Essay: Commonwealth Bank Of Australia - A Multinational Company In Australia.

1. Identify a multinational company operating in Australia. Provide a brief description of the company including the following 

• The industry the company operates in

• Number of staff in Australia

• Number of staff globally

• Location of global headquarters 

2. Identify any regulatory framework/s affecting the multinational company you have identified operating in Australia and discuss why and how it affects the company. For example, multinational corporations, like local companies, are subject to 30 per cent corporate tax  

3. Identify any treaties, conventions or agreements that have impacted on the products or services that multinational company provides in Australia. How does it impact the goods/services?

Common wealth bank of Australia

There are many multinationals working in Australia; however, there are few that can match the size of Commonwealth Bank of Australia. It is the biggest bank in Australia and has branches across USA, Fiji, Asia and the United Kingdom. It is the largest company in Australia that is listed in the Australian Securities Exchange. It has other brands and subsidiaries like the Bankwest, commonwealth Insurance Limited, ASB Bank in New Zealand and the First State Colonial Investment Ltd. Commonwealth Bank of Australia also known as Commbank is involved in many financial services including insurance brokerage, investments, securities agencies trading and funds management(Adeyeye, 2012).

It was initially founded in the year 1911 by the Australian government to help the government and the people of Australia sound financial services. It is among the list of banks called the big four. The global headquarters of commbank is in Darling Harbour on the west side of Sydney’s central business district. The previous headquarters were at the commonwealth Trading bank Limited. This is at Pitt Street and the Martin place.

The bank operates in the banking and financial sector. However, there are also other sector that the bank operates in including insurance and investments(Bessis, n.d.). By the end of 2016, the bank had over 45,000 employees working for it. Internally or locally the number is more than 25000 which makes it among the biggest employers in Australia with others including BHP Billiton.

The key personalities and executives in Commonwealth bank are

Catherine Livingstone- Chairman

Ian Narev- CEO and Managing Director

What are the regulatory framework/s affecting the multinational company?

From the conceptual point of view, the analysis of the role of multinationals in the world economy is relatively new. It appears in the second half of the 20th century and considers, as already stated, the multinationals as firms that operate in more from a country(Code of Federal Regulations Title 12, 2015). More broadly, and thus will be conceived in this essay, it is understood by MS firms controlling operations or assets that generate income in more than one country. Consequently, other types of expressions of this type of business are left aside, and in particular those that are often described as transnational.

In this sense, the multinational has as fundamental characteristic to make foreign investment in one of the two traditional types of the same: Investment Portfolio (IP) or Foreign Direct Investment (FDI). The first type of investment implies for the MS to be involved in the acquisition of foreign securities, without control over the management or direction of the company receiving the capital. In the second, the MS achieves mastery of the administration and management of the company; This can be achieved through the acquisition of an existing firm or by making a new investment that fully involves the MS in this operation.

As can be seen from the above, there is a wide range of forms of MS functioning. The same goes from the property of the subsidiary company with some interference of the parent box until the absolute partition of this and, consequently, the subordination of the subsidiary. It acquires different business figures, such as Joint Venture, Licensing, Franchising, Cartel, Strategic Alliances(Dunning, 2013). Due to the purpose of this essay, we will not delve into each of these forms and will consider the articulation of the MS (parent company) and its subsidiaries from the general perspective.

The political distance has to do with the gap between the country of origin of the MS and the receiving country in terms of institutional organization, form of government and legal order. It is assumed that, to the extent that the political regime is homogeneous between the countries that emit and receive the resources of the MS, the "liability" is reduced. The geographic distance is not only a physical problem, but has to do with infrastructure and transportation in the countries. Again countries with relatively similar infrastructures reduce the "costs" of MS. Income differences between countries, as well as those related to the supply chain and distribution channels, explain the economic distance. The cultural gap is explained by differences in language, religion, ethical beliefs and social norms.

The question to be asked, which allows us to characterize the MS process, has to do with what then moves MS to overcome this "liability" and to explore new scenarios (countries)? Jones (2005) considers several theories, but takes an open stance by the postulates of Dunning (1976), who points out three advantages that make it possible to compensate for the "debt" mentioned: Advantages of ownership, localization and internalization(Feldstein, Hines and Hubbard, 2007).

The advantages of ownership provide the host country with access to new products and processes and superior techniques of administration and organization. It facilitates privileged access to resources and raw materials, and enables the ability to exploit economies of scale.

Number of employees in and out of Australia and global headquarters

Multinational companies and the first stage of globalization in regulation

As already mentioned, the first phase of globalization was characterized by an important process of technical and institutional transformations, which generated a significant integration of factors, specifically labor and capital.

Double taxation of dividends

In this first phase of globalization, in the field of banking, the multinational occupied an important place in the international diffusion of industrial knowledge, in the development of productive and administrative processes and in product innovation. Banking companies grew rapidly between the end of the 19th century and the first three decades of the 20th century. This type of company had advantages in technology, organization and other factors, while the high transaction costs encouraged it to be exploited through direct investment, rather than with market-based agreements or the indirect appropriation of the administration and / Or address. Tariffs, patent legislation, market size and competitive behavior were important local determinants for the development of banks .

On the other hand, multinational service companies flourished in the first global economy. Commercial and transportation companies, banks, insurance and additional and complementary services to productive and commercial activity facilitated the expansion of global trade, built the infrastructure of the global economy and spread the technology(Machiraju, 2010).

As far as the role of governments is concerned, it must be said that in the first stage of globalization, they were largely prone to linking to their MS economies. The institutional and legislative frameworks, new to the treatment of this type of companies, favored an active participation of the MS in the local economies

Faced with the crisis of the initial stage of globalization presented between the First World War and the late 1940s; the MS changed its strategy. These companies concentrated on the national markets in which they operated, so that local subsidiaries or companies became increasingly independent from the parent company and sought to stimulate the creation and participation of the cartel. This was mainly produced in basic goods and natural resources and its objective was to stabilize markets. Although the amount of international trade was reduced, knowledge transfer between subsidiaries and matrices remained relatively stable.

Banking laws

A careful analysis of the experiences in the field of efficient use and the review of antecedents related to the subject make it possible to affirm two essential aspects that derive from this Guide for the formulation of the regulatory frameworks: first, that the measures of efficient use of the energy addressed, Far from being contradictory to the enormous energy needs of vast sectors of the continent's population, emphasize quality (efficiency); More than in quantity (sufficiency); Secondly, that in the light of the current challenges

Regulatory framework/s affecting the multinational company

Developing regulatory frameworks

The apparent insatiable consumer demand for increasingly fast financial services is requiring large investments in the next generation of fixed banking networks. This has increased uncertainty for all market participants(Smith, Walter and DeLong, 2012). The business plan for many of these new investments is still unclear, and the move to competition based on these new networks calls into question the business models established over the current networks

Government and regulatory policies must provide adequate incentives to achieve efficient levels of investment by all operators, relying on market forces where sufficient, and protecting the interests of consumers if necessary. The key challenge is to find a framework that balances the different objectives.

We advise on the design of regulatory policies that reflect local circumstances and also operators improving their understanding of the impact of regulatory policy on market outcomes. For example, we have worked with regulators who have sought to promote cross-platform investment in the field of next-generation networks, as well as those who have chosen to focus on service-level (or intra-platform) Suitable for the development of the network infrastructure. We have also been at the forefront in developing policies to encourage investment in mobile networks.

The purpose of the Reciprocal Payment and Credit Agreement is to minimize the effective transfer of currency between financial institutions of the participating countries and to support trade between the countries of the central banks that sign them. Accordingly, the respective participating central banks have established a system of multilateral clearing of credit and debit balances (including interest payments) through accounts in which the authorized transactions between Countries. The limit of the debit balance between each pair of participating banks is set by mutual agreement between them.
For the channeling of operations through the mechanism, residents are required to agree to pay their commitments, using the payment instruments defined in the Agreement, and that their processing is carried out through the " Authorized Institutions that central banks delegate for these purposes(Jachia and Nikonov, 2012).

Item 13 of the Manual of International Changes presents the regulations that are applied to these operations by the Bank of the Republic, indicating the eligible operations, accepted payment instruments, the requirements that must be met by Colombian authorized institutions and other Generalities related to this mechanism.
Payment instruments that are channeled through the Agreement must be issued and collected by institutions authorized by the respective central banks to operate through the mechanism in each of the countries.

During the last decades international agreements have been one of the disciplines that has developed the most, where it is sought to promote integration between the different actors of the international system so that its guidelines are the result of an equitable interaction in the making Of global decisions, thereby reversing the concentration of power in international organizations and stimulating concerted action by developing countries.

That is to say, the more capital is placed in a State, it implies that there is confidence in the return of resources, the legal framework is stable, inflation is controlled, country risk is minimal and finally is the way by which the government obtains Public revenues by applying the respective tax collection procedures.

In this sense, foreign direct investment has represented the fundamental axis for economic activity in most countries, thus achieving greater internalization, which has become an economic interdependence worldwide, this situation leads to To analyze such international relations, because agreements are being established only to improve financial situations in certain countries and not as growth strategies for them.

The present research seeks to carry out an economic and financial analysis of the integration agreements signed by Venezuela, specifically in the movements that take place in the economic and financial structures of the countries that integrate the agreements, as well as in the variations of their financial flows , Through situations related to investment alternatives, which can be associated with a series of net benefits or net outflows of money, depending on the decision and the level of uncertainty and risks that the investment generates.

 Integration Agreements: Solidary and Non-Competitive Relations
Economic integration (EI) consists of the elimination of economic frontiers between two or more economies. A border is a demarcation that limits the mobility of goods and services, and factors. On both sides the determination of prices and the quality of products and factors are only marginally influenced by the flows between the two sides.

The significance of EI is the increase in real or potential competition, engendered both by the appearance of competitors in the country or group of countries, and by the entrepreneurs themselves competing outside their economy (Jachia and Nikonov, 2012). Competition leads to lower prices, better quality and greater choice, as well as a general push for change (direction and intensity of innovation, and work habits).

When it comes to block integration, what is sought is to provide certain privileges to trade with neighboring or neighboring countries, establishing tariffs or external tariffs and different from non-member countries. International relations seek to strengthen national sovereignty and promote a multipolar world, diversifying the modalities of relationship and redefining the model of hemispheric security. In addition, economic integration processes are characterized by the elimination of economic barriers between the States concerned and by a special legal status, through which each State makes concessions from its sovereign exercise, in a way that facilitates the implementation of such processes

References:

Adeyeye, A. (2012). Corporate Social Responsibility of Multinational Corporations in Developing Countries. 1st ed. Cambridge: Cambridge University Press.

Bessis, J. (n.d.). Risk management in banking.

Blackstone, W. (n.d.). Commentaries on the laws of England.

Code of Federal Regulations Title 12. (2015). Natl Archives & Record Service.

Dunning, J. (2013). Multinationals. 1st ed. Routledge.

Feldstein, M., Hines, J. and Hubbard, R. (2007). The Effects of Taxation on Multinational Corporations. Chicago: The University of Chicago Press.

Jachia, L. and Nikonov, V. (2012). Risk management in regulatory frameworks. 1st ed. New York: United Nations.

Kind, H., Midelfart-Knarvik, K. and Schjelderup, G. (2004). Trade and multinationals. 1st ed. London: Centre for Economic Policy Research.

Machiraju, H. (2010). Merchant banking. New Delhi: New Age International.

Multinational Corporations in Political Environments. (2010). 1st ed. World Scientific Pub Co Inc.

Smith, R., Walter, I. and DeLong, G. (2012). Global banking. Oxford: Oxford University Press.