A transnational corporation is an enterprise that is involved with the international production of goods or services, foreign investments, or income and asset management in more than one country.
Transnational corporations share many qualities with multinational corporations, with the subtle difference being that multinational corporations consist of a centralized management structure, whereas transnational corporations generally are decentralized, with many bases in various countries where the corporation operates.While traditional multinational corporations are national companies with foreign subsidiaries, transnational corporations spread out their operations in many countries to sustain high levels of local responsiveness.
A multinational corporation (MNC) or worldwide enterprise is a corporate organization that owns or controls production of goods or services in at least one country other than its home country. Black's Law Dictionary suggests that a company or group should be considered a multinational corporation if it derives 25% or more of its revenue from out-of-home-country operations. A multinational corporation can also be referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation, or a stateless corporation. There are subtle but real differences between these three labels, as well as multinational corporation and worldwide enterprise.
A transnational corporation operates substantial facilities, does business in more than one country, and does not consider any particular country its corporate home. One of the significant advantages of a transnational company is that they are able to maintain a greater degree of responsiveness to the local markets where they maintain facilities.[ citation needed ]
Transnationality also refers to the extent to which a firm engages in value-creating activities across national borders. Faced with accelerated globalization, managers often make decisions to expand a firm’s transnationality in order to enable the firm to effectively compete with rivals on a global scale (e.g. Nestlé, Deutsche Post, Toyota, etc.), who employ senior executives from many countries and tries to make decisions from a global perspective rather than from one centralized headquarters. [ citation needed ]Actions taken with transnational cooperation can help create better relationships between nations. Resources that are found in nations often need to be spread out throughout the world and thus transnationality helps this process. The history of the TNC dates back to Western Europe in the 16th century. During this time firms like the British East India Trading Company were founded, helping to develop transnationality to what is seen today.
Nestlé S.A. is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world, measured by revenues and other metrics, since 2014. It ranked No. 64 on the Fortune Global 500 in 2017 and No. 33 on the 2016 edition of the Forbes Global 2000 list of largest public companies.
The Deutsche Post AG, operating under the trade name Deutsche Post DHL Group, is a German multinational package delivery and supply chain management company headquarter in Bonn, Germany. It is the world's largest courier company. The postal division delivers 61 million letters each day in Germany, making it Europe's largest such company. The Express division (DHL) claims to be present in over 220 countries and territories.
Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered in Toyota, Aichi, Japan. In 2017, Toyota's corporate structure consisted of 364,445 employees worldwide and, as of September 2018, was the sixth-largest company in the world by revenue. As of 2017, Toyota is the largest automotive manufacturer. Toyota was the world's first automobile manufacturer to produce more than 10 million vehicles per year which it has done since 2012, when it also reported the production of its 200-millionth vehicle. As of July 2014, Toyota was the largest listed company in Japan by market capitalization and by revenue.
Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.
In economics, internationalization is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. There are several internationalization theories which try to explain why there are international activities.
Bilateralism is the conduct of political, economic, or cultural relations between two sovereign states. It is in contrast to unilateralism or multilateralism, which is activity by a single state or jointly by multiple states, respectively. When states recognize one another as sovereign states and agree to diplomatic relations, they create a bilateral relationship. States with bilateral ties will exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperations.
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.
Global strategy as defined in business terms is an organization's strategic guide to globalization. Such a connected world, allows a business’s revenue to not be to be confined by borders. A business can employ a global business strategy to reap the rewards of trading in a worldwide market.
Transnationalism is a scholarly research agenda and social phenomenon grown out of the heightened interconnectivity between people and the receding economic and social significance of boundaries among nation states.
International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational level..
Foreign exchange risk is a financial risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. The exchange risk arises when there is a risk of significant appreciation of the domestic currency in relation to the denominated currency before the date when the transaction is completed.
Sell side is a term used in the financial services industry. The three main markets for this selling are the stock, bond, and foreign exchange market. It is a general term that indicates a firm that sells investment services to asset management firms, typically referred to as the buy side, or corporate entities. One important note, the sell side and the buy side work hand in hand and each side could not exist without the other. These services encompass a broad range of activities, including broking/dealing, investment banking, advisory functions, and investment research.
EFG Hermes Holding S.A.E. is an Egyptian investment bank present in the Middle East and North Africa (MENA) region and specializes in securities brokerage, asset management, investment banking, private equity and research. EFG Hermes serves a range of clients including sovereign wealth funds, endowments, corporations, financial institutions, high-net-worth clients and individual customers. EFG Hermes is listed on the Egyptian Exchange (EGX) and London (LSE) stock exchanges. EFG Hermes has offices in Egypt, the United Arab Emirates (UAE), the Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Jordan and Lebanon with over 800 people from 25 nationalities. They serve clients from the Middle East, North Africa, Europe and the United States. EFG Hermes owns a 63.7% majority stake in the Lebanese commercial bank, Credit Libanais.
Network governance is "interfirm coordination that is characterized by organic or informal social system, in contrast to bureaucratic structures within firms and formal relationships between them. The concepts of privatization, public private partnership, and contracting are defined in this context." Network governance constitutes a "distinct form of coordinating economic activity" which contrasts and competes with markets and hierarchies.
Megacorpstate is a form of market structure that designs new strategies to systematize the cartel power in the world. This particular market framework consists of oligopolistic interdependent nations-states and multinational corporations, which have established alliance to own majority of the market power. The most prominent organizations within the structure are OPEC and the Seven Sisters that include Exxon, Mobil, Socal, Royal Dutch-Shell, BP, Texaco and Gulf. Regardless of its great influence, Megacorpstate does not have a major recognition in the world. The main reason for its unfamiliarity is its disinclination to characterize itself as a separate market structure.
The Transnationality Index (TNI) is a means of ranking multinational corporations that is employed by economists and politicians. It is calculated as the arithmetic mean of the following three ratios :
Sanjaya Lall, was a development economist, Professor of Economics and Fellow of Green Templeton College, Oxford University. Lall's research interests included the impact of foreign direct investment in developing countries, the economics of multi-national corporations, and the development of technological capability and industrial competitiveness in developing countries. One of the world's pre-eminent development economists, Lall was also one of the founding editors of the journal Oxford Development Studies and a senior economist at the World Bank.
EPG Model is an international business model including three dimensions – ethnocentric, polycentric and geocentric. It has been introduced by Howard V. Perlmutter within the journal article "The Tortuous Evolution of Multinational Enterprises" in 1969. These three dimensions allow executives to more accurately develop their firm's general strategic profile.
Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise.
An international joint venture (IJV) occurs when two businesses based in two or more countries form a partnership. A company that wants to explore international trade without taking on the full responsibilities of cross-border business transactions has the option of forming a joint venture with a foreign partner. International investors entering into a joint venture minimize the risk that comes with an outright acquisition of a business. In international business development, performing due diligence on the foreign country and the partner limits the risks involved in such a business transaction.
Land grabbing is the contentious issue of large-scale land acquisitions: the buying or leasing of large pieces of land by domestic and transnational companies, governments, and individuals. While used broadly throughout history, land grabbing as used in the 21st century primarily refers to large-scale land acquisitions following the 2007–08 world food price crisis. Obtaining water resources is usually critical to the land acquisitions, so it has also led to an associated trend of water grabbing. By prompting food security fears within the developed world and new found economic opportunities for agricultural investors, the food price crisis caused a dramatic spike in large-scale agricultural investments, primarily foreign, in the Global South for the purpose of industrial food and biofuels production. Although hailed by investors, economists and some developing countries as a new pathway towards agricultural development, investment in land in the 21st century has been criticized by some non-governmental organizations and commentators as having a negative impact on local communities. International law is implicated when attempting to regulate these transactions.
Internalization theory is a branch of economics that is used to analyse international business behaviour.
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