Philip Morris International
Philip Morris International is an America based multinational enterprise which offers in the tobacco industry. The company is involved in the process of manufacturing cigarette and tobacco products which are sold in more than 180 nations. One of the best-selling products of the enterprise includes Marlboro cigarette. The corporation was founded in 1847, and its global headquarters is situated in New York City, United States (PMI, 2018a). The enterprise is highly controversial since it offers tobacco-related products which cause serious health issues to customers such as cancer. The enterprise faces a number of litigations regarding the products which it offered to its customers, and it is subject to restrictive legislation from governments across the globe. The enterprise has hired a diverse workforce of more than 81 thousand employees who operate in different locations in the world (PMI, 2018b). Furthermore, in Australia, the enterprise has hired more than 500 employees who work across the nation to handle the operations of the enterprise (PMI, 2018c).
Legislative regulatory framework in Australia which affects the business of MNCs
The Australian government is strict regarding the legislative framework in the country because it focuses on ensuring the interest of the customers along with supporting the economic growth of the nation. The Australian government has set high standards which corporations have to comply with in order to ensure that their products are safe to consume by Australian citizens. In case of Philip Morris International, the company operates in a tobacco industry which is a controversial field since the products of the enterprise result in causing serious health injuries to consumers. Therefore, the regulatory framework which Philip Morris International has to comply with is comparatively stricter than compared to corporations operating in other fields. Since the 1950s, the Australian government has progressively involved in enacting the legislation in the country in order to reduce the devastating impact which customers have to face relating to their health while using tobacco products and smoking (Liberman, 2013). Due to media pressure, health authorities and general awareness between people, the pressure has been high on the Australian government to implement tougher tobacco control laws in the nation. For example, while offering tobacco products in Australia, corporations such as Philip Morris International have to ensure that they pack their products with printed warning labels (ACOSH, 2018).
The government imposed these regulations in 2006 based on which the tobacco corporations have to add new warning signs on their products which covers an expanded range of health effects which customers might face while using such products. In case of cigarette packs, the companies have to ensure that the 30 percent of the front area and 90 percent of the back area of the pack has graphic appearing on the packet (Jarman, 2013). The goal of these warning signs is to increase awareness among people regarding the detrimental effect of smoking or tobacco. The government issued the updated and expanded warning signs which tobacco corporations have to put on their products as given by the Competition and Consumer (Tobacco) Information Standard 2011. Based on these new regulations, the corporations have to cover 75 percent of the front of the package with graphic presentation of the negative effect of smoking and 90 percent of the back of the package with the graphic content (Tobacco Control Laws, 2017). Furthermore, Philip Morris International also has to comply with the taxation regulations in Australia based on which it has to pay tax as per the corporate rate.
The current tax rate which is implemented by the government on the companies operating in Australia is 30 percent (ABC, 2018). The tax payment assists in supporting the economy of the nation, and it assists the enterprises in effectively handling their actions in Australia. Moreover, the multinational corporations operating in Australia have to pay Goods and Services Tax while offering products or services to the company. This tax is levied on the products or services which multinational companies’ offers to their customers while managing their operations in Australia. Philip Morris International has to pay the tax on the income which is generated by the company from its operations situated in Australia (Yong et al., 2014). Furthermore, Philip Morris International is mainly operated in the United States and its products are subject for excise in Australia. Since the government is strict regarding reducing the use of tobacco in the country, the excise imposed on tobacco was increased by 25 percent by the government of Australia in April 2010. Moreover, the excise and excise-equivalent customs duty which imposed on the products offered by Philip Morris International in Australia were increased by 12.5 percent in December 2013.
Furthermore, the government again increased this rate by 12.5 percent in September 2017 (ATO, 2018). The Corporations Act 2001 (Cth) is another key legislation in Australia which provides provisions regarding enterprises operating in Australia. The act provides guidelines regarding the incorporations of companies in Australia and the rules which they have to comply with while handling their operations. Based on this act, the corporation has to maintain a transparent framework regarding the impact of the company’s products on the health of customers. Furthermore, the board of directors of the enterprise has to comply with the guidelines given in the Corporations Act while taking business decisions regarding the company’s operations situated in Australia. The general duties are given under section 180, 181, 182 and 183 based on which the director has to ensure that they focus on the interest of the stakeholders of the company rather than their personal benefits (OBP, 2018). Philip Morris International also has to comply with the guidelines given under the Competition and Consumer Act 2010 to ensure that the products offered by the corporation are safe to consume.
Since it offers tobacco related products to its customers, the company has to ensure that it did not cause harm to its customers. The Australian Consumer Law provides that the corporation has to ensure that its products are safe for consumers to use. Moreover, there are a number of state and territorial laws relating to consumer safety which Philip Morris International has to comply with while offering its products to customers. Since tobacco and cigarette are dangerous for customers’ health, Philip Morris International has to deal with stricter legal regulations regarding the safety consumers (Mitchell and Studdert, 2012). The enterprise also has to comply with the Fair Work Act 1992 which provides guidelines regarding the safety of employees which operates in the factories of the company. Based on this regulation, the company has to ensure the safety of its employees. Thus, Philip Morris International has to comply with these regulations while handling its operations in Australia.
Treaties, conventions or agreements which affect the products and services offered by MNCs in Australia
The treaties and agreements formed between the nations create new business opportunities for multinational corporations which offer their products or services in such nations. In many cases, these treaties create new challenges for enterprise as well while there are handling their operations in the international market. A good example is the bilateral trade agreement formed between Australia and New Zealand. A suit was filed between the Australian government and Philip Morris International regarding displaying of graphic content on the cigarette packages offered by the company. Australia has involved in the healthcare framework issued by the World Health Organisation (Hammond et al., 2012). The Department of Health in Australia is responsible for imposing provisions given by under the WHO Framework Convention on Tobacco Control. These provisions were contradicting with the regulations of the bilateral trade agreement which formed between Australia and Hong Kong. However, this legal battle is won by the Australian government because the court ordered Philip Morris International to put graphic health warning signs on the packing of the products offered by the enterprise. The suit was filed by Philip Morris International by arguing that the government has breached the foreign investment provisions of Australia which are given in Australia’s Investment Promotion and Protection Agreement which is signed by the government with Hong Kong (Hurst, 2015).
Another key treaty which affects the products and services offered by Philip Morris International in Australia is the treaty signed by the government with the United States. The treaty is focused on eliminating double tax policies in order to avoid corporations from paying double tax on the income which they generate while managing their operations in these countries (Barthel and Neumayer, 2012). Based on this treat, Philip Morris International did not have to pay double tax on the income which it generates from its operations situated in Australia. Moreover, the trade agreement formed between the two nations also assists the company in expanding its operations in both nations. Since the enterprise operations in the tobacco industry, the company has to ensure that it has to maintain a high level of standard regarding the security of the products offered by the firm. The goal of this treaty is to increase the trading relationship between both nations which assist in increasing business opportunities for Philip Morris International as well. The organisation has to comply with the legal standard issued by this treaty based on which it is easier for the enterprise to expand their operations in both nations. Similarly, the free trade agreement formed between Australia and New Zealand also resulted in creating new business opportunities and threats for the company.
For example, ASEAN Australia New Zealand FTA (AANZFTA) is a treaty which is formed between the two nations in order to promote trading practices between the countries. The goal of this treaty is to increase trading practices between both nations by encouraging small as well as multinational companies to expand their operations in both markets (Lewis, 2015). However, Philip Morris International operates in the tobacco industry due to which it has to comply with a strict legal framework while expanding its operations in different fields. The government implements a wide range of legal regulations on Philip Morris International regarding its operations to ensure that tobacco consumption did not increase in the nation. Moreover, Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) is another treaty which is formed between the two nations. The goal of this treaty is to increase the economic relationship between these countries in order to support their GDP and overall growth (Radaelli, 2014). Based on this treaty, corporations can bypass various laws which the governments impose in order to expand their operations in these countries which result in increasing the number of customers which they target. Similarly, Philip Morris International recently was involved in a legal dispute with the government in New Zealand regarding the selling of their heated tobacco products.
The suit was filed based on the provisions given under the “Smoke-Free Environment Act” based on which the government has imposed a ban on the tobacco products which are for chewing or any other oral use (Reuters, 2018). The lawsuit was won by Philip Morris International based on which the government has to remove the restrictions on its products, and the company is able to sell its products in the country. China is a major market for Philip Morris International because there are a large number of customers in the industry. China Australia Free Trade Agreement (ChAFTA) is a treaty which is signed between both nations with an objective to promote trade practices between the countries. The treaty assists Philip Morris International in expanding its operations in both markets which is crucial for its success since it results in expanding its market share. Based on this treaty, the enterprise able to avoid various taxes and fees relating to the foreign operations and easily expand its operations in the overseas market (Baykitch and Sladojevic, 2015). Another treaty signed between the nations assist Philip Morris International to avoiding paying double tax paid by the company to the government of both nations. It creates new business opportunities for the enterprise since it can use the money saved on the taxes to invest in the operations of the enterprise.
References
ABC. (2018) Corporate tax cuts: What are the key issues in the debate?. [online] Available from: https://www.abc.net.au/news/2018-03-29/corporate-tax-cuts-explained/9600004 [Accessed on 29th August 2018].
ACOSH. (2018) Australian tobacco control legislation. [online] Available from: https://www.acosh.org/law-policy/australian-tobacco-control-legislation/ [Accessed on 29th August 2018].
ATO. (2018) Excise rates for tobacco. [online] Available from: https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Tobacco-excise/Excise-rates-for-tobacco/ [Accessed on 29th August 2018].
Barthel, F. and Neumayer, E. (2012) Competing for scarce foreign capital: Spatial dependence in the diffusion of double taxation treaties. International Studies Quarterly, 56(4), pp.645-660.
Baykitch, A. and Sladojevic, A. (2015) Free trade agreements and arbitration: Understanding investor-state dispute settlements. LSJ: Law Society of NSW Journal, (14), p.74.
Hammond, D., Wakefield, M., Durkin, S. and Brennan, E. (2012) Tobacco packaging and mass media campaigns: research needs for Articles 11 and 12 of the WHO Framework Convention on Tobacco Control. Nicotine & Tobacco Research, 15(4), pp.817-831.
Hurst, D. (2015) Australia wins international legal battle with Philip Morris over plain packaging. [online] Available from: https://www.theguardian.com/australia-news/2015/dec/18/australia-wins-international-legal-battle-with-philip-morris-over-plain-packaging [Accessed on 29th August 2018].
Jarman, H. (2013) Attack on Australia: Tobacco industry challenges to plain packaging. Journal of public health policy, 34(3), pp.375-387.
Lewis, M.K. (2015) The ASEAN-Australia-New Zealand FTA (AANZFTA). Bilateral and Regional Trade Agreements, 2nd edn. Cambridge University Press, Cambridge, pp.114-132.
Liberman, J. (2013) Plainly constitutional: the upholding of plain tobacco packaging by the High Court of Australia. American Journal of Law & Medicine, 39(2-3), pp.361-381.
Mitchell, A.D. and Studdert, D.M. (2012) Plain packaging of tobacco products in Australia: a novel regulation faces legal challenge. Jama, 307(3), pp.261-262.
OBP. (2018) A guide to director’s duties. [online] Available from: https://obp.com.au/director-duties/ [Accessed on 29th August 2018].
PMI. (2018a) How can we help you?. [online] Available from: https://www.pmi.com/contact-us [Accessed on 29th August 2018].
PMI. (2018b) Who we are. [online] Available from: https://www.pmi.com/who-we-are [Accessed on 29th August 2018].
PMI. (2018c) Australia. [online] Available from: https://www.pmi.com/markets/australia/en [Accessed on 29th August 2018].
Radaelli, C.M. (2014) Majone’s Cathedral. Journal of Comparative Policy Analysis: Research and Practice, 16(1), pp.22-27.
Reuters. (2018) New Zealand court gives Philip Morris nod to sell heated tobacco product. [online] Available from: https://www.reuters.com/article/us-newzealand-pmi/new-zealand-court-gives-philip-morris-nod-to-sell-heated-tobacco-product-idUSKBN1H333X [Accessed on 29th August 2018].
Tobacco Control Laws. (2017) Legislation by country Australia. [online] Available from: https://www.tobaccocontrollaws.org/legislation/country/australia/summary [Accessed on 29th August 2018].
Yong, H.H., Borland, R., Balmford, J., McNeill, A., Hitchman, S., Driezen, P., Thompson, M.E., Fong, G.T. and Cummings, K.M. (2014) Trends in e-cigarette awareness, trial, and use under the different regulatory environments of Australia and the United Kingdom. Nicotine & Tobacco Research, 17(10), pp.1203-1211.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download