Multinational Company Operating In Australia: BASF Essay

Question 1: identification of multinational company (MNC) operating in Australia with brief description of company and key data.

• Effective Executive Summary or Introduction
• Gives a brief yet complete snap shot of the company’s operations, with emphasis on: the industry it operates in; number of staff in Australia and globally; and location of global headquarters.
• Appropriate evaluation and synthesis for the specific company chosen and provided complete data required on the company
• Did not simply copy and paste the above information from external sources (ex. company annual report) but presents information in an organised, logical and easy to understand manner.

Question 2: Identification of regulatory framework/s affecting the chosen MNC and discussion of why and how it affects the company.

• Describes comprehensively and in detail the specific regulatory environment in which the chosen MNC operates in Australia.
• Demonstrates in-depth understanding of the specific regulatory frameworks within that industry that affects the MNCs operations in Australia.
• Gives concrete examples of Australian laws and regulations that impact the MNCs operations in Australia and succinctly explains any impacts identified.
• Did not merely give a general, “copy-paste” description of the regulatory environment within an industry and did not attempt to link regulatory frameworks to the MNCs Australian operations.
• Makes no attempt to contextualize the MNCs operations with the specific industry in which it operates and in light of laws and regulations relevant to that industry.

The Legal and Legislative Frameworks Affecting BASF

The legal characteristics of an international business play a significant role in the procedure of determining the success of the business (Haidar, 2012). The globalization has increased the number of multinational enterprises that operates throughout the world and BASF which operates in the chemicals industry with their headquarters based in Ludwigshafen in Germany incorporated in the year 1865 before 153 years, has number of legal regulations that guides the organization. BASF has their business established in almost all over the world in 80 countries and Australia is one of them along with other continents that include Asia, Africa, America and Europe. Though BASF expanded in only 80 countries through joint venture and subsidiaries, there are 190 countries where the products of the organization are supplied in various industries. BASF has rich history in Australia and have operated for 90 years in the country with 12 sites of production and with 501 employees as of the data available from their Australian website, though the company employs more than 115,400 employees in their global operations (www.basf.com, 2018).

For an organization that operates in a business environment, there are a few legal and legislative frameworks that can affect the organization and this can either hinder the organization or can also help in the growth of the organization as well (Eberlein et al., 2014). For BASF, there are a few legislative frameworks that affect the organization as cited below:

Chemical industry antitrust laws:

There are many people in Australia that are concerned regarding the chemicals that are present in the products in the current days and this is due to the reason that chemical can impact the health of a person of the environment as well. There are a few rules and regulations that have been set by the government of Australia that guides the chemicals supply of the country and in order to conduct their business in Australia, BASF should comply with these rules. It is required that the chemical companies that are working in the country should register their chemicals so that the duplication of the products can be minimized and this can also help in the process of avoidance of unnecessary burdens upon the industry (Kent, 2012). The regulations of the chemical industry cover the medical and the pharmaceuticals, industry related chemicals and also the chemicals that are used for domestic purpose, scheduling poisons, transportation of dangerous products, management of chemicals in environment, veterinary and agricultural chemicals, safety maintenance in the workplace and so on (Rae, 2016).

There are a few key industries in which BASF supplies their chemicals in Australian and those include the agricultural industry, construction, mining as well as manufacturing sectors. Thus, BASF should comply with the rules of Australian government in order to conduct their business in the country and should provide protection to the employees of the organization form the hazardous effects of chemicals and should provide them with equipments that can help in the process of protecting the employees. Moreover, for transporting the chemicals from warehouse to different buyers of the products, safety transportation process should be used by BASF as well. Furthermore, chemicals should not be exposed in the open environment which can cause hazards to the environment and individuals or any form of living things and lastly, BASF should also keep in mind that they should conduct fair trading of the chemicals which is mandatory as per the government of the country as well as should follow the consumer protection laws of Australia.

The Role of Antitrust Laws in the Chemical Industry

Discrimination Laws:

This is another law that BASF should keep in mind in order to conduct the business in Australia and the law states that there should not be any unlawful discrimination based upon the sex, age, religion, ethnicity, gender and so on. There are a few laws that are included in the Australian anti-discrimination laws and those include Sex Discrimination Act of 1984 which states that any individual at workplace should not be discriminated upon the basis of his/her gender (Thornton, 2013). Also, Age Discrimination Act of 2004 states that age should not be the boundary for any worker, until and unless he/she is capable to perform the work. Disability discrimination act of 1992 states that no disable persons should be discriminated by an organization or its management or staffs and racial discrimination act of 1975 states that no person should be discriminated based upon their race.

Thus, in order to maintain the business in Australia, BASF should follow these laws strictly which can help the management of the organization to stop discrimination and follows the rules and regulations of Australia.

Employment Laws:

Employment laws also forms a significant part of the legal system of operating in Australia and BASF should comply with the employment laws of the country in order to operate in Australia. Within this law, the maximum weekly hours that an employee can be kept at workplace by the employers has been mentioned and also the amount of annual leaves that the employee can avail (Twomey, 2012). Moreover, the public holidays that the employees are pertained to and parental leaves are also a part of the employment law of Australia.

Thus, in order to operate in Australia, following these laws are a significant part of the organization and disobeying these laws can bring the organization towards a legal trouble.

Health and Safety Laws:

The latest health and safety law in Australia was amended in the year 2017 and the law states that the employers are responsible for providing a safe environment at the workplace which can promote the health of the employees and also that the health of the employees can be protected.

Being in a chemical industry, BASF employees are exposed to chemicals most of the times and thus this law is required to be followed by BASF by providing the employees with safety equipments and gadgets which can protect their health and follow the regulations set by the Australian government.

Data Protection Laws:

The data protection act of Australia is contained under the privacy laws of the country and as per this law, it has been stated that the employee data should be protected by the employers at any cost as losing these data might cause harm to the employees (Howells et al., 2017). Data breach can bring in legal trouble for the organization and thus the protection of the employee data is necessary for BASF due to the fact that it can increase the sustainability of the organization and also help in avoidance of legal trouble.

The Australian Anti-Discrimination Laws Affecting BASF

The services or the products of an organization can be affected by the conventions, agreements and the treaties that have been made between two countries and this can affect the business of the organization as well along with the sales and the revenue gained from the products (Terpstra et al., 2012). There are a few treaties, conventions and agreements that can affect BASF products in Australia are cited below:

Germany and Australia Tax Treaty:

Since 13^th December, 2016, the tax treaty between the Australia and Germany came into force which has affected BASF and this has helped in changing the commercial exercises and the present treaty policies of the country as well as the domestic system for tax as well. This treaty has minimized the avoidance of tax by the business, thus BASF will have no scope to avoid any kind of tax in Australia and the corporate tax rate of Australia being as high as 30%, this has reduced the amount of revenue making of the organization (Maurer et al., 2017). But this has created a good environment for the business to pay taxes and act in a legal way by following the regulations of the country.

This treaty has also helped the government of the country to collect the debts form the businesses and has also created a healthy environment for tax payment in the country. Tax system integrity has been built with the help of this treaty and this has also improved the amount of tax transparency.

Germany and Australia Air Treaty:

This treaty was signed in 22^nd May in the year 1996 and while this treaty was signed, it had opened new routes between the airports of Germany and Australia which has created new business routes and demand for the German products and services in Australia and vice versa (Bartlik, 2016). With more flights from various airports from Germany carrying goods and cargos to Australia, BASF enjoys this facility since then and this treaty has helped them to carry their products to Australia and also has increased the amount of their innovation in the country. Air treaty between Australia and Germany has also helped in the process of carrying officials for the purpose of meeting in order to develop new products by BASF in Australia which are in demand and this has helped in the development of the products demand of BASF in the country. Also, this treaty has enabled in any combination of air travel through any routes from Germany to Australia and this has increased in carrying people from all over Germany to Australia for the official meting which has increased the demand of the BASF products in Australia.

Trade Agreement between Germany and Australia and agreed Minute:

This agreement came into act in the year 1995 in Commonwealth of Australia and was an act formed between the government of Germany and Australia. This act states that the parties or the business from the country that will contract for trade in other country will have to offer some benefits to the customers and the consumers of the other country and this can help in the process of diversifying the offerings as well as strengthen the link of trade and relation between the two countries. Offering benefits to the customers of the country by charging a low price of the finished goods or raw materials can help the company to exempt the freight and the cargo charges at the airport and also exportation and importation of goods can be done at free of cost as per this treaty (Johnson et al., 2012). There are also a few rules and regulations that will be there linked with the importation and the exportation of the goods and cargos. Also, the party that will be offering their products to the other countries will receive favour form the government while importing their products or raw materials from other countries and requirements, regulations and the laws will vary for them as set by the government of country while signing this treaty. Moreover, there will be special assistance received during the distribution of the goods from the government and also for intention to sale or purchase new materials for the operations purpose.

BASF being a company of Germany and operating in Australia will receive these benefits and will be able to offer a lower price for their products in the country. They will also get import and carriage and cargo charges at the airport free of cost when they will import products or raw materials from their country. The importation as well as exportation of the products and the cargos can also be done by BASF at free of cost which is as per the rules of this treaty and thus BASF will receive favour in terms of the products that they sell in Australia.

Conclusion:

From the discussion above, it can be concluded that legal and regulatory aspect of the business plays a significant role in the business environment. Also, when the organization operates in a global environment and is a global player, the legal and regulatory frameworks are stricter in nature and avoiding these regulatory frameworks of disobeying the laws can bring in legal trouble for the business (El Kharbili et al., 2008). Thus following the legal and the regulatory framework can be a significant part of the business to maintain their reputation and also sometimes following the regulatory frameworks can help in the process of increasing the sales and revenue.

As stated, following the legal and the regulatory ethics can help BASF to increase their sales with the help of the treaties and conventions and also following the legislative frameworks in Australia can help in avoiding the legal troubles as well.

References:

Bartlik, M., 2016. The impact of EU law on the regulation of international air transportation. Routledge.

Eberlein, B., Abbott, K.W., Black, J., Meidinger, E. and Wood, S., 2014. Transnational business governance interactions: Conceptualization and framework for analysis. Regulation & Governance, 8(1), pp.1-21.

El Kharbili, M., Stein, S., Markovic, I. and Pulvermüller, E., 2008. Towards a framework for semantic business process compliance management. Proceedings of GRCIS, 2008.

Haidar, J.I., 2012. The impact of business regulatory reforms on economic growth. Journal of the Japanese and international economies, 26(3), pp.285-307.

Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.

Johnson, R.C. and Noguera, G., 2012. Fragmentation and trade in value added over four decades (No. w18186). National Bureau of Economic Research.

Kent, J.A. ed., 2012. Riegel's handbook of industrial chemistry. Springer Science & Business Media.

Maurer, L., Port, C., Roth, T. and Walker, J., 2017. A Brave New Post-BEPS World: New Double Tax Treaty Between Germany and Australia Implements BEPS Measures. Intertax, 45(4), pp.310-321.

Rae, I.D., 2016. Letter from Melbourne: The wild colonial chemist/mountaineer. Chemistry in Australia, (Apr 2016), p.41.

Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.

Thornton, M., 2013. Sex Discrimination in uncertain times (p. 379). ANU Press.

Twomey, D., 2012. Labor and Employment Law: Text & Cases. Cengage Learning.

www.basf.com. (2018). We create chemistry for a sustainable future. [online] Available at: https://www.basf.com/au/en/company/about-us.html [Accessed 4 Sep. 2018].