Describe main features of Transnational Corporations (TNC).
The main features of Transnational Corporations (TNC) are:
The assets and sales of transnational corporations are quite large. The sales turnover of some TNCs exceeds the gross national products of several developing countries. For example, the physical assets of International Business Machines (IBM) exceed S billion dollars.
A transnational corporation has its head quarter in the home country. TNC exercises control over all its branches and subsidiaries which operate within the policy framework of the parent corporation.
A transnational corporation has production, marketing and other facilities in several countries. TNCs operates through a network of subsidiaries, branches and affiliate in the host countries. TNC owns and controls assets in foreign countries. Firms like Pepsi Co, CNN ( the global news network) and Benetton can easily be identified as transnational corporations because they have fully established a global presence in virtually all their businesses.
Transnational corporations are generally oligopolistic (few firms in the same line of business) in nature. Due to their giant size they occupy a dominant position in the. market. They also take over other firms to acquire huge economic power. For example, Hindustan Lever Ltd. has acquired Tata Oil Mills, Ponds India etc. and thus has improved its market share in personal wash, washing powder, washing bars, shampoos and skin care creams.
Generally a transnational corporation has its command advanced technology so as to provide world class products and services. TNC employs capital-intensive technology not only in manufacturing, but in marketing too. TNCs spend sizable amount on research and development (R&D).
In order to integrate and manage worldwide operations, a transnational corporation employs professional skills, specialized knowledge and training. TNC employs professionally trained managers to handle advanced technology, huge funds and international business operations.
On account of its vast resources and superior marketing skills, a transnational corporation has vast access to international markets. Therefore, it is able to sell whatever product or services it produces in different countries.
TNCs are found in almost all the countries, with the USA perhaps the biggest amongst them. Even the developing countries have their TNCs which operate in other developing countries. But in comparison with TNCs of the developed countries, TNCs of developing countries stand no comparison. Thus, taken as a whole, the TNCs phenomenon is by and large that of the developed countries.
The activities of the TNCs have been many and varied. On the one hand TNCs offer services in respect of capital, technology transfers, research and development of know-how in several fields including the marketing of products. On the other hand TNCs are largely confined to dynamic sectors of goods and products including minerals, petroleum, pharmaceuticals, chemicals, heavy engineering goods etc.
To integrate worldwide operations, TNCs carry on their operations with flexibility and adaptability. To be able to meet the ever-changing demands of highly flexible and dynamic consumers, TNCs must have the ability and flexibility to develop and distribute products through constant developments and innovations. In the world of today, where change is the key to international competitiveness, managers must posses the features of flexibility to adjust to the ever changing demand economic/ political/ legal environment.
TNCs have a number of affiliates operating in different countries. A successful TNC focuses its attention on group performance rather than performance of any single affiliate.