Definition of Transnational Company

Those large companies dedicated to the production of goods or services that have subsidiaries in different countries are known as transnational companies. This type of company is characterized by its international expansion and its global dimension.

What is the fundamental requirement for a company to be transnational?

For a company to be considered transnational or multinational, it is necessary that 10% of the capital of the parent entity is invested in a foreign subsidiary. According to international criteria, a transnational company is constituted by a parent company located in a specific country and is governed by the legislation of that country, but is implemented in other countries through investments direct without creating local partnerships.

These companies are private and financially supported by investors and shareholders.

They are multifaceted and versatile companies and tend to operate economically in several lines (financial speculation, production of goods, international trade, services, etc.).

They have one strategy business based on offshoring, that is, the search for territories where labor is as cheap as possible and where labor Labor legislation is in your best interest.

The most common economic sectors are energy, new technologies and communication

These companies are associated with the large oligopolies and monopolies, so some of them are a threat for the free market. By having a high level of production, they have a lower cost for each product and this implies that their potential competitors (small and medium-sized companies) cannot offer the same prices and end up disappearing.

Transnational companies use state-of-the-art technology and thus can create high-end products. quality and at a good price compared to smaller companies.

They have a great financial capacity, that is, their access to credit is greater than that of a medium-sized company

The characteristics of these companies mean that their power is not simply economic, but they also have an influence politics And social.

From a historical point of view, the first transnational companies took their first steps in the second industrial Revolution in the 19th century and after World War II they began to consolidate in the context of the economy globalized.

Photos: Fotolia - canbedone / ontsunan