on extracting raw materials, is to reduce costs and generate more profit. Here we will mention some transnational companies of which there is an exact record and that have had an economic impact.

  • The PepsiCo company, which is the in charge of supplying drinks and snacks or meals.
  • Bayer companies its medicine products and its pharmacy subsidiaries.
  • Johnson & Johnson that produces products that target the personal hygiene.

some transnational companies

As we have analyzed, the expansionist approach of transnational companies They are creating more income in other parts of the world.

We hope this article will help you to further expand your knowledge on issues of trade and financial commercialism, you can also search for more information at tdftips.com.

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