SUBSCRIBE(free)-Daily Updates (Click Verification Link Received in Your Email)
Difference between Global Co., International Co., Multinational Co., Transnational Co. and Multidomestic Co.
With the Globalization of trade between the countries, many a companies across the world have come forward to sell their products and/or render services not only in their domestic country but also in different foreign countries. This has opened up whopping opportunities for these companies to go global, grow and diversify.
Operations & Trading: Any Company, which is having operations and trading in many countries across the world is called as a Global Company. Generally, the number of countries in these cases, would be quite high, lets say atleast around 15-20+ countries.
Investment: Global companies mostly have foreign direct investment (FDI) in some or all of the foreign countries where they operate in.
Strategy: In most of the Global companies, the organization structure and key decisions making functions have a "Centralized" approach i.e the major decisions on the organizational approaches /changes are taken from the headquarter of the company. These major decisions are like merger and amalgamation, new products launching, etc.
Products / R&D: Products development processes are generally initiated and also completed by the Parent company and then distributed to the subsidiary companies at other countries for further trading. Subsidiary companies at other countries may be allowed to take part in product idea evolvement process, but the final development takes place at the headquarter of the Parent company's country.
Challenges: As these companies have investment in many countries, they face regulatory and legal issues in those countries often. Also, as these companies follow uniform product type across all countries, they miss the local touch in it and this sometimes lowers the demand in some countries.
Abbreviation / A.k.a.: Do not have any abbreviation.
Operations & Trading: International companies are the companies, who sell its products in foreign countries by exporting it to those countries and they might also be involved in various importing activities. These companies do not have their own establishments in foreign countries.
Investment: International companies do not have any foreign direct investment (FDI) in the foreign countries where they export to or import from their products/services.
Strategy: As these companies do not have any foreign set up or branches, the key decision making functions is always taken from the domestic country of the company.
Products / R&D: Product development processes are accomplished in the domestic country.
Challenges: Legal, regulatory and customs issues are the key bottlenecks for these companies. Also, in cases where the taste of products in some of the countries does not match, these company may run the risk of failures.
Abbreviation / A.k.a.: Do not have any abbreviation.
Example: Wal-Mart, Spencer.
Operations & Trading: Any Company, which is having operations and trading in two or more countries across the
globe is called as a Multinational Company. Generally, the number of countries
in this cases, would be in the medium range - from two to ten.
Investment: Multinational companies may have foreign direct investment (FDI) in very few of the foreign countries where they operate in.
Strategy: Multinational companies, mostly, have a "Centralized" organization structure and key decisions making functions.
Products / R&D: Just like the global companies, in case of multinational companies the products development processes are generally taken up by the Parent company and then distributed to various subsidiary companies at foreign countries for further trading.
Challenges: In addition to the international legal issues, these companies also face various IPR (Intellectual Property Rights) issues like product ideas copying, etc.
Operations & Trading: These type of companies can be considered as a mixture of the global, multinational and international companies, as it combines many of the features of these 3 types of companies. Here, the structure of the company is a little complex type and also versatile - considering many of aspects vital for global trade. These companies are pretty flexible companies in terms of operating across the global by adopting the local cultures and consumer behaviors and the ultimate marketing strategy based on it.
Investment: Transnational companies mostly have foreign direct investment (FDI) in many of the foreign countries where they operate in.
Strategy: Transnational companies prefer to have a "Decentralized" organization structure and key decisions making functions wherein each of their international establishments are responsible to take their own key decisions as suitable for the local region they are in.
Products / R&D: Here, subsidiary companies at different countries are also given the
rights to develop products on their own based on the local needs and
demands, though the final approval for launching may come from Parent
company's side. Products of multidomestic companies vary from country to
country, as products are developed in line with the local taste and
Challenges: Due to varied organization structure and culture, transnational companies mainly face internal manpower issues, and organizational problems, etc.
Abbreviation / A.k.a.: TNC, T.N.C.
Example: BMW, Nokia, Ford Motor Company.
Operations & Trading: These type of companies are almost similar to the Transnational companies. These companies have branches and establishments across many countries in the world.
Investment: Multidomestic companies mostly have foreign direct investment (FDI) in some of the foreign countries where they operate in.
Strategy: Multidomestic companies also prefer to have a "Decentralized" organization structure and key decisions making functions wherein each of their international branches are responsible to take their own key decisions suitable to the respective domestic places.
Products / R&D: Subsidiary companies at different countries are also given the rights to develop product as per the local taste and demands.
Challenges: Same challenges as mentioned above for Transnational companies.
Abbreviation / A.k.a.: MDC, M.D.C.
Example: McDonald, KFC.
COMMON PRACTICES ON USE OF TERMS
Generally, it is a practice that many companies who have operations in different countries gets referred to as "International Company" or simply as "MNC".
Also, it has been seen that some of the companies who have operations in different countries refer themselves (even in public) as any of the above said four category of company without going deep into various aspects which would really put them in the right category of company. Most of the time the confusion arises between global, multinational and international company.
Though the meaning of all these companies are almost similar to Universal Company or Worldwide Company, but they are hardly referred to by these names. Hence, it is better not to refer by these names.