Legal Aspects Of International Business And Enterprise: Digital Determinism Essay

Question:

Discuss about the Legal Aspects of International Business and Enterprise for Digital Determinism.

Answer:

MacDonald’s is one of the largest food and beverage selling organisation in the world. It is world’s largest hamburger food chain restaurants. Macdonald’s is a renowned names almost every part of the world working around 119 countries and overall 36, 538 outlets since its inception in the year 1940. It is extremely important to mention that the company has become one of the most loved companies in the world with around 65 millions of customers who are served almost every day in the different outlets of the company (Gould, 2010). The history of Macdonald’s is extremely interesting as the company started as a small Barbecue restaurant in the Illinois Oak Brook. The company was started by the Macdonald brother Richard and Maurice and was taken care by them till 1955 when Ray Crock the Founder of the Macdonald’s Corporation. He saw the worldwide growth of the company (Wellard et al., 2012).

Over the years the company has grown huge and its market share in the global market has defeated many renowned food chains making it leading food and Beverage Company in the world. Presently the company only opens franchisee restaurants, or an affiliate or the corporation itself. The company focuses on creating smiles in the face of its customers by providing excellent food stuffs and is renowned for its famous hamburgers (Fraser et al., 2010). Right from the beginning of the Macdonald’s corporation the company has had signature food stuff in the form of Hamburgers which are loves like the Chicken products from KFC and Domino’s Pizza. Over the years the company has opened number of outlets in the world but only has its global headquarter in Illinois Oak Brook. In the recent past the company has planned to shift its global headquarter to Chicago by 2018 (Nadolny & Ryan, 2015).

The company has its corporate offices in the different countries where its works. The company follows a very simple business model and mostly earns from the investment made by the shareholders and investors in the franchisee business. Even though Macdonald’s is a US Multinational company but the company has spread all over the world due to its effective products and service provision. It is extremely important to mention that the company is present in all the different developed and developing countries like UK, Russia, France, Australia, India, Pakistan and other countries. The Australian market is one of the biggest markets for the company and hence the company has become very particular about its working in Australia (Gould, 2013). Macdonald’s due its extremely popular products in the Australian Market has got the name of “Macca’s”. The name has become so popular the company has rebranded itself as Macca’s in Australia. In Australia the company works mainly in franchisees where different businessmen and women own the outlet and the company has 20% profit out of it. It is extremely important to mention that the company is an unlisted company in Australia but gives employment to a huge number of people all across the Australia (Nadolny & Ryan, 2015). The overall strength of the company Macdonald’s 420,000 and the Macdonald’s franchisees all across the Australia places around 90,000 and is still on the move up. It is important to mention that these employees are direct employees of Macdonald’s and have the same mission and vision as the company. Hence it could be said that the company has been able to work effectively in the Australian market with its effective business strategy and expansion programs. The company has an excellent policy of corporate social responsibility which makes it one of the effective companies in Australia as it has been able to understand the mindset of the Australian People and have developed their business relations effectively in the country ((Nadolny & Ryan, 2015) et al., 2011).

For foreign companies working in Australia there are different legislations and regulatory frameworks which a company has to follow. It is important for companies like Macdonald’s to set examples for the other smaller companies to follow them which will help these companies to act effectively and do business without facing any legal problems. It is important to mention that in order to work in a country a company has to follow certain rules and regulations and certain statutory frameworks which will not only help the company to work effectively but will also help to follow law and order (Chen et al., 2009). For an organisation it is important for a company to conform to the laws and regulations that a country sets in order to have effective relationship with the government. There are number of regulatory framework which Macdonald’s an organisation has to abide by in order to do business effectively in the country. First of all it is extremely to mention as per the Australian Taxation Act 1997 which is revised version of the 1953 Act is a key act that affects the company and its profits (Buckley & Casson, 2010).


As per this act Macdonald’s has to give around 30% of its profit before it is paid to the shareholders to the government and this impacts the business in terms of economic development of the business in Australia. The company has to pay a huge amount of money in the form of tax to the Australian government in order to work ethically and legally as well. There are number of companies in Australia who have been sued in avoiding taxes to the Australian Government (Cavusgil et al., 2014). It is important to mention that as regulatory framework this act is favorable for the government but it is highly impactful for the company since it has to pay a substantial amount of money to the government. On the other hand the company in fact the franchises have to pay a capital gain tax on the assets they are using for the business which also has an effect on the way the company provides its products and services to the Australian consumers (Coulton & Ruddock, 2011).

On the other hand the Fair Trading Act in Australia provides a good option for every company to practice effectively in the market. Companies like Woolworths and Coles have been sued for not conforming to the fair trading laws. Since Macdonald’s have to work with the local suppliers it is important that the company is able to have fair trading and abides by the Fair trading law as if a franchisee fails to conform to it, this will directly harm the image of the company. Another key regulatory framework which every company especially tangible product handling companies have to abide by is the Product Liability regulation (Dunning, 2012). This is enforced by the Australian Competition and Consumer Commission. This affects the companies handling food mainly and is liable to punished for their casualness towards the quality of the product and hence Macdonald’s Australia has to ensure that the food sold in its outlets are test and quality passed or else this might have huge impact on the business (Vom Brocke & Rosemann, 2010).

The Environment Protection and Biodiversity Conservation Act 1999 obligates all the companies foreign or domestic to focus on safeguarding the environment and selling green products which doesn’t have any negative impact on the environment. In the recent past Macdonald’s few outlets have been warned as they failed to pass the environmental test. They were not able to pass the environmental quality tests and hence it could be said that these aspects are highly important for the company to focus on. Finally the origin of the country aspect in products has become a key regulatory aspect now and every product that Macdonald’s sell has to exhibit in its print the country of origin in its products or else the company is exposed to legal problems. Overall it could be said that these regulatory frameworks might apparently seem hard on the company but as a foreign multinational company they are helpful for the company to make it sustainable in Australia and hence it could be said they are important to be followed by the company in order to have a good run in the Australian market (Shams & Huisman, 2011).


Treaties and convention or agreements are done by two or more countries in order to have better political, social and trade relations and hence it could be said that they are effective and favorable for the health of a country but it is not always necessary that it acts the same way for a company as well. It is seen in number of times that treaties or conventions have acted negatively for a company and hence it is extremely important for a company to assess whether an agreement or a treaty is effective for a company or not. Australia as a nation collaborates with different companies in order to have fair and peaceful relationship with some of the bigger countries in the world which are US, UK, China, Japan et cetera. These countries are significant in terms of development and growth for Australia (Chauffour & Maur, 2011).

One of the very common standards that regulate food standards in New Zealand and Australia is a treaty called FSANZ. This is a law which is Food Standard Australia and New Zealand Act 1991 which mainly focuses on standardising the quality of food sold in the different companies in both the countries. This treaty always keeps an eye on the companies from both the countries to standardise their quality which brings companies like Macdonald’s, Subway, and KFC into limelight and hence it is important that these companies have set their own regulations for the standard quality of food. This has helped the company to regulate its standards which has helped to sale product in both the countries without any hassle. The origin of the company Macdonald’s is USA and hence it is important as a foreign multinational company working in US to abide by the laws and take the treaties in their stride so that they are able to do the business successfully in different markets (Lim t al., 2012).

The Free Trade Agreement which had been done between USA, Australia, China, Japan, Malaysia, Singapore and Indonesia have helped Macdonald’s to provide its services in Australia at minimum expense. The company has been able to get supplies at lower costs and also have been able to maneuver few key legal bindings with the help of this agreement which has helped the company to work effectively in Australia. Separately Australia have been able to come under a treaty with China which will also help the Macdonald’s Australia to work without any problems in china and serve consumers even in Australia effectively. One of the key tax treaties taking place between US and Australia has helped US based Multinational companies to work effectively in both the countries. This treaty has helped companies and individuals working in both the countries to mutually reduce taxes and also work on tax evasion, double tax and fiscal evasion avoidance has been enforced which helps the company. On the other hand tax on business profits have been agreed to be taken from the country of origin of the company which is also a huge plus for the company (Breen, 2010).


Since the company has to work on the shareholders it has to pay dividends and hence as per the treaty no charge is taxable in the source country where the company is based and hence it could be said that the company can invite investments from US to Australia in order to fulfill their expansion plans which is an effective idea to work in this highly competitive market environment. Overall it could be said that these treaties which are discussed in this section are extremely important for the company in order to develop their business in Australia. It could be said that the company has focused on treaties like US tax treaty and Free Trade Agreement between US, Australia and China which will help the company to implement newer ideas for the business and sale it in these markets especially in Australia which would help to gain market share as well as customer loyalty which is capable of giving competitive advantage in the market. Overall it could be said that treaties and agreements are likely to have positive effect on the service of the company (Chauffour & Maur, 2011).

References

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Buckley, P.J. and Casson, M., 2010. A theory of cooperation in international business. In The Multinational Enterprise Revisited (pp. 41-67). Palgrave Macmillan UK.

Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.

Chauffour, J.P. and Maur, J.C. eds., 2011. Preferential Trade Agreement Policies for Development: A Handbook. World Bank Publications.

Chen, S. and Bouvain, P., 2009. Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87(1), pp.299-317.

Coulton, J.J. and Ruddock, C., 2011. Corporate payout policy in Australia and a test of the life?€ђcycle theory. Accounting & Finance, 51(2), pp.381-407.

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Fraser, L.K., Edwards, K.L., Cade, J. and Clarke, G.P., 2010. The geography of fast food outlets: a review. International journal of environmental research and public health, 7(5), pp.2290-2308.

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Lim, C.L., Elms, D.K. and Low, P. eds., 2012. The trans-pacific partnership: a quest for a twenty-first century trade agreement. Cambridge University Press.

Nadolny, A. and Ryan, S., 2015. McUniversities revisited: a comparison of university and McDonald's casual employee experiences in Australia.Studies in Higher Education, 40(1), pp.142-157.

Shams, F. and Huisman, J., 2011. Managing offshore branch campuses: An analytical framework for institutional strategies. Journal of Studies in International Education, p.1028315311413470.

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