Study Notes

Transnational and Multinational Corporations

Edexcel, IB

Last updated 22 Mar 2021

A Trans-National Corporation (TNC) or Multi-National Corporation MNC is a business that is based or registered in one country but has outlets/ affiliates or does business in other countries.

Globalisation is one of the major reasons for the growth in TNCs. A number of businesses in order to grow and develop have had to take on a global or international perspective. In addition, TNCs have also caused further globalisation – a two way process.

Many TNCs are based in more economically developed countries such as the UK and USA, with Foreign Direct Investment coming from similar countries. However, an increasing number of TNCs are based in LDCs, for example India’s Tata or China’s Alibaba.

There are a number of reasons why a TNC might want to set up in a country.

These include: cheap labour, cheap raw materials, good transportation links, a business friendly government (ones which adopt policies which encourage business develop and growth such as low rates of corporation tax), exploitable property rights and so on.

There are a number of examples of TNCs which instantly recognisable. McDonalds has a presence in over 119 countries with approximately 30, 000 restaurants. Likewise there are over 21,000 Starbucks outlets worldwide (2014 figures) operating in over 60 different countries.

The table below show the top 10 TNCs as defined by their global, worldwide assets (source: UNCTAD).

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