Difference between Multinational and Transnational

Main Difference – Multinational vs. Transnational

Both multinational and transnational are more or less similar in meaning, and some scholars use these two terms interchangeably. However, there is a small difference between multinational and transnational. Multinational, as the term suggests, operates in many countries. The main difference between multinational and transnational enterprises is that multinational enterprises have a centralized management system which cannot be seen in transnational enterprise. However, both multinational and transnational companies have foreign affiliates and operate around the world. Let us look at the difference between multinational and transnational, in detail here.

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 companies 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 license in foreign markets, contract manufacturing, etc.

Difference between Multinational and Transnational - Multinational Example

Microsoft Corporation is an example of a multinational corporation.

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 take 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.

Main Difference - Multinational vs. Transnational

Nestlé S.A is an example of a Transnational company.

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.Difference between Multinational and Transnational

Image Courtesy:

“Microsoft CES 2009″ by Ben Franske – Own work. via

“Kopenhagen Mai 2009 PD 486″ by Dornum72 – Own work. via  

About the Author: admin


Related pages


what is the difference between charging by conduction and inductionneutropenia and leukopeniaexposition plot definitionsugar cane vs sugar beetwhat is warm blooded animalhomophones vs homonymsinderect objectsis bicarbonate soda and baking soda the same thingdifference between transcription and replicationcalzone vs stromboli differencephagocytosis and pinocytosis differencecocci exampleswhat is the difference between schizophrenia and schizoaffectivewhat happens during cytokinesis in a plant celldeception definition in psychologynucleoidcapsule and slime layerdefine vernierprotoplamletter writing sincerely or faithfullywhat is the difference between relative and absolute humiditydifferent types of trufflestypical and atypical antipsychoticshomophone of stairwhy is ayers rock famousconductors and insulators meaningrubella or rubeolathe difference between protons and electronsstructure of ribose and deoxyribosehow is cytokinesis different in plants and animalsdifference between hypothyroidism and hyperthyroidismdefine unicellularadvantages of selective breedingmolecular structure of cyclohexanebicarbonate soda vs baking sodadifference between curriculum and syllabuswhat is difference between tortoise and turtleakita shibaatmosphere literary term definitionwhat is the difference between butterscotch and caramelplants vascular and nonvascularsingular form of alumniwhat is the difference between recessive and dominantwhat are protagonists and antagonistsmnc tncthymine cytosinedifferences between chrome and chromiumdefine harboursmeaning of predecessor and successorcompare reflection and refractionhow to find the area of a decagondifference between epinephrine and adrenalinedenotative and connotative meaning and examplesdifference between iupac and common nameskaryokinesis definitiondefinition hemostasiswhat is the difference between a hurricane and a typhoondefinition of sardonicconceit in poetryheterophones examplescentripetal vs centrifugal forcesdifference between radiation and irradiationwhat is the difference between phloem and xylemdefination of boiling pointcount the syllablessardonic satirepomelo fruitsdifference between alaskan husky and siberian huskythe difference between modernism and postmodernismdifference between reciprocating and centrifugal pumpdefine cerealwhat is the difference between id ego and superegowhat is the difference between overdrive and distortionschema piaget definitiondifference between electrophilic and nucleophilic substitutionosmotic pressure definition biologymagnetic permeability of free space