Transnational corporations are sometimes referred to as multinational corporations. A multinational corporation is typically involved in international operations; these operations may be located in various foreign countries, yet the corporation has a home base or country. A transnational corporation operates globally; however, it may or may not have a central headquarters. Moreover, although a conglomerate is clearly defined, a transnational corporation may be a conglomerate and vice versa. It is best, however, to provide a definition for both of these corporate structures before discussing the fact that the structures may sometimes merge.
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A transnational corporation is generally one that operates in a variety of countries; these corporations are typically registered to do business with the countries where they operate. Generally, a transnational corporation will be headquartered in a specific country, but will operate subsidiaries in other countries. It is often the case that the transnational corporation's subsidiaries report to its headquarters.
Generally, conglomerates are comprised of more than one corporation; these corporations are commonly engaged in very different businesses, yet they are still part of one corporate group or structure including a parent corporation and subsidiaries. Typically, conglomerates are diverse in that they are multi-industry entities. Conglomerates may operate in one country, or they may be transnational or multinational.
Primary Differences between Conglomerates and Transnationals
The primary difference between a conglomerate and a transnational is that a conglomerate tends to be more diversified. In other words, the corporations that make up a conglomerate may do business that is wholly unrelated to the other corporations. On the other hand, a transnational corporation generally delivers services and oversees production of goods in a variety of different countries.
Although a conglomerate corporation may also be a transnational corporation, the main difference concerns diversity of business. A transnational conglomerate may operate in several different countries, yet still have the hallmarks of a conglomerate; that is, there may be a group of corporate structures engaged in different business activities, yet operations take place in more than one country.
References & Resources
- Your Dictionary: Conglomerate Business Definition
- The Free Dictionary: Transnational Corporation
- Oxford University Press: Case Study - The Relationship Between the Structure/Strategy of Multinational Corporations and Patterns of Knowledge Sharing Within Them
- The Global Economy and the Nation-State; Peter F. Drucker
- TransTutors.com: Conglomerate VS Multinational Corporations
- Thompson & Thompson: The Parent / Subsidiary Relationship
- BusinessDictionary.com: Multinational Corporation
- Challenging McWorld; Tony Clarke
- The Street Beat: Morgan Stanley Starts General Electric as an “Outperform” (GE)