These past few weeks an important topic drew the public’s attention about American corporations. Largely it has initiated a hot and emotional debate on the current political paradigm. A significant discussion is on companies’ tax-inversion. This is the practice of purchasing foreign company, and claiming that the company was a “parent” company. This way the “investor” is no longer obligated to pay U.S. income tax on any revenue made outside of the country. As a result, more organizations are taking advantage on tax avoidance. Due to these complaints President Obama and his administration is imposing new rules to oppose and disallow these loopholes.

Many fortune 500 organizations are considering this option. Recently Burger King, made headlines when they are trying to move their headquarters to Canada from Florida. They are working on purchasing the largest fast food service, Tim Hortons, Inc. which is based in Canada.

In management class we have learned that efficiency and effectiveness are some of the major keys in organization’s performance, as well as their ethical outlook. As a customers, we support businesses that have strong reputation and those companies that invest and contribute to the community well-being.
Today’s economy is very volatile and competitive place to do business in. Majority of large American companies are global, and they need competent people that are capable of tackling different issues to be productive and innovated. To achieve a greater goal you need also a great leadership; managers who must understand others, make responsible choices, and take proper actions to achieve the desired objectives.

I understand the frustration of people complaining about companies changing their “citizenship,” and consequently avoiding paying taxes on non-U.S. profits. Also, I do understand the government administration is trying to protect self-interests as they are losing revenue. However, when comparing the US with other developed countries, United States has one of the highest corporate tax rate. If businesses continue to pay high rates, they will be looking for other alternative methods to save money and as a result they will be unable to reinvest more in our people and our communities.
Instead of punishing companies that are moving abroad to avoid paying taxes, the government should try to lower the tax rate and encourage organizations to return and create more jobs back home.

Someone may say that tax inversion loophole creates incentives for companies to put their self-interest above others and act unethical. From the stockholders perspective at the end of a day the most essential goal is to accelerate and satisfy returns on investments to shareholders.

Do you think companies should continue taking advantage on tax inversion? Or should they receive tax benefit and expand their operations right here in U.S.? How about the ethical issues? What behavior is appropriate or inappropriate for organizations?

http://en.wikipedia.org/wiki/Tax_inversion
http://en.wikipedia.org/wiki/Tim_Hortons
http://www.philly.com/philly/business/20141029_Pfizer_CEO__still_exploring__tax_inversion__tactic.html
http://ourfuture.org/20140923/administrations-new-rules-for-companies-renouncing-citizenship
http://www.opednews.com/articles/Tax-Dodging-Deal-Fails-Tha-by-Dave-Johnson-Corporations_Politicians_Taxes-141102-630.html

Millions of people around the world drink coffee for whatever reason. Since I am in an operation management class I started to think about what makes Starbucks a wonderful and a successful company. I am a huge fan of coffee and the “café experience,” and I must say that the quality of coffee and the whole process is not particularly exceptional at Starbucks. So what is their secret? How can a small coffee shop, started in the 70’s in Seattle, Washington, become prosperous?

Operating a large chain is unquestionably a very challenging process. Starbucks took the risk of expanding their brand and products not only throughout United States, but also worldwide. I believe that we can definitely say that the company has succeeded in regards to operations in a global environment, and furthermore, redefined the culture of drinking coffee. In order to achieve these goals the organization had to apply KSFs (Key Success Factors). These activities helped the organization to outperform and give them a competitive advantage.

Companies who try to establish their operations outside of United States have to deal with many challenges from the aspect of operational management. They must be able to analyze in detail the environment in which the company would like to establish its operations. They have to identify the culture, their needs, traditions, and customs. Based on all of these important factors they are then able to identify SWOT analysis on themselves. Starbucks had a clear purpose and strategy as stated on their mission statement, “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

Starbucks chain stores captured nearly the whole world and their brand is recognized by many people. However, there are a few places in which Starbucks didn’t quite succeed. One of them is Australia. The company was forced to close 61 of its 85 shops across the country. What went wrong? How did they fail at accomplishing their mission?

Mr. Urquhart, a retail consultant, says that, “With more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia should be aware that they are not dealing with one monolithic block”. In my opinion the management was too occupied with expansion, and focusing only on immediate growth instead of studying the local preference and acknowledging that not everyone is this same. Also, product standardization doesn’t always yield great results because some communities prefer customization and unique service. Lastly, Australians have a great expectation in terms of product originality, meaning the taste, texture, and history of coffee has to match their expectations.

Are you a fan of Starbucks? Do you think they overstretched their operations? What additional strategy could have been implemented to succeed down under?

Sources:

http://news.bbc.co.uk/2/hi/7540480.stm
http://en.wikipedia.org/wiki/Starbucks