Question:
Identify a Multinational Company Operating in Australia. Provide a brief description of the Company.
With the advancement of technology and globalisation, the corporations have expanded their business in multiple countries. Both small and large organisations are offering goods and services to customers from different countries. The international corporations are required to examine and comply with various domestic and foreign legal regulations to ensure that they fulfil the necessary legal requirement. Modern corporations can improve their reputation by effectively comply with their regulatory framework because it ensures that company is fulfilling its legal duties in an ethical manner. This report will focus on ‘Wesfarmers Limited’ operations in Australia and the regulatory framework apply to the company. Further, the report will analyse the impact of various treaties, conventions, and agreements on the goods and services offered by Wesfarmers limited.
Wesfarmers limited was founded in 1914, and its headquarters is situated in Perth, Western Australia. Primarily the company focuses on its retailing business, but it also has a predominant interest in various other sectors including coal mining, fertilisers, chemicals, and safety products. The company has more than 220,000 employees worldwide, and it has more than 500,000 shareholders (Wesfarmers, 2017). The corporation has more than 2,000 employees in New Zealand; in case of Asian countries such as Bangladesh, it has around 5,000 stakeholders. Wesfarmers limited had revenue of AU$65.98 billion in 2016; Richard Goyder is the CEO of the corporation (Wesfarmers, 2016).
The company has various subsidiaries including Coles Supermarket, Cole Express, Bunnings, Kmart Tyre & Auto Service, Vintage Cellars, and many others (Wesfarmers, 2017). The subsidiaries of Wesfarmers limited operate in New Caledonia, China, India, Singapore, Indonesia, Hong Kong, Bermuda, and United Kingdom. The New Zealand headquarters of the firm is situated in Auckland, New Zealand, while in India the corporation intends to open their apparel retain chain for expansion opportunities and increase business revenue.
A regulatory framework is defined as an essential infrastructure that supports the implementation and directions of various regulations, policies, activities, and law followed by a corporation (Sheenan, 2009). The regulatory framework of retail industry provides various rules and regulations that focus on governing the practices and offering of retail products offered by energy and grocery retailers. The company implements new policies to face market challenges and continuously satisfy its customers’ requirements; these policies are required to comply with regulatory framework of different counties. The regulatory framework provides provision regarding various functions of the retailing industry including safety, health, trade practices, environment, food safety and privacy. The multinational corporations are subject to 30 percent corporate tax just like local firms (Australian Taxation Office, 2017). The location of headquarters has a considerable influence on a company’s tax liability because in some countries there is higher tax rate than compared to other.
Australia and New Zealand have entered into an agreement to regulate double taxation convention properly. The international organisation usually finds loopholes in regulations to avoid paying large amount of tax, therefore, they carefully expand in other countries and cautiously select the place for their headquarters. Wesfarmers limited is also required to comply with regulatory framework of labour law; the company complies with various safety, health, wages, and benefits regulations enacted by the government for protection of workers. The company complies with Workplace Relations Act 1996 to ensure they maintain equally in workers and fulfil the necessary requirement for their safety (Cooney, Cooney and Cooney, 2006). In New Zealand, the company fulfil the requirement of Labour Framework of Employment Relations Act 2000 to comply with the labour law. Wesfarmers limited value its employees and considered them a valuable asset, therefore, the corporation also comply with the regulatory framework of Health and Safety in Employment Act 1992, Equal Pay Act 1972 and Human Rights Act 1993 (Robson, et al., 2007).
Wesfarmers limited pays special attention to its workers that are situated in developing countries such as Bangladesh; due to lack of education and poverty, living condition of workers is bad (Afrin, 2014). Therefore, the company provides appropriate training and salary packages to upgrade the living standards of its workers which also benefit the company by increasing its reputation. The corporation properly complies with Bangladesh Labour Act 2006 to ensure they fulfil the requirement of the regulatory framework. In the United Kingdom, the company complies with Employment Rights Act 1996 to comply with provisions relating to childcare, maternity leave, working hours and others. In Australia, the company is required to follow the regulatory framework of food safety regulations (Azizul Islam and Jain, 2013). Wesfarmers limited offers food products to its customers through supermarkets and departmental stores, therefore, they have to ensure that their products are not hazardous to consumers’ health.
The products are required to be environment-friendly and safe for the consumption or else the government can impose penalties on the corporation. Wesfarmers limited is required to comply with the standard provided by the Food Standards Australia New Zealand (FSANZ) (Mhurchu, 2007). In recent years, the role of international organisation regarding the protection of the environment has grown. The corporations are expected to establish a code of standard to ensure their practices are not polluting the environment, and they are complying with the environment regulatory framework. From 2000, the government of Australia started imposing Goods and Services Tax (GST), and Wesfarmers limited has to pay this tax as well. The current rate of GST in Australia is 10 percent (Australian Taxation Office, 2017).
The GST provides a uniform tax which reduces the requirement of corporations to file separate tax for different operations; it establishes uniformity in business policies and strengthens the taxation regulations. Wesfarmers limited is required to comply with various mining laws that are implemented by the government for the protection of workers and environment. In India, the corporation complies with Mines and Minerals (Development and Regulation) Act, 1999 which provide a regulatory framework that is necessary to be fulfilled by the corporations for ensuring labour safety. The WorkSafe New Zealand Act 2013 and Mines Regulation 2014 have implemented by the government of New Zealand and the United Kingdom respectively; Wesfarmers is required to comply with these regulatory frameworks and implement them into their business strategies (New Zealand Petroleum and Minerals, 2017).
Treaty is defined as an agreement under international law in which the parties are two different counties. Primarily, the treaties are adopted by the countries to promote and support the trading practices between countries that positively affect their national income and economic growth. The government of Australia and New Zealand has entered into various treaties such as Australia and New Zealand Closer Economic Relations, New Zealand Free Trade and ASEAN-Australia (Barton, Gwynne and Murray, 2007). On the other hand, the New Zealand government has implemented Anti-Counterfeiting Trade Agreement which abandoned the trading of counterfeit goods. The coal mining business of Wesfarmers limited did not negatively influence by this treaty because the firm trades no counterfeit or exploratory goods. This allowed company to maintain a positive reputation among the customers because it shows that it ethically performs its operations. Along with retail industry, Wesfarmers limited focuses on mining and energy operations as well which allowed them to gain a competitive advantage over its primary competitors — Woolworth and BHP Billiton (Dagge, 2016).
The subsidiaries of the company also assist them to formulate a collaborative business contribute to the national income. For example, Bunnings established 15 new sites from which seven were leasehold trading, six were freehold trading, and two were freehold development sites. The company allowed Wesfarmers to trade in 11 out of 15 sites so that their customers can easily access their product and services throughout Australia (Nottage, 2015). Similarly, Wesfarmers limited can increase its global expansion through the international initiatives started by its subsidiaries. Additionally, Wesfarmers limited followed the protocol that was signed between India and Australia in 2011, which demonstrate how International Corporation can avoid double taxation along with fiscal evasion. Due to this treaty, the source country only has to pay the cross-border service tax when the company conducted trading for more than 183 days in 12 months. This approach assists the source country in gaining profits for their natural resources by trading with another country, these practices between Australia and India is supported by the legislation called International Tax Agreement Act 2014.
In case of trading or exporting any hazardous waste or material, the company is required to take a permit from Ministry of Economic Development that is situated in Australia (Kuppusamy and Anantharaman, 2014). The subsidiary of the company, Coles, signed a long-term supply agreement through which they offer competitive prices. Furthermore, WesCEF mitigates the threat of market demand for products, by incorporating long-term contracts and establishing price mechanism that focuses on supporting short-term spot agreements. By establishing this approach, the corporation is able to satisfy the interest of each associated stakeholder through the business procedure, and it has allowed Wesfarmers limited to lead the retailing market in Australia. In case of coal and mining operations, the company has signed a coal supply agreement with the Stanwell Corporation Limited.
The agreement allowed the company to enter into a three-year partnership agreement which resulted in increasing their association with the indigenous community. Wesfarmers limited focuses on providing paid maternity leaves, flexible working hours, maintaining the inclusive culture, keep in tough programs, and on-site vacation areas (Booth and Coveney, 2015). These programs ensure that corporation is complying with various mining regulations. The treaties and agreement between various countries assist Wesfarmers in easily expanding its business at a global stage. Governments implement such treaties to promote and support international trading because it increases national income and economic growth. Wesfarmers limited is required to properly assess the regulatory frameworks and other governmental regulations that influence its business and comply with them while formulating business policies.
Conclusion
From the above observations, it can be concluded that international corporations are required to comply with the regulatory framework of various countries. Wesfarmers Limited is Australia’s largest retailing corporation; the company also operates in fertilizer, coal mining, safety products and chemicals industry. The company complies with various domestic and international regulations that are implemented by the government for safety and protection of customers, workers, and environment. The corporation is required to pay various tax levied by the government such as Goods and Services Tax and Corporation Tax. The operations and performance of the business are influenced by the various treaties, conventions, and agreements. The free trade treaty established between Australia and New Zealand promotes and support trading practices between the firms of both industries. Wesfarmers limited enter into various agreements with its subsidiaries and government from different countries to expand their business globally. For effective growth and sustainable development, the corporations are required to assess their regulatory framework and comply it while formulating business policies.
References
Afrin, S., 2014. Labour Condition in the Apparel Industry of Bangladesh: Is Bangladesh Labour Law 2006 Enough?. Developing Country Studies, 4(11).
Australian Taxation Office., 2017. Company tax rates. [Online] Australian Taxation Office. Available at: https://www.ato.gov.au/Rates/Company-tax/ [Accessed on 30/11/2017]
Australian Taxation Office., 2017. GST. [Online] Australian Taxation Office. Available at: https://www.ato.gov.au/Business/GST/ [Accessed on 30/11/2017]
Azizul Islam, M. and Jain, A., 2013. Workplace human rights reporting: a study of Australian garment and retail companies. Australian Accounting Review, 23(2), pp.102-116.
Barton, J.R., Gwynne, R.N. and Murray, W.E., 2007. Competition and co?operation in the semi?periphery: closer economic partnership and sectoral transformations in Chile and New Zealand. The Geographical Journal, 173(3), pp.224-241.
Booth, S. and Coveney, J., 2017. ‘Big Food’ — The Industrial Food System. InFood Democracy. Springer Singapore.
Cooney, S., Cooney, S. and Cooney, S., 2006. Time and money under WorkChoices: understanding the new Workplace Relations Act as a scheme of regulation. UNSWLJ, 29, p.215.
Dagge, J., 2016. Wesfarmers overtakes rival Woolworths and BHP Billiton to become biggest Australian. [Online] The Daily Telegraph. Available at: https://www.dailytelegraph.com.au/business/wesfarmers-overtakes-rival-woolworths-and-bhp-billiton-to-become-biggest-australian/news-story/4d805e696f21512ecd7d08814e08e48a [Accessed on 30/11/2017]
Kuppusamy, J. and Anatharaman, R. N., 2014. A Critical review of barriers to Export Business. [Online] Indian Journal. Available at: https://www.indianjournals.com/ijor.aspx?target=ijor:sjbms&volume=10&issue=1&article=002 [Accessed on 30/11/2017]
Mhurchu, C.N. and Gorton, D., 2007. Nutrition labels and claims in New Zealand and Australia: a review of use and understanding. Australian and New Zealand journal of public health, 31(2), pp.105-112.
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Nottage, L., 2014. Do Many of Australia’s Bilateral Treaties Really Not Provide Full Advance Consent to Investor-State Arbitration? Analysis and Regional Implications of Planet Mining v Indonesia and Regional Implication. Sydney Law School Research Paper 14/39.
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