Trade arose in ancient times. With the development of mankind, virtually nothing has changed, except, of course, the market for goods and services. If earlier production was based on a certain territory, now the purchase of land from other countries for the construction of their own plants and factories is quite an ordinary occurrence. This is done (and quite actively) not only by European countries, but also by the Russian Federation. Actually, in which country the largest TNCs in the world will be discussed.
What is a transnational corporation?
TNK is initially a company with production offices in several countries. The role of such corporations in the globalization process is undoubtedly enormous. TNCs can act not only as manufacturing companies, but also as telecommunications, insurance and audit. In addition, this includes transnational banks and pension funds.
The budget that some of the largest TNCs in the world have is so large that it exceeds the financial condition of some countries. So, for example, General Electric Corporation's net annual profit is a little more than $ 13 billion, which is almost 34 times more than the annual budget of Andorra with a population of 85.4 thousand people or slightly less than Iceland's GDP for 2015. Corporations also play a large role in science; TNCs account for about 80% of the financial supply of research and development and approximately the same number of registered patents.
Transnational corporations: why internationality?
The emergence of transnational corporations, firstly, is built on the possibility of obtaining superprofits. This explains the creation of international production. Due to the presence of factories and plants in the territory of another country, you can significantly save:
- on the cost of natural resources (if the country that owns the multinational corporation is not adequately provided with a certain type of raw material, then the construction of a subsidiary in someone else's territory can solve this problem);
- in the tax sphere (due to differences in economic terms, it is sometimes cheaper to conduct production as if “not at home”);
- on wages for workers (if, for example, Germans and Americans rate their work rather high, then those immigrants from Mexico agree to work for a relatively small remuneration).
There are plenty of reasons for international corporations. It is on these principles that the largest transnational corporations of the world are held.
Types of Multinationals
There are three types of TNCs: an international, multinational and global company.
The first type is a corporation that creates its branches in other countries, but at the same time these structural elements are isolated. That is, they have their own production and scientific development. Nevertheless, it is the parent company that has absolute priority.
The second type acts as a link among national companies around the world. Actually, this view to a greater extent explains what TNCs are. Each company included in MNCs has independence in conducting any operations.
The third type is presented as a characteristic of the largest TNCs in the world. When following this option, the corporation either provides a patented project for production together with other countries, or it produces elements of the product, and other plants are already engaged in the assembly. Since the 80s, this species has been flourishing. The largest TNCs in the world still follow this order.
TNC management mechanism
The main trends in corporate governance are two opposing options: centralization and decentralization.
The first option is the desire of TNCs to create a single leadership center. It must be located in the country to which the corporation belongs. Other branches conduct their activities only with the permission of the parent company.
The second option allows you to make decisions yourself. Management centers are created in each branch. Subsidiaries, as a rule, are sufficiently independent from other branches of the corporation.
Sources of Effective Transnational Corporations
The comparative characteristics of the largest multinational corporations in the world, the practical benefits of which are undeniable, indicate the following: the use of raw materials from other countries, as well as its financial capabilities, allows us to expand, capture or hold the market. In addition, effective activity is due to the proximity of foreign consumers. Awareness of research trials, as well as their results, very well affects the development of transnational corporations.
In addition to these principles, the comparative characteristics of the largest TNCs in the world make it clear that activities in several countries at the same time help to strengthen competitiveness and improve relations with partner countries.
Statistics on the value of foreign assets
The main areas of activity of current corporations are electronics, automotive, oil production and refining. The largest multinational corporations in the world often invest in non-core assets with the goal of sustainability in the global market. In the list of largest foreign assets, the first places are given to the following corporations:
- General Electric. Country - USA, field of activity - electronics. The share of foreign assets is 30%.
- Royal Dutch Shell. Country - Netherlands - United Kingdom, field of activity - oil industry. The share of foreign assets is 66%.
- Ford Country - USA, field of activity - automotive industry. The share of foreign assets is 30%.
In addition to these companies, there are also many TNCs using this development method to achieve sustainability.
List of Corporations
An important indicator of a company's success in the international market is the amount of sales sold in other countries. The largest TNCs in the world, the list of which is presented below, was analyzed precisely on this principle. Also, in addition to the type of activity and the owner country, the items also include corporate revenue:
- Walmart (US Retail) - 482,130.
- State Grid Corporation of China (electric power industry, China) - 329,601.
- China National Petroleum (oil and gas sector, China) - 299.271.
- Sinopec Groupe (petrochemical industry, China) - 294.344.
- Royal Dutch Shell (oil and gas sector, Netherlands - Great Britain) - 272.156.
Not all TNCs are listed here. But as of 2016, it is these companies that make up the top five.
TNCs in Russia
Since the end of the 19th century, Russia has tried to get involved in the activities of transnational corporations in the world. But constant inhibition due to revolutions and political rearrangements did not allow to conduct this process fully. For this reason, until now, the services and products of foreign companies have prevailed in the country. Only relatively recently, Russia began to create its own financial-industrial groups (FIGs), which are very similar to TNCs.
Only at the end of the 20th century, the comparative description of the largest TNCs in the world was replenished by the Russian representative, namely: in 1996, the rating published by the Financial Times was presented by Gazprom.
At the moment, the development of Russian corporations is slower than in other countries. For more successful promotion on the world market of Russia, it is necessary to combine efforts to improve their own financial-industrial groups together with friendly states.