It is often practiced by the large size companies to shift its operation and manufacturing to other foreign countries in order to save cost, increase revenue, build regional centres and staying ahead of competitors (Capurso, 2016). The companies have its shareholding to whom they are accountable to and they feel necessary to reduce its cost so that it can generate larger profit possible. However, the aim of the paper is to research on a company that had moved to a different location, particularly from United States to another region. The chosen company is Burger King because in 2014 it moved to Canada following its acquisition of Tim Horton.
Company Description And Type Of Service Provided
Burger King is an American multinational chain which caters hamburger fast food restaurant in several parts of the world. In 2010, the 3G Capital of Brazil had acquired majority of the stake in the business firm, thereby dealing with a great value of US $3.26 billion (Gilson, 2014). However, in 1970 it was the Golden Age for Burger King as its only advertising but in early 1980s the company had started losing its focus. The introduction of Whopper in 1970 is its first major addition to the menu and thereafter it became the signature item in the menu. The initial target market of Burger King was the age group of 18-34 both male and female, but lately in 2011 it transformed the menu and introduced new menu, packaging and product-reformulation. As of December 2018, it is reported that Burger King had 17,796 outlets in almost 100 countries. Out of all the outlets 99% are located within US and the rest are privately owned and operated, where the new owners have started shifting to entire franchising model. Hence, Burger King had historically moved to multiple variations in order to expand its operations (Musonera, 2019). The Burger King Australian Franchise Hungry Jack’s is the only franchise that that operates under different name due to the issue of trademark. In 2014, the future of the business firm’s Miami headquarter was in double reports surfaced that Burger King was in consideration of buying the Canadian restaurant chain in Tim Horton with the aim of relocating the headquarter in Canada as the corporate tax was lower.
Decision Taken For Drastic Move
In 2014, the American fast-food company, Burger King had announced that the business had planned to move the corporate headquarter to Canada so that they can avoid the United States punitive corporate taxes which is comparatively higher rate of tax in the world (Grant, 2015). Even the President Obama had expressed its emotion of displeasure and threatened the use of executive power in order to prevent companies from following this strategy. Therefore, a global minimum corporate tax rate was in response to the corporation’s decision making so that they can relocate. The corporations are not unique where it can desire to escape regulations. As per the recent analysis of mitigation it is reviewed that the citizen of US is neglecting or leaving the regulated blue region in favour of lower rate of tax, better economy and lighter regulation of middle American red regions. Due to this reason, Burger King had taken the decision of moving to Canada and follow acquisition with Tim Horton so that it can avoid the tax of $275 million. There is billionaire as well as vocal supporters of higher tax within the rich people as it is assisting to finance Burger King exodus so that it can pursuit the lower tax rates (Boje, Haley & Saylors, 2016). However, the goal of the company was to operate on a global business and by merging with Horton’s it claimed for global growth for both the business firm. Burger King maintains the long-standing commitment so that it remains to assist franchise, employees as well as the local communities they serve.
Difficulties Involved
As per the new Americans for Tax Fairness report highlights that Burger King along with its shareholders faced an estimated $400 million to $1.2 billion tax between 2015-2018 (Hoene, 2016). This ultimately led the business firm planned its strategy of merger and acquisition with Tim Hortons which is also a Canadian company. Hence, it contradicted the assertion of CEO Daniel Schwartz where Burger King’s plan to become one Canadian company also known as inversion. The difficulties involved for the company was that in the ATF report it reviewed the renouncement of US corporate citizenship Burger King which faced $117 million within the United States taxation on profit which led the company held its offshore by the end of 2013. In such situation the company had avoided an additional $275 million in United States between 2015-2018 just because Canadian law will no longer have to pay even on a deferred basis the US taxes on the future worldwide profit. As a part of the merger and acquisition strategy the business firm had introduced a new firm in Canada, signifying the move of Burger King to lower tax burden at the same time exposing the company to confusion of criticism after its confirmation (Yang & Aquilino, 2016).The greatest challenge regarding the move was the expense of the company where the reports reveal that Burger King’s largest share could had saved the company from much $820 million in its capital gains taxes just because it was on its way the company had structured the invasion.
As per Daniel Goleman the six-leadership style that is mentioned by him are Authoritative, Coercive, Coaching, Affiliative, Pacesetting and Democratic.
With the help of authoritative leader style, it can be analysed that the leadership style directs to inspire the move of people towards a common goal (Cwalina & Drzewiecka, 2019). With the assistances of this style of leadership it can be stated that starting from the announcement of acquisition to its operation Burger King can set new vision and set new direction such as corporate improvements. Hence, the business requires to focus on enhancing its expertise, self-vision and empathy. this will automatically assist to convince the Tim Horton’s vision so that it can improve its business operational skills. Secondly, coaching leader will assist to connect the personal goals with the organisational goals. This leadership style can be related with the strategy of shifting from US to Canada aiming to be a global brand. Burger King can implement this leadership approach by engaging the informal coaching and mentorship so that it can operate effectively in a new region (Arnold & Wilson, 2014). This can be conducted by highlighted daily relationship within the team members. On the other hand, the affiliative leader can assist the business to announce its shifting strategy valuing the emotion of the shareholder and place them into high emotional needs. Similarly, the next leadership style that is democratic leader will focus on collaboration. With reference to Burger King, it could had announced its acquisition by involving the team members, considering their viewpoint, identifying and solving issues. The fifth type of leadership is pacesetting leader. This leadership style can assist the business firm to focus on organisational perfo0rmnace and meet the strategic goals. Burger King can involve high performance coaching so that it is easier for re employees to operate in a new country. Lastly, coercive leadership style refers to an autocratic method to leadership (Treu & Magaldi, 2016). This leadership style usually helps in high pressure situation and will assist the business firm to move from one country to another in midst of excessive corporate tax.
However, the move of Burger King to Canada had led to save the shareholders as much as it was possible which estimated approx. $820 million in terms of capital gain taxes. This was because of the way the business firm had structured the inversions. On the other hand, it can be further analysed that the move for Burger King was successful because it is number one chain which is serving member of the United States Armed Forces (Weatherby, 2016). It is further anticipated tha that over the next ten to fifteen years the business can receive more than $150 million in marketing as well as in royalty support for the military restaurant. On the other hand, it was a success factor for Burger King to shift Canada, as it was playing a dominant party in its deal as was at the tope of the biggest fast-food chains with combined market valuation of US $18 billion.
Conclusion
Hence, it can be concluded that the move of Burger King in 2014 to Canada along with its acquisition with Tim Horton had tried to sooth consumer as they faced backlash. However, by moving to a different country, it had also moved its headquarter, thereby signifying that the company will be avoiding excessive tax. Furthermore, as stated above the decision of moving also emphasized on new global or a quick service restaurant by pairing up with an independent brand, thereby stating that the reason was not only due to heavy tax rate but focused on global growth.
Reference
Arnold, B. J., & Wilson, J. (2014). Aggressive international tax planning by multinational corporations: The canadian context and possible responses. SPP Research Paper, (07.29).
Boje, D. M., Haley, U. C., & Saylors, R. (2016). Antenarratives of organizational change: The microstoria of Burger King’s storytelling in space, time and strategic context. human relations, 69(2), 391-418.
Capurso, C. (2016). Burgers, doughnuts, and expatriations: An analysis of the tax inversion epidemic and a solution presented through the lens of the Burger King-Tim Hortons merger. Wm. & Mary Bus. L. Rev., 7, 579.
Cwalina, W., & Drzewiecka, M. (2019). Who are the political leaders we are looking for? Candidate positioning in terms of leadership style. A cross-cultural study in Goleman’s typology. Journal of political marketing, 18(4), 344-359.
Gilson, C. (2014). The GOP struggles with women, Chicago Cubs’ Obamacarewoes, and Burger King heads to Canada–US national bloground up for 23–29 August. LSE American Politics and Policy.
Grant, G. L. (2015). The Aftermath of a King Renouncing his Citizenship: A Closer Look at Recent Trends of Corporate Inversions in America. J. Bus. & Sec. L., 16, 111.
Hoene, D. J. E. (2016). Assessment of value creation in private equity: the acquisition of Burger King by 3G Capital (Doctoral dissertation).
Musonera, E. (2019). Merger of Burger King and Tim Hortons: analysis of marketing strategies in the quick service restaurants. International Journal of Strategic Business Alliances, 6(4), 267-283.
Treu, J. S., & Magaldi, J. A. (2016). AICPA v. the IRS: Is the AICPA Protecting Taxpayers Interests or Its Own in Seeking to Invalidate the Annual Filing Season Program. Taxes, 94, 41.
Treu, J. S., & Magaldi, J. A. (2016). AICPA v. the IRS: Is the AICPA Protecting Taxpayers Interests or Its Own in Seeking to Invalidate the Annual Filing Season Program. Taxes, 94, 41.
Weatherby, G. J. V. (2016). Tim Hortons: A situational analysis.
Yang, J. G., & Aquilino, F. J. (2016). Corporate Inversion Strategies versus Anti-Inversion Treasury Regulations. Taxes, 94, 47.
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