Introduction to transnational corporationsPPT
What is a transnational corporation?A transnational corporation (also known a...
What is a transnational corporation?A transnational corporation (also known as a multinational corporation) is an enterprise that operates in multiple countries, with headquarters in a different country from its operations. These corporations are typically large, with operations in multiple continents and often in multiple industries. They are usually listed on stock exchanges and have a market value in the billions of dollars.Functions of transnational corporationsTransnational corporations perform several functions that enable them to operate successfully in multiple countries.1. Globalization of productionTransnational corporations use the latest technology and information to globalize production, which allows them to take advantage of low-cost labor and raw materials in different countries. This helps them to reduce production costs and increase profits.2. International diversificationTransnational corporations often operate in multiple industries and countries, which helps to diversify their risk. If one sector or country experiences economic downturn, the other sectors or countries can often offset the loss and maintain the company's overall profitability.3. Access to markets and resourcesTransnational corporations use their operations in different countries to access markets and resources that are not available in any single country. This allows them to expand their sales, production, and research and development activities worldwide.4. Technology and knowledge transferTransnational corporations often transfer technology and knowledge from their headquarters to their operations in different countries. This helps the company to maintain its competitive advantage and ensures that its operations are up-to-date with the latest technology and management practices.Forms of transnational corporationsThere are several forms of transnational corporations, including:1. ConglomeratesConglomerates are transnational corporations that operate in multiple industries but do not focus on a specific sector. They typically acquire or merge with companies in different industries to diversify their operations and reduce risk.2. Conglomerate-holding companiesConglomerate-holding companies are transnational corporations that operate in a specific industry but have diversified operations within that industry. They acquire or merge with companies in the same industry to increase their market share and reduce competition.3. Pure holding companiesPure holding companies are transnational corporations that do not have any operational activities but act as a holding company for other companies. They acquire or merge with companies in different industries but do not manage any of them directly. Instead, they provide financial and strategic support to their subsidiaries.SummaryTransnational corporations are large enterprises that operate in multiple countries, with headquarters in a different country from its operations. They globalize production, internationalize diversification, access markets and resources, and transfer technology and knowledge to maintain their competitive advantage. There are several forms of transnational corporations, including conglomerates, conglomerate-holding companies, and pure holding companies.
