Distinction between TNC and MNC
International corporations have several categories depending on the business structure, investment and product/ service offerings. Transnational companies (TNC) and multinational companies (MNC) are two of a these categories. Both MNC and TNC are enterprises that manage production or delivers services in more than one country.
They are characterized as business entities that have their management headquarters in one country, known as the home country, and operate in several other countries, known as host countries. Industries like manufacturing, oil mining, agriculture, consulting, accounting, construction, legal, advertising, entertainment, banking, telecommunications and lodging are often run through TNC’s and MNC’s. The said corporations maintain various bases all over the world. Many of them are owned by a mixture of domestic and foreign stock holders. Most TNC’s and MNC’s are massive with budgets that outweigh smaller nations’ GDPs. Thus, TNC and MNC alike are highly influential to globalization, economic and environmental lobbying in most countries. Because of their influence, countries and regional political districts at times tender incentives to MNC and TNC in form of tax breaks, pledges of governmental assistance or improved infrastructure, political favors and lenient environmental and labor standards enforcement in order to be at an advantage from their competitors.
Also due to their size, they can have a significant impact on government policy, primarily through the threat of market withdrawal. They are powerful enough to initiate lobbying that is directed at a variety of business concerns such as tariff structures, aiming to restrict competition of foreign industries. Some of the top TNC’s and MNC’s are General Electric, Toyota Motor, Total, Royal Dutch Shell, ExxonMobil and Vodafone Group
Moreover, a lot of people often interchange MNC and TNC or misconstrue them to be one and the same to pertain to a company that owns production facilities in two or more countries, with the only difference that the former being the original terminology. Contrary to this popular notion, they are of different kinds. TNC has been technically defined by United Nations Commission on Transnational Corporations and Investment as ‘enterprises which own or control production or service facilities outside the country in which they are based.” The committee has also placed its preference on the term TNC. MNC, on the other hand, is the older term and popularly remains to be the generic label for firms similar to TNC and MNC.
Here’s the significant difference, though. Multinational companies (MNC) have investment in other countries, but do not have coordinated product offerings in each country. They are more focused on adapting their products and service to each individual local market. Well-known MNC’s are mostly consumer goods manufacturers and quick-service restaurants like Unilever, Proctor & Gamble, Mc Donald’s and Seven-Eleven. On another note, Transnational companies (TNC) are much more complex firms. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market. Most of them come from petroleum, I.T. consulting, pharmaceutical industries among others. Examples are Shell, Accenture, Deloitte, Glaxo-Smith Klein, and Roche.
1) Multinational (MNC) and Transnational (TNC) companies are types of international corporations. Both maintain management headquarters in one country, known as the home country, and operate in several other countries, known as host countries.
2) Most TNC’s and MNC’s are massive in terms of budget and are highly influential to globalization. They are also considered as main drivers of the local economy, government policies, environmental and political lobbying
3) An MNC have investment in other countries, but do not have coordinated product offerings in each country. It is more focused on adapting their products and service to each individual local market. A TNC, on the other hand, have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market.