What is a transnational company and what are the strategies to become one?

All posts, Company creation process Leave a comment   Published on par Jonatan Carbonell

One of the main objectives for companies is to be able to experience an expansion that makes them generate more profits, have a presence in different countries around the world and maximize brand recognition.

Therefore, knowing that a transnational company can generate these benefits to your brand will make you consider a transnational strategy for your company. Below we will explain in more detail what a transnational company and a transnational strategy are. Don’t miss it!

So, what is a transnational corporation?

Its definition is simple, a transnational company is one that owns and performs economic activities in different countries around the world.

This company must have a main headquarters, which is located in the country where it was created, and in turn, has other headquarters established in other countries in order to comply with international expansion and obtain the meaning of what a transnational company is.

However, at first glance it may seem easy to do, but we have to tell you that this is not the reality. In order to reach the globalization of your brand and to be able to have a presence in several countries, the company must carry out and apply a transnational strategy.

 

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Transnational strategy

This strategy is implemented by carrying out different market studies and analyses so that the brand can reach another country and succeed, allowing the company to obtain higher profits over time.

Why do we talk about market research and analysis? Well, because not all consumers in different regions of the world behave in the same way, each country has its own consumer trends, priorities, tastes and customs, so the transnational strategy is responsible for gathering all the necessary information from the sector and the country to which you want to expand, and then apply different techniques to adapt the brand to the needs of the sector where you want to expand.

Building a transnational strategy

Well, you already know what a company and a transnational strategy are, now you may be asking yourself, what does it take to implement a good transnational strategy?

As we mentioned before, transnational strategies are not easy to implement, it takes time, patience and qualified people who can establish which are the adjustments that must be made to the brand in order to reach another country.

The first thing you should take into account is how to adjust your brand to the place where you want to go, by this we mean that you should analyze which are the best options for the image and the commercial name you want to establish. Remember that a transnational company does not necessarily have to have the same brand name as the one it has in its region of origin, an example of this is the Vodafone brand, which has a different name in Africa, where it is called Vodacom, but still belongs to the same company.

However, this does not have to be the definitive option, everything will depend on how the analysis is done and how the market is expected to react to the brand name, for example, giant companies such as Apple, Samsung, General Electric and other brands use the same commercial name in all the countries where they are present.

As we said at the beginning of this article, people in other countries have different customs, needs and preferences, so if your company is having a considerable success in its country of origin, it is no guarantee that it will reach another country with the same product and will have the same success.

For example, the Doritos brand produces a spicier product in its classic presentation in Mexico, unlike in other countries where they do not have a touch of spice. The reason for this is because in Mexico it is very common for food to be spicy, so they react positively to having a bag of Doritos containing spicy ingredients.

Another study that should be done to develop a transnational strategy is that of the competition, since you may be entering a market where there is a lot of competition, given that there are many national brands that operate exclusively in their own country.

 

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What are the advantages of a good transnational strategy?

Not all strategic plans are well developed regardless of the objective they are seeking to achieve, however, a good construction of a transnational strategy and its implementation can generate a series of important benefits such as:

  • Leading in a new market with new competition.

  • Cost reduction, since the company will not start from scratch, but will already have an established production system.

  • Increased brand recognition worldwide.

  • Achieve globalization.

  • Significantly increase the brand’s source of income.

  • Generate jobs that contribute to the country where the brand is expanding.

  • Obtain new ties, links and strategic alliances worldwide.

Are there any disadvantages to implementing a transnational strategy?

Well, although there are some disadvantages, we must clarify that they are not serious at all, the advantages caused by the transnationalization of a brand are objectively greater than the disadvantages that may arise. Some of these disadvantages may be:

  • The large amount of capital required to expand to another country. Although it is a bit obvious, companies wishing to carry out a transnationalization process must take into account all the necessary capital investment, this due to the establishment costs, such as the purchase or rent of the facilities where the company will arrive, the hiring of new personnel, etc.

  • On the other hand, trying to expand your company to another country can be quite exhausting, due to the different permits involved in this action and all the necessary legal procedures.

  • Due to all the permits and legal procedures, the process of transnationalization of a brand can be quite slow, it all depends on how the situation is handled, however, it is generally a strategy that takes time to be fully implemented.

  • Monopolies can occur as a result of corporate transnationalization, governments are generally against monopolies, so they will try to avoid it at all costs.

 

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Examples of the largest transnational brands in the world

One of the largest companies that have offices around the world is Apple Inc, this brand that was created in the United States by Steve Jobs, Steve Wozniak and Ron Wayne has been reaching the globalization of its brand for years, we can find their products such as iPhones, iPads, iMacs and others in virtually any country in the world, without a doubt, Apple is one of the clearest examples of successfully applying a transnationalization strategy.

Another great example that we can give you about a globalization of a brand due to the successful application of a transnational strategy is McDonald’s, this company, which has a presence in 119 countries around the world and a number of more than 1.7 million workers, is one of the brands with more branches established around the world.

In the automotive sector, one of the largest transnational companies is Volkswagen Group, this German company owns multi-million dollar brands such as Bugatti, Audi, Porsche, Lamborghini, Bentley and other automobile brands that make this company one of the largest in the world.

To take your company to internationalization is necessary to apply a transnational strategy that is developed by experts so that it is effective, you should also advise you on all legal issues that cover the power to establish in another country.

 

In TAS Consulting we offer you a professional advisory service that is tailored to your needs, so that we can provide you with more information about this issue if you want to expand your company to Spain, one of our great virtues is that we can establish your company in the country in less than 24 hours, so do not hesitate to contact us.

 

Published on par Jonatan Carbonell

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