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Introduction
Companies around the world could be classified in many different ways. These are based
on the type of structure that their business have, their investments, as well as the products and
services that they offer to the market. One of these classifications is by categorizing them either
as TNCs or MNCs. These stand for transnational companies and multinational companies,
respectively. These types of international companies both control the manufacturing of their
products or the delivery of their services in more than one country. It ranges from different
industries such as agriculture, mining, manufacturing, construction, lodging, consulting,
accounting, banking, legal, advertising, entertainment, and telecommunications. In addition,
these firms also have significant effects to various nations, like the Philippines. Such impacts
could range from political concerns to socioeconomic issues.

Objectives
The objectives of this paper are:
to define and give examples of TNCs and MNCs;
to give the similarities between TNCs and MNCs; and
to identify the impact of TNCs and MNCs to the Philippine Society

Definition and Examples of TNCs and MNCs

Transnational companies or TNCs and multinational companies or MNCs are enterprises
that mainly originated in only one country, called the home country, and operate in other
countries around the world, called the host countries. In most literatures, these two are often used
interchangeably or are referred to as the same thing; however, these categories are actually

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different. It just happened that the two have more things in common rather than differences. In
addition, TNCs and MNCs do not include those firms that participate actively in foreign
operations, but do not have or manage manufacturing and/or service infrastructures in other
countries. Examples of this include the LBP or the Land Bank of the Philippines and the Ayala
Corporation.Such businesses are generally called as national enterprises or NEs. These are
businesses that only operate within the boundaries of only one country.
Basically, TNCs are business firms that belong to and are run by various individuals from
different countries. This means that its management and production facilities could be found in
countries other than the one in which it is based. It also does not recognize itself as one that is
solely owned by only one country. It operates in various industries like in the extractive (e.g.
mining, oil, petroleum, coal, etc), agricultural, manufacturing (e.g. processed foods, clothing,
gadgets,

pharmaceuticals,

etc.),

or in the

service

sector (e.g.

health,

consulting,

telecommunications, transportation and other social services). It could be privately, semiprivately, or government owned. It also does not offer products and/or services that suite the
tastes or culture of only a particular market or group of people. Rather, it makes its services, as
much as possible, able to cater to the needs and/or wants of every person, community, or state.
Aside from that, TNCs also leave the authority on advertising and of making decisions to their
markets in the host countries. Examples of these companies include Shell, GlaxoSmithKline,
Nestle, and Accenture.
MNCs, on the other hand, are business firms that have its executive center of operations
only in the home country or its country of origin, and its operation or production facilities in its
host countries. It operates mostly in the extractive, agricultural, industrial, as well as in the
service sector. Most of these are manufacturers of consumer items (e.g. gadgets, toiletries, food,

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etc) and quick-service restaurants or fast-food chains. Another thing about these companies is
that it specializes in making its products and/or services suitable to the tastes and/or lifestyle of
the people or that of a particular market. Examples of these include McDonalds, Unilever,
7eleven, and Microsoft.
The similarities between TNCs and MNCs generally lie in the strategies that these firms
utilize, as well as in the influences and/or the effects that it brought about to society and its
different sectors. One of the most prominent similarities between the two is that these companies
could be found all over the world. This is in order to make sure that there would be a high level
of participation and response that they will get from the local citizens of the country. It is
important for them to do as such because it part of their responsibility as businesses to make sure
that their stakeholders, which includes the local community in which their plant would be built,
not the affected rather negatively. For instance, an oil refinery station must make sure that its
wastes will be properly disposed of, and will not pollute the surrounding water bodies or land of
the community. This is because it might inhibit the locals from continuing their usual way of life
as well as their livelihood. Another thing is that most of these companies originated in just a few
industrialized nations. Such was the case because of the fact that majority of these nations
created these enterprises just as their societies were starting to progress. These firms also have a
very huge amount of financial resources that surely beats most countries GDP (i.e. Gross
Domestic Product). In terms of the strategies, TNCs and MNCs mainly have patents in order for
them to avoid producing and selling the same commodities. Another thing is because of
copyright laws. For example, Samsungs products have a patent, and the same goes with that of
Apple. This would ensure that even if both companies manufacture the same kind of products, its
features and contents would be very different. TNCs and MNCs also utilize advertisements quite

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extensively. This serves as a way of informing the public about their products and/or services, so
that they may be able to sell it. Their use for ads, on the other hand, differs. TNCs use these tools
simply as a way of relaying information about their products and/or making it attractive to their
consumers. For instance, in a Coca-Cola commercial for coke zero, a slim East Asian girl was
just shown dancing and then drinking the soft drink. This shows that by utilizing the product, the
consumer would become lively and would only gain a few calories. In comparison, MNCs use
ads in order to also connect with their consumers way of life or culture. As an example, in a
McDonalds commercial, a girl was shown eating at the fast-food chain with her grandfather.
This shows the closeness of family members and respect for the elderly among Filipinos.

Impact of TNCs and MNCs to the Philippines

TNCs and MNCs have similar effects on our society. These are very much diverse that
we could categorize it in many different ways. These could be in terms of political, economic,
social or cultural matters. One impact of these companies is that, because they are so powerful,
they are very much capable of influencing national governments, most especially when it comes
to policy-making. Most of the time, these companies would pressure the government to do
something in their favor. For example, some companies would threaten the government that they
would shut down if they are not given a tax holiday or an extension of their operations. With the
thought of hundreds or even thousands of citizens becoming unemployed as well as loosing
foreign investor/s, the government would give in. Doing so would not only guarantee them a tax
holiday but also an assurance that their company/ies would still continue its operation in the
country. In effect, a tendency for TNCs and MNCs to lobby emerges. These international
companies also affects the current status quo of the citizens, particularly that of the working and

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entrepreneurial class. These companies provide employment to a portion of the countrys
working class or labor force. As a result, they are provided a means of livelihood as well as an
almost stable income or salary every month. Moreover, because of the advent of new
technologies, these people are given the knowledge and skills that they may be able to utilize not
only in the company itself. Because of that, some of these people would eventually establish
their own businesses; thus, they have now become entrepreneurs or business men and women. In
addition, social mobility is also permitted. Another thing is that these companies also indirectly
employ those people who work for their subsidiaries or local partners. This is due to the fact that
they are a sure market for the produce of this sector/s. An example of this is DOLE, which is a
manufacturer of preserved foods, particularly fruits. This firm helps out fruit farmers by means
of teaching them new knowledge and skills about producing good crops and/or fruits, as well as
by means of buying their produce. For the entrepreneurial class, on the other hand, the impact
could either be positive or negative. It could be good for these people if these companies would
provide knowledge and skills, through seminars or modules, for them, and when it would partner
with them. In contrast, it could be bad for them if these companies would offer the same products
and services because it might cause their business to shut down. This is due to the fact that most
consumers would think that the offers of international companies are of better quality compared
to those of the local enterprises. In a way, these companies also trigger the colonial mentality of
the people. In addition, TNCs and MNCs also promote social inequalities. These disparities
could be in terms of ethnic stratification and economic inequalities. These companies do not
really favor certain social groups; however, there are times that it would be necessary for them to
do so. For instance, in certain countries, some ethnic groups or families are more powerful than
others, be it politically or financially. To make sure that their company would be built or would

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stay there, they must win the trust of this particular group. When it comes to economic
disparities, on the other hand, TNCs and MNCs somehow provoke this because their employees
receive a relatively higher amount of salary or wages compared to people holding the same
position at a local enterprise. For example, a bank manager who works for a transnational or
multinational bank would receive a comparatively higher wage than a bank manager who works
for a local bank.
Another impact of TNCs and MNCs is on the consumption patterns and lifestyle of
people. As shown in various commercial ads, these companies somehow create new needs and
wants for people. For instance, not very long ago, people can get by without cellular phones.
Nowadays, it almost seems impossible to go on a day without it. Another example is television.
Before, people can pass their time by means of doing other things, like children playing tag or
hide-and-seek outside or the adults doing chores such as watering the plants or knitting. Now, it
almost seems as a must among homes. TNCs and MNCs, particularly those in the
communication and information technology industries, also pass on knowledge and skills to
various members of society. With these, the diffusion of newfound knowledge around the globe
is now made possible. This could be in the form of articles and essays found in printed and
electronic versions of books, journals, magazines, and the like. The development of new skills is
owed much to the new technologies created. In addition, TNCs and MNCs also give and/or alter
the cultural identity of many. This is related to the passing on of new knowledge and skills as
well as to the peoples colonial mentality. Because of this, we Filipinos tend to imitate those
practices that foreign cultures possess. A good example of this is the way most people in the
western hemisphere dress themselves, and in the way they openly show their affection to other
people. These are commonly shown in the films that we see, and in the literature that we read. As

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a result, it now uncommon to see Filipinos wearing jeans, t-shirts, or bow ties on some particular
occasions; moreover, kissing and hugging in public seems to be fine among couples, friends, and
family members.
For the most part, TNCs and MNCs play a significant function in the strengthening of
relations among countries as well as in the phenomenon of globalization. It serves as a link
among nations because it was through these companies that negotiations and pacts between and
among countries are made. Another thing is that it was also through these that agencies and/or
organizations are made. A good example for this is the World Trade Organization or WTO. This
is a global alliance of nations which generally helps countries settle issues on trade, like tariffs
and barriers. In addition, TNCs and MNCs also affect the overall development of the country.
This could be in terms of economic growth or social progress. These companies contribute to the
GDP of its host countries through its financial investments. In the long run, this somehow helps
in the economic development of the country. In line with this is the economic development of
some of its citizens who are employed, whether directly or indirectly, by these companies. In
terms of social progress, on the other hand, the peoples welfare and well-being are being taken
care of, and social mobility is made possible. Because of its financial contribution to the country
as well as to its workers, it gives the citizens a way to achieve most of their basic materials
needs, which includes food, clothing, shelter, and education. When these are met, the fulfillment
of the intangible ones follows. These include self-esteem and a sense of security, among others.
As a result, a good well-being is said to be achieved. In relation to this, some members of the
lower class may, in the long-run, move to the middle or upper class.

Conclusion
TNCs and MNCs stand for transnational companies and multinational companies,
respectively. These are just some of the many categories of international companies; moreover,
these two are often used interchangeably. This is because of the two having more similarities
than differences. Its similarities include having a huge influence on the government of host
countries, a budget bigger than some nations GDP, patents, and the extensive use of
advertisements. Another similarity is that both have the same effects on society, which include
the promotion of social mobility, social inequalities, changes is consumption patterns and
lifestyles, and many others. In addition, these also help in the overall economic and social
development of a person, a community or that of a country. The main difference between TNCs
and MNCs, on the other hand, is that TNCs have its management headquarters in its country of
origin or home country and its operation facilities in its host countries; whereas, MNCs have its
management and operation facilities in all countries where it is found.

References
Kumar, K. (Ed.). (1980). Transnational enterprises: Their impact on third world societies
and cultures. Boulder, Colorado: Westview Press, Inc.
Kumar, K., & McLeod, M. G. (Eds.). (1981). Multinationals from developing countries.
Massachusetts: D. C. Heath and Company.
?. (2010). Difference Between TNC and MNC. In DifferenceBetween.net. Retrieved
January 31, 2012, from http://www.differencebetween.net/business/differencebetween-tnc-and-mnc/.