Unformatted text preview: ProFile 3 UNIT 9 International business
BR AIN DR AIN
For many decades, before it achieved its ‘Celtic
Tiger’ status, citizens of the Irish Republic
worked abroad, notably in Britain and the
United States. Typically in these scenarios, the
folks back home relied on the foreign
remittances from overseas family members, due
to high unemployment at home. Ireland has
now turned this situation around, and people
are emigrating there to work and to further
their careers in such areas as high-tech
Ireland is not an isolated case. Frequently, it is
the best and the brightest who leave their
homelands. This brain drain includes research
scientists and doctors lured by better pay,
working conditions and research opportunities
elsewhere. British universities are now under
intense pressure to keep their academic staff,
who can find numerous career openings with
higher pay in the US higher education sector.
California has also welcomed thousands of
Indian engineers in recent years. In the US such
workers find it comparatively easy to win the
coveted ‘green card’: others may win one in a
lucky lottery or simply choose to work illegally.
An unattractive aspect of the brain drain is that
developing countries are often deprived of the
skills of doctors and nurses who are assured of a
better life overseas.
SETTING UP OVERSEAS
It is not just staff who seek opportunities
overseas: more and more companies are doing
the same. The risk is that companies which
outsource production are often criticized for
exporting jobs. However, the home country’s
loss is a foreign country’s gain. Winning
overseas investment can see some unseemly
behaviour from all parties with multinationals
playing developing countries off against each
other. Developed European countries compete
ferociously for the privilege of hosting
operations such as a Japanese car plant on their
soil with all the new employment that entails.
See the ProFile Student’s site: www.oup.com/elt/profile Governments and local authorities may offer all
kinds of subsidies, tax breaks, and incentives to
beat their rivals. Many of these advantages will be
part of an economic development zone set up in
LEVELS OF RISK
When opening plants or branches in foreign
countries, there are four main categories of risk.
• Financial: Will the project be financially
viable? In addition, setting up a plant overseas
will add a new layer of complexity to its
management and administration. There will
inevitably be differences in taxation, and very
often currency. There are benefits too.
Multinational companies commonly show
their profits in countries with the lowest rates
of corporation tax and taxes on profits.
• Political: Companies need to take a long cool
look at the political situation of possible
countries. What is the level of corruption in
the country – how easy is it to get things done?
Countries may have insurgency problems
which make it difficult for foreigners to work
there without being kidnapped or worse. In
some countries there is the risk that the
industry could be privatized if it is exploiting
local raw materials or mineral wealth.
• Geographical: Companies thinking of
establishing themselves abroad should ask the
following: is the site of the projected plant
susceptible to natural disasters such as
flooding, earthquake, or volcanic activity?
What logistical problems will the situation of
the plant produce? What are the ports,
airports, and roads like?
• Reputational: Companies damage themselves
by making poor choices about outsourcing
production to countries where there is
widespread use of sweated or child labour.
Many companies set a benchmark for the
treatment of their workers which is the
standard set by local law, but this may not
reflect the standards expected in the home
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- Spring '10
- Corporation, AIN DR AIN