European Multinational Organizations In Australia Economics Essay

There are many transnational corporations which operate in Australia due to the superior advantages which it possesses as an investing finish. These include political stableness, good substructure, rich human resource, handiness of engineering and economic liberalisation. These factors have enabled the multinationals to accomplish returns on investing through taking advantage of the rich homo resource which can work out the modern challenges in the concern environment through application of critical thought. The findings have revealed that these factors play an of import function in promoting investors in the car industry to put in Australia. However, there are failings in the macro environment such as geographical location, high revenue enhancement rates, the planetary fiscal crunch and low investing in substructure and human resource.

The study recommends that the Australian authorities should turn to their concerns if they are to accomplish bigger net incomes in the long tally. The study besides recommends that multinationals which operate in Australia should go on developing merchandises which meet market demands every bit good as back uping community enterprises if they are to run into their aims. The Australian authorities should take down the revenue enhancement rates in order to pull new investors to Australia. The authorities should besides increase the investing in the human resource every bit good as substructure in order to take down the operating costs of multinationals and increase the productiveness of employees. Finally, the authorities should utilize macro economic tools such as the financial and pecuniary policies to guarantee that there is handiness of recognition through exciting fiscal service suppliers and promoting them to give recognition.

2.0 Introduction

Australia is one of the most developed states in the universe. It is graded thirteenth in footings of GDP in 2009 with a GDP of $ 1.2 trillion ( Denoon, 2000 ) . The service sector is a major driver of the economic system and 68 % of the GDP is driven by this sector. Other of import sectors in the economic system include the excavation and agricultural sectors. The state has a higher buying power than states such as France, Germany and the UK and in footings of human development ; it is graded 2nd in the universe. There are assorted factors which have supported the growing of this immense economic system and these include foreign and domestic investing which has been encouraged by trade liberalisation. Investing has besides been mostly attributed to the many multinationals which are based in Australia ( Denoon, 2000 ) . These multinationals have contributed non merely to economic growing but besides to societal development through the corporate societal duty plans. The immense growing in multinationals has besides been facilitated by the handiness of engineering and substructure in Australia which supports external investing.

It is of import to analyse the future chances of multinationals which operate in Australia. It is besides of import to measure the current issues which face multinationals. This paper will measure the Australian concern environment with the purpose of analysing current issues and future chances of European transnational organisations in Australia. The paper will concentrate on the car fabrication industry with specific focal point on multinationals such as BMW and Mercedes Benz. This will supply a decision on whether Australia is favourable to European multinationals or non. The discussed issues will be summarized at the terminal of the paper.

3.0 Benefits which European multinational organisations enjoy in Australia

There are several benefits which transnational organisations in Australia enjoy and this makes it attractive to put in the state. These benefits guarantee that transnational houses which invest such as BMW and Mercedes have certainty that they will reimburse investings within a sensible clip frame. Some of these benefits will be discussed below ;

3.1 Political stableness

Australia is one of the most political stable states in the universe. The state is besides really stable in footings of enduring unrest or onslaughts from terrorists. This is a really of import factor which any investors are acute on measuring before perpetrating their investings to a state. A state which is politically stable assures investors of the ability of retrieving returns on investings ( Bateman, 2010 ) . It besides makes it able to gauge the clip when this return will be achieved, which is of import when sourcing support and finance. Australia has hence become attractive to car manufacturers who are assured of retrieving their investings and net incomes within a sensible clip frame.

3.2 Good substructure

This is another of import factor which is considered by any investor who is keen on puting in any state. Infrastructure plays a important function particularly when puting in the fabrication industry such as the car industry. Australia is a really developed state with good substructure including roads, edifices, constructions public-service corporations and others. Multinational organisations which develop cars rely on the substructure to present stuffs and merchandises on clip and at lower costs. The superior substructure possessed by Australia has made in an attractive investing finishs particularly by car manufacturers such as BMW and Mercedes Benz.

3.3 Rich human resource

Australia has a really rich human resource. The state is ranked 2nd globally in footings of homo development index and its literacy rates among the population are highly high, with 99 % of the population being literate. This has provided the multinationals with a rich homo resource which can efficaciously set about the functions which they are assigned in organisations. The rich human resource has besides provided the multinationals with a human resource which can work out the modern challenges in the concern environment through application of critical thought ( Beach, 2007 ) . This has enabled organisations such as BMW and Mercedes to execute really good, with their one-year net incomes turning each twelvemonth in their investings on Australia.

3.4 Availability of engineering

The handiness of engineering is of nucleus importance to houses in the fabrication industry. Firms in this industry are to a great extent reliant on engineering and their entree to superior engineering determines whether they have a competitory niche over their rivals. Australia has encouraged invention among the population which has resulted ion new engineering. The state is besides a heavy importer of engineering which can be applied in multinationals organisations which operate in the state. As a consequence, it has become an attractive investing finish particularly to automobile companies in Australia which rely on the engineering to run into their organisational ends ( Macintyre, 2000 ) .

3.5 Economic liberalisation

The Australian macro economic system is liberalized and there is small intervention by the authorities on the concern environment. Many investors prefer puting in a concern environment which features small or no intervention by the authorities since this allows them to realistically cipher net income projections in the long tally. This besides guarantees that political intervention in concern will non be experienced. Car manufacturers such as BMW and Mercedes have therefore to a great extent invested in Australia since the economic system is liberalized and there is no authorities intervention in concern activities.

4.0 Challenges of European transnational organisations in Australia

There are assorted challenges which multinationals which operate in Australia face. These challenges reflect the jobs which car manufacturers in Australia face and they will be briefly discussed below ;

4.1 Geographic location

Australia is comparatively far from Europe every bit far as the geographical location is concerned. In the fabrication industry and particularly the car sector, the geographical location plays an of import function every bit far as production costs are involved. Most of the natural stuffs and engineering used in the industry are imported from Europe and the conveyance cost signifiers a important per centum of the merchandise cost. Multinationals hence face challenges in maintaining the production costs low with the high conveyances costs associated with investing in Australia. Development of low cost cars which meet the demands of the market is important if BMW and Mercedes are to vie with more constituted cars such as Toyota.

4.2 Tax rates

Although Australia is considered a favourable investing finish with comparatively lower revenue enhancement rates, the revenue enhancements which are charged to foreign investors are comparatively high and they might impact the long term profitableness of multinationals. Taxs such as the capital additions revenue enhancement which is taxed on disposal of assets which have generated investing are considered prejudiced by some investors and particularly those in the fabrication sector who investing in expensive assets and engineering. When revenue enhancements are added to the costs of production, the cars become expensive and are at times out of the range of their mark market sections.

4.3 Global fiscal crunch

Australia was one of the states which suffered the worst economic effects due to the planetary crunch. This is because the state has invested to a great extent in existent estate and this is where the brunt of the fiscal crisis was felt. Australia hence faced an unsure economic hereafter and this adversely affected investors in the car fabrication workss. In add-on, the high costs of finance made many investors unable to get recognition from the Australian fiscal service suppliers. Although most of the effects of the planetary crunch have worn off in Australia, there is still an uncertainness on how long the economic system will take to to the full retrieve. This has lowered the investings in the fabrication industry and particularly the car industry.

4.4 Low investing in substructure and human resource

In malice of the high quality of substructure and rich human resource earlier discussed, there is concern that investing in these two of import resources has reduced over the old ages due to concentrate on the excavation sector. There is concern that the authorities has over-invested in the excavation sector to the hurt of other sectors of the economic system. As a consequence, the investings in substructure and human resource are worsening at an dismaying rate. This is a challenge which may adversely impact the long term operations and endurance of multinationals in Australia and particularly those in the car industry.

5.0 Current tendencies in European transnational organisations in Australia

There are assorted emerging new tendencies which have been adopted by transnational organisations which operate in Australia. These tendencies are similar to the planetary tendencies which have been embrace by multinationals across the universe. They are meant to increase effectivity of operations and cut down production costs. They will be briefly discussed below ;

5.1 Outsourcing

This is a common scheme which has been adopted by multinationals across the universe. These houses have realized that outsourcing can be used to increase efficiency of operations and cut down costs through deputing non-core activities to 3rd parties ( Bragg, 2006 ) . Already, automobile makers in Australia have outsourced non-basic services such as research, cleansing services, letter paper and others to local Australian houses which are specialized in set abouting these functions. This has resulted in making occupations for locals while at the same clip cut downing costs for the multinationals while increasing efficiency.

5.2 CSR maps

Multinationals in Australia and particularly those in the car fabrication industry have adopted an attack of corporate societal duty in back uping community enterprises in countries they operate. This has been witnessed through support of causes such as malignant neoplastic disease research, instruction chances, preparation, sponsorships and contributions to worthy causes. These multinationals have realized the benefits of CSR enterprises which include community support and chances to market their merchandises. Mercedes and BMW have undertaken several enterprises to authorise communities including the Aborigines and this has increased local support for both multinationals in Australia ( Mercedes Benz Website, 2011 ) .

5.3 Environmental preservation and traveling “ green ”

There is demand for green merchandises in virtually all parts of the universe. Humanity has realized the at hand menace from environmental devastation and many consumers have switched to the ingestion of green merchandises. Firms have been forced to make merchandises utilizing clean engineering due to coerce from environmentally friendly consumers ( Lerner & A ; Wilmoth, 2006 ) . This has forced Australian multinationals to follow steps to restrict their C emanations in the fabrication procedure. In add-on, the fact that Australia is a signer to the Kyoto Protocol has dictated the houses ought to take steps to cut down C emanation by buying C credits. Both BMW and Mercedes have embraced the traveling green construct and they have imported engineering aimed at cut downing emanations from their fabrication workss. In add-on, both have invested in bring forthing intercrossed autos which are environmentally friendly.

6.0 Future chances of European transnational organisations in Australia

Multinational organisations in Australia face a positive hereafter in the coming old ages. In malice of the failings which are present in the macro environment, there are many positive benefits of puting in Australia. Australia is an economic human dynamo with a well developed substructure. It besides has a rich human resource and high literacy rates. These are really of import considerations which any fabrication house analyzes before puting in a finish. Multinationals and particularly those in the car industry necessitate political stableness and strong substructure in order to accomplish long term profitableness. For these houses to reimburse their investings they have to run for several old ages and this can merely be achieved through political stableness. The broad economic system has ensured that investors ‘ activities are non interfered with by the authorities. The rich human resource has helped multinationals achieve their organisational aims through using workers who are able to utilize critical thought to cover with challenges in the on the job environment. This is complemented by the engineering nowadays in Australia which has ensured that cars with the latest technological and safety characteristics are developed to accommodate consumers demands.

For any house to run efficaciously, it has to hold local support. Multinationals in Australia have acquired local support through back uping community enterprises such as authorising local communities and back uping causes they believe in. This has made consumers have assurance in operations of these multinationals. The strong assurance in BMW and Mercedes Benz merchandises can be seen in the high gross revenues degrees which the two multinationals have established in the Australian market. Adapting to market tendencies is another important constituent of long term profitableness by any house. The Australian car manufacturers have embraced the “ traveling green ” construct which is a planetary enterprise aimed at conserving the environment. Equally long as the multinationals continue to back up the Australian community, accommodate the new consumer tendencies and utilize new engineering to further invention in their merchandises, they face long term success in the Australian concern environment. The chances of the multinationals in Australia and peculiarly those in the car industry can hence be said to be positive in the long tally. However, the Australian authorities should turn to the assorted challenges which are present in its concern environment if it is to pull and retain investors.

7.0 Summary and decision

The car fabrication industry in Australia with specific focal point on multinationals such as BMW and Mercedes Benz has been discussed in the paper. Australia has been seen to be an attractive investing finish for these multinationals due to factors it possesses such as political stableness, good substructure, rich human resource, handiness of engineering and economic liberalisation. These factors have enabled the multinationals to accomplish returns on investing through taking advantage of the rich homo resource which can work out the modern challenges in the concern environment through application of critical thought. The handiness of engineering and substructure has besides enabled the multinationals to bring forth high quality merchandises at lower costs. However, there are failings in the macro environment such as geographical location, high revenue enhancement rates, the planetary fiscal crunch and low investing in substructure and human resource. The Australian authorities should turn to these challenges which are present in its concern environment if it is to pull and retain investors.

The multinationals have besides adopted modern tendencies such as bring forthing “ green ” merchandises, authorising communities through CSR plans and utilizing the outsourcing scheme to cut down costs and increase efficiency. This has made consumers have assurance in operations of these multinationals and they have in bend purchased these merchandises in big measures. It can hence be seen that multinationals in Australia in particularly those in the car industry have a good hereafter in Australia and more so if they continue developing merchandises which meet market demands every bit good as back uping community enterprises.

8.0 Recommendations

The Australian authorities should turn to their concerns if they are to accomplish bigger net incomes in the long tally. It should take down the revenue enhancement rates in order to pull new investors to Australia. Taxes such as the capital additions revenue enhancement which is taxed on disposal of assets which have generated investing are considered prejudiced by some investors and should be removed by the authorities. The authorities should besides increase the investing in the human resource every bit good as substructure in order to take down the operating costs of multinationals and increase the productiveness of employees. This will do Australia a more attractive investing finish. Finally, the authorities should utilize macro economic tools such as the financial and pecuniary policies to guarantee that there is handiness of recognition through exciting fiscal service suppliers and promoting them to give recognition. This will increase the degrees of investing in Australia and better the quality of life of the people.