Companies that have headquarters in their country of origin and operate in other countries through the installation of branches are classified as transnational companies. The term transnational replaces the term multinational, as the latter can be interpreted as if the company belonged to several nations, the first is related to the fact that the company exceeds the territorial limits of its nation to operate in the market outside.
The first transnational companies emerged at the end of the 19th century, however, they only reached the peak of their global operations after the Second World War. Most transnational companies come from industrialized countries, which after having conquered the domestic market, they set up branches in other countries, mainly in countries in development.
Transnational Companies
For developing countries, the installation of these companies in their territory is a positive factor, as it generates new jobs, in addition to promoting industrialization in the region.
In turn, transnational companies use as criteria to set up their branches, locations with market potential consumer, infrastructure, raw material, energy and cheap labor, in addition to possible land donations and exemptions of taxes.
The investments made by these companies are high, and the financial return is satisfactory due to a series of reasons mentioned above. The profit is destined to investments for the installation of new branches, and another part is directed to the head office.
Globalization is a process of fundamental importance for the performance of transnational companies, as it provides all the technological apparatus for telecommunication services, transport, among others, essential factors for the effective realization of economic activities at scale global.
There are currently records of approximately 40,000 transnational companies in activity, most of them originating in industrialized countries, however, there are companies of Indian, Mexican and Brazilian.
Examples of transnational companies with headquarters in Brazil are: Vale do Rio Doce, Sadia, Perdigão, Weg, Alpargatas and Gerdau.
Globally known transnational companies: Coca Cola, Pepsi, Unilever, Mc Donald's, Nestlé, Nike, Adidas, Puma, Volkswagen, General Motors, Toyota, Nokia, Sony, Siemens, Peugeot, Vivo, among others.
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*Image credits: BrooklynScribe / shutterstock
By Wagner de Cerqueira and Francisco
Graduated in Geography
Would you like to reference this text in a school or academic work? Look:
FRANCISCO, Wagner de Cerqueira and. "Transnational Companies"; Brazil School. Available in: https://brasilescola.uol.com.br/geografia/empresas-transnacionais.htm. Accessed on June 28, 2021.
