Home Grown Business

Benefits of home grown developed products

• Domestic producers can take advantage of local suppliers to ensure a dependable level of quality and supply.

• The domestic consumers, their demands and preferences are understood.

• Distribution channels are established and easier to control.

• A successful domestic business has an established foundation for international entry.

The role of Ethics

• Companies are expected to act ethically. Ethics are the way a company and its staff interpret and comply with laws and regulations.

• Companies are expected to be good global citizens and use their economic and social influence to raise living standards domestically and globally.

• An ethical dilemma arises when companies must choose between staying home grown or going global.

Environmental responsibility

• Sustainability is about balancing profit with protecting the environment.

• A company may have a triple bottom line, where they report in the profit, environmental impact and contribution the society.

• Corporate ethics relate to how management chooses between what is best for the company and what is best for the environment.

• Reducing waste and resource use can reduce costs and be good for business.

• Staff may be more loyal to a company that is environmentally responsible.

• A company can build a positive public image if they manage their environmental impact.

• Being proactive can help a company avoid strict regulations from governments.
  

Outsourcing and offshore labour

• Outsourcing can reduce costs and increase profitability.

• Outsourcing: contracting a third party to perform tasks on behalf of your company (e.g. outsourcing your call centre, IT support, manufacturing etc.)

• Ethical issues:

• Outsourcing labour may be in countries that have poor protections for workers pay, health and safety and the environment.

• The ethical dilemma is whether to outsource to the lower cost country to increase profit while workers there are being exploited.

Offshore Production

Offshoring can reduce costs and increase profitability.

• Offshoring: moving your own production to a lower-cost country (e.g. opening a branch of your business in that country)

• Ethical issue: ethics also involve the decision to replace domestic jobs with offshore labour.

Host Country and home government incentives for international trade

State and Federal governments encourage international trade by providing support and incentives to Australian businesses. They also negotiate trade agreements with other countries.

Austrade is a Federal agency that provides information and advice to assist Australian companies to expand overseas.

• Grants

• Taxation

Grants - make sure data is up to date

Grants
Grants are provided as payments/reimbursements, to incentivize international trade.

• Austrade administers the Export Market Development Grant (EMDG) scheme for new and existing international businesses.

• Free Trade Agreement Market Entry (FTA-ME) Grant reimburse up to 50% of export expenses.

(note: businesses that have an income of less than $50 million per year and incur at least $15,000 of eligible export expenses are eligible.)

• Special grants during crisis/pandemics can be used in the short term

Export Market Development Grant (EMDG)

Closer look at Export Market Development Grant (EMDG): scheme for new and existing international businesses.

• Tier 1: up to $30k a year for the first 2 years

  • First time exports

• Tier 2: up to $50k a year for established exporters

  • Existing exports (looking to expand)

• Tier 3: up to $80k a year for high level expansion

  • New key markets ( Aus company that is the first electric car company in aus trying to compete with Tesla - America)

Eligible Activities: overseas representation, marketing visits, trade fairs/seminars, free samples, and intellectual property registration.

Taxation - Encourages to expand and for companies to come here

• Taxation credits/incentives are available to reduce the tax bill companies pay, to incentivize international trade.

• Foreign Income Tax Offsets (FITOs) are available to avoid double taxation in respect of foreign tax paid on income or gains that are assessable in Australia.

• Other examples include :

  • Eligible companies with a turnover of less than $20 million can receive a tax offsets for their research and development.

  • Digital Games Tax Offset (30%)

  • Film and Production offsets (16.5-40%)

Tax incentives- example for test

• Exports of goods and services from Australia are generally GST-free which can help keep pricing competitive. (Aus business makes Aus products here and then plans to sell it overseas)

  • Within 60 days of payment or invoice, whichever comes first

• Australia has tax treaties with more than 40 countries to minimize double taxation, and also have guidelines to limit tax evasion