Discuss about the Legal Aspects of International Business and Enterprise for BHP Billiton.
International business and enterprises operate under licensed premises. Some regulations relate to their operations, start-ups, and closures (Vagts et al. 2015). Many people fear to engage in the international markets because of the legislations, uncertainty over success and incorrect beliefs that the world stage is for the big developed companies (Vagts et al. 2015). However, this notion is not true as long as one has dedicated their time and the little resources they have to the venture.
That said, there are many businesses in Australia that have taken their brands to the international market (Vagts et al. 2015). These include; Amcor, Commonwealth Bank, QBE Insurance, Wesfarmers and BHP Billiton company among many others. This paper will solely focus on BHP Billiton since it is the most successful of them all.
BHP Billiton is an Australian company that deals in the industry of petroleum production and mining (Shaper et al. 2014). Some of the minerals mined by the corporation are copper, zinc, iron, and ore among other. The company is world wide spread in Chile, Peru, South Africa, and Canada and across many states in the United States of America (Shaper et al. 2014). The current total revenue of the company stands at above thirty billion Australian dollars.
In Australia alone, the company has employed over 15,000 people in their various departments ranging from administration to miners (Shaper et al. 2014). This shows a significant commitment to job creating in the country. The number of employees in Australia represents a 23 percent of the global employees’ number.(Subedi 2016). It is a good employer and great booster to reducing the government burden of unemployment.
The total number of staff as of the month of March 2017 stand at about 65, 000 people spread across the continents of Australia, America, Africa and Asia. (Subedi 2016). This is such an enormous contributions that have left a mark in the market regarding reducing global unemployment levels through the globe.
The BHP Billiton Company being an international enterprise, has locations in the continents it has set up its operations. These areas include; Saskatoon, Saskatchewan, Canada, Houston, Texas in the USA, Brisbane Queensland in Australia and London in the United Kingdom. (Subedi 2016). The main Headquarters is however in Melbourne, Australia.
In the global trade, there exist regulations and legislations that either positively or negatively impact on business. Potential investors always have to be on the look-out for these legislations before committing their resources to setting up any firms in a country. (Subedi 2016). Unfortunately, some countries end up losing out on lucrative opportunities because of their stiff and unreasonable regulation (Preston & Windsor 2013). Also, the businesses themselves may miss out great profit making opportunities if they fail to take a risk with the existing legislations of a state.
Some of the regulatory frameworks that affect international businesses and trade include, but are not limited to; Labour acts and employment laws, taxes, corporate structures, compliances to international business standards, finance and exchange controls, intellectual property laws and termination of the enterprise (Preston & Windsor 2013). We shall discuss the mentioned regulatory frameworks below.
Intellectual property helps businesses add value, attract investors and access new markets with ease (Piccioto & Mayne 2016). However, they are territorial and varied in different settings of the state the business operates in. BHP Billiton being an international company with global set ups has encountered the problems with IPs across the nations it serves.
The intellectual property comes in the forms of brands, trademarks, designs and patents among others. Since these rights and laws vary in different countries, it is quite expensive for the company to manage such massive IP requirements (Piccioto & Mayne 2016). It is, therefore, advisable that carefully drafted employment agreements, trade licenses, and such tools are used to mitigate the effect of clashing with IP laws.
The mere fact that a business has gone global involves security and economic interests. BHP Billiton is a multinational company, and the products it deals in are quite expensive. Petroleum and minerals are some of the most profitable enterprises in the industry (Piccioto & Mayne 2016). The import and export of these products is a logistical, legal and security nightmare to any enterprise. Conformity to the set international trade compliance is, therefore, the key to ensuring the goods reach their destinations in time and safely.
The challenge with these products is that the routes they may follow to reach their destinations may be infiltrated by terrorist groups, corrupt government officials and sometimes drug traders (Penrose 2013). These make it difficult to ensure their security. The need to conform to standards and employ trustworthy logistical companies is, therefore, key to success.
International business entities like the BHP Billiton Company operate in different countries with different currencies. Some approvals, exemptions, and restrictions relate to payments and finances of any international entity that has set up business in a foreign country (Penrose 2013). The currencies used in foreign trades differ in value, and this may affect the calculations of required funds needed to facilitate these projects.
Business entities can employ other payment methods like wire transfers and split payment’s to avoid loses of finances (Penrose 2013). Some countries may have adverse exchange controls that impede firm operations in those countries. Reverting to technological means of financial transactions can help mitigate these challenges.
These are some of the threats to business opportunities around the globe. Petroleum and mining industries like BHP Billiton are also primary targets to the fees legislation challenges since they make big profits in their operations (Lammers & Hickson 2013). Improper regulation of taxes can, in turn, hinder a business’ growth into another country.
To start a business at the international level, potential investors must research the tax regulations in that particular country. BHP Billiton has set up many businesses in many countries. It faces the challenges of the tax compliances but has grown anyway. This means that the company does significant research regarding tax regulations (Lammers & Hickson 2013). However, the same exorbitant tax requirements relating to foreign corporations have hindered its star up in other countries hence losing business opportunities.
The existence of companies is for profit purposes. International companies like BHP Billiton has other players in the field that run the same products. An excellent corporate structure is hence essential in ensuring the success of the business (Jenkins 2013). This is another regulatory challenge to international companies since each country has their costs, capital needs and tax requirements in setting up corporate entities.
Since the business has many headquarters, it has spent so much in the corporate offices indicating the financial challenge required to do the same in other countries that demand unsuitable corporate structure set up compliances (Jenkins 2013). It is, therefore, important to note the legal impediment in capital requirements of constructing organizational structures in different countries before deciding to invest in international business.
The BHP Billiton Company has employed more than 65,000 people across the globe. These figures indicate a company that has done real research on the labor laws and employment regulations in the countries it operates (Jenkins 2013). Many international businesses shy away from setting up their operations in other countries because of these regulations.
The processes of sub-contracting employments are subject to a country’s labor and employment legislations (Hill & Wickramasekera 2013). Additionally, each business needs a high-ranking legal officer to interpret the compliance requirements for that particular state. All these are expenses which may hinder businesses start-ups.
Unfortunately, there are countries which exploit foreign companies due to their inability to provide jobs to their citizens. They may tend to formulate employment regulations that are unfavorable to the entity or rather place the work burden to these institutions (Hill & Wickramasekera 2013). The compensation packages for employees who resign and retire may also be so high that discourages the growth of the establishment.
Lastly, the legal and political requirement of business termination can be quite a tricky affair. International companies as can be witnesses by the BHP Billiton Company offer excellent employment opportunities and taxes to the government (Forsgren & Johanson 2014). Exiting the market can be very challenging regarding the length of time taken to complete the process, employee compensations, and tax demands.
The political pressures are also other contributing challenges to closing up a business. Some politicians ride on the corporate existence to lie to the citizens that they have brought in foreign investors. Also, the government may demand very high taxes and deliberately delay the termination process (Forsgren & Johanson 2014). It is important, therefore, that an international entity formulates an exit strategy when they enter into the business so that they do not face legal battles.
Australia has made several treaties, conventions, and agreements that have significantly impacted on their trade in the international scene (Dunning 2014). An example is the ASEAN-Australia. New Zealand agreement establishing Australia, New Zealand a free trade area was signed in 2009 and amended in 2014. The custom amendment subdivision B, 153ZKC (e) relates to minerals mined in the party country (Dunning 2014). The same subsection explains the removal of tariffs on traded goods and services as listed in the treaty.
The ASEAN agreement, therefore, is of great improvements to the trade of the products of BHP Billiton Company since the products that this company deals in like petroleum and minerals are tariff-free in the market (Dunning 2014). In turn, the firm makes good profits and can obtain the human resource from New Zealand at a subsidized rate.
The agreement also relates to an integrated cargo system which also claims preferential tariffs. As discussed before, logistical security and its financial constraints may hinder global business prosperity (Cavusgil et al. 2014). The products that BHP Billiton Company exports and exports are quite expensive. The fact that the ASEAN treaty subsidizes tariffs from entry of cargo into New Zealand reduces the logistical cost burdens of the company
Additionally, the agreement establishes an integrated Cargo system. Mentioned herein is the fact that these goods are quite expensive (Cavusgil et al. 2014). An integrated system means that property and products of the company shall be monitored as they come from Australia to New Zealand and vice versa. This ensures the security of the assets and their safe carriage through the system.
Australia also established a Free Trade Agreement Training provider (FTA-TP) Grant to assist the bigger organizations to support, the smaller trade institutions in formulating Free Trade Agreements with other countries (Cavusgil et al. 2014). BHP Billiton, being one of the largest multinational company in Australia has the upper hand in assisting this process since it has established businesses in many countries. The experience it has can help the smaller businesses to grow into internationally recognized institutions hence improving the state’s revenue.
The other treaty is the Environmental Goods Agreement that is negotiated by around 46 members of the world trade organization (Crane & Matten 2016). This deal is meant to remove higher tariffs placed on environmental goods in the international market. Environmental goods include the petroleum products that are manufactured by the BHP Billiton Company Ltd. Removal of high tariffs from these products will in turn;
Conclusion
In conclusion, there are many legal aspects of the international business enterprises. Their existence should not be seen as impediments to innovations or growth (Crane & Matten 2016). Governments should be encouraged through the World Trade Organization to set up friendly business regulations to encourage international investments and the general global economic growth. The existence of multinational organizations like BHP Billiton should be viewed as an advantage to learn international trade negotiations (Crane & Matten 2016). A series of international treaties, agreements and contracts shall help in the realization of the dreams of a free trade globe.
References List
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