The Differences Between Transnational & Conglomerate Corporations

Related Articles

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.

Transnational Corporations

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.

Read More: How to Form a Multinational Corporation

Conglomerates

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.

Considerations

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.