Identification of an MNC
The topic introduces the concepts of international trade and various legal and regulatory frameworks associated with the business functioning of BHP Billiton in Australia. The report covers the various aspects regulatory frameworks and legislations that may have affected the business functioning. The legislations proposed in the report will not only allow for maintaining the corporate standards but can also facilitate the business operations and processes and ensure proper management of trade relations between Australia and other nations (bhp.com 2018). There are different treaties, agreements that are also formed to ensure smooth flow of business operations along with better growth in economy and innovation.
The company that has been chosen here as the case study and has been operating in Australia is BHP Billiton in Australia. The industry within which the company operates is the metals and mining industry. The company is a trading entity of the BHP Billiton Limited and is a major Anglo-Australian multinational mining, petroleum and metals dual listed public company, which has its headquarters in Melbourne, Victoria in Australia. The company’s CEO is Andrew Stewart Mackenzie and has a revenue of more than 3828.5 crores USD. It is the second largest mining company in the whole world in terms of the revenue generated, i.e., 69.4 billion US dollars (Dunning 2013). The numbers of employees are 65000 and the operating and net incomes are US$11.753 billion and US$6.222 billion respectively.
According to Dunning (2013), there are various legislative frameworks including the laws, rules and regulations that are imposed and due to this, companies like BHP Billiton has subjected to 30 percent of the corporate tax. There are various legislative requirements and frameworks that are associated with the expansion of the project and it can also manage the approval and allow for permissions and licensing of various activities. Beamish (2013) argued that the legislative frameworks have considered the Australian, South Australian and Northern Territory Government requirements, which can assist in identifying the various legislations, policies, laws, standards and codes of practices that can create an impact on the expansion of the project against the local and regional statutory planning instruments (Beamish 2013). The legislative frameworks have also assisted in managing the environmental approval processes, which include consultation of the process of EIS along with the identification of various scopes and opportunities required to make formal submissions to the Government during the public exhibitions.
The legislative frameworks facilitate the Government assessment processes that are integrated with the previous collaborative process for ensuring expansion of the proposed project with ease and effectiveness. Vagts yet al. (2015) stated about the major legislative frameworks including the Environment Protection and Biodiversity Protection Act, Ratification Act, Development Act and Darwin Port Corporation Act. The actions undertaken involved the Commonwealth land for protecting the environment and control the various provisions related to the project expansion (Vagts yet al. 2015). The guiding principles of sustainable development fell under the EPBC Act for ensuring that the environment is protected while managing the business operations and at the same time, foster the development of new products and services. There are other relevant legislations of Government proposed for influencing the decision making process, furthermore ensure that the regulatory frameworks safety regulations Act, Customs Act, are aligned with the corporate goals and objectives (Sornarajah 2017).
Identification of various legislative regulatory frameworks affecting BHP Billiton
Few other legislative regulatory frameworks that affect the MNC are Aviation Transport Security Act 2004, Australian Radiation Protection and Nuclear Safety Act 1998, Civil Aviation Safety Regulations Act, Energy Efficiency Opportunities Act 2006, Defense Act, Environmental Protection Act 1981. According to Kirton and Trebilcock (2017), the Aviation Transport Security Act 2004 is enabled to develop a regulatory framework and safeguard the business against unlawful or unethical practices and establish minimum security requirements for the civil aviation in Australia (Kirton and Trebilcock 2017). This regulatory framework provided approval for the security program managed for keeping the Olympic dam expansion project successful while the Australian Radiation Protection and Nuclear Safety Act ensured that BHP Billiton Limited, Australia regulate the activities related to radiation and protect the health and safety of people and at the same time, keep the environment protected and safe from harmful effects. BHP holds the licenses under Division 2, which is part 5 of the Act and it has helped in controlling materials, machineries, equipments and facilities. The Customs Act enabled proper management of import and export of goods considering the permission granted for exporting the nuclear materials such as the uranium oxide and concentrates from Australia (Subedi 2016). The Energy Efficiency Opportunities Act improved the level of identification of energy efficient techniques to manage lesser costs incurred during nuclear project implementation. BHP, with the implementation of this legislative regulatory framework, made sure to assess the energy efficient procedures and reported those publicly based on the outcomes of the assessment of resources and components available. The Environment Protection Act enabled BHP to dump the wastes properly and even manage incineration to control the waste materials to keep the environment safe and healthy (McGovern 2018).
According to the National Electricity Law and National Electricity rules, BHP Billiton controlled the system for transmission of electricity and even managed the power and energy generation plants considering registration as a network service provider. On the other hand, the multinational company to prevent increase in harmful gases and greenhouse gases generation, maintained reports about the greenhouse gases emissions along with the production and consumption of energy. Hossain (2013) argued that the Navigation Act helped in regulating the transport of materials through waterways and at the same time, managed competent authority approval and secured the transportation activities with the involvement of Australian Maritime safety Authority (Hossain 2013). Based on the Australian Consumer law, there are various laws, rules and regulations on the unfair contract terms, consumer rights, laws regarding product safety, consumer agreements and penalties that created pressure on BHP’s operations. The law ensured management of subcontracts and BHP worked with the trade unions and provided the local subcontractors with priority. The consumer laws though limited the management of business operations and allowed BHP to deliver high quality products and services to the customers without any discrimination (XU et al. 2013).
Being one of the major mining companies in Australia, the Government of Australia developed statutory framework for maintaining proper laws, rules and regulations and regulate the mining corporations product safety and information standards. As stated by Cavusgil et al. (2014), the strict laws and rules helped BHP to appoint reputed IT experts who can design the standards and ensured that flawless products are delivered to the customers in the different market segments. The Australian mining industry is competitive and thus the company investigates the various processes with primary focus on meeting the required standards set by the Australian Competition and Consumer Commission Act. The MNC complied with the corporate social responsibilities by not only protecting the environment, but also by following the strict legislations, Governmental laws, rules and regulations needed to maintain a healthy and safe workplace (Cavusgil et al. 2014). The Australian Government assisted the company to set precautionary measures and protect the employees from any kinds of hazards within the workplace. The management of health and safety training, according to the Workplace Safety laws, furthermore enhanced the level of safety of the workers and maintained high morale of workers.
The formation of treaties and conventions allowed for the development of various international laws, rules, regulations and standards maintained to manage successful global business. There are both bilateral and multilateral treaties, where two and more than two nations are considered as the contracting parties. Based on the information presented by Picciotto and Mayne (2016), the agreements are established for developing a good environment and manage the international relations with ease and effectiveness. The treaties are signed and agreed between the two parties to develop global rules and regulations, furthermore create a positive impact on the products and services delivered by BHP Billiton to its customers. There are bilateral agreements between Australia and other nations like Thailand, Turkey, Poland, Denmark, etc. The Australian Government, with its bilateral agreement with the other companies has facilitated the access to exemption of tax and ensured that the market entry requirements are met properly (Picciotto and Mayne 2016). There were many companies in Australia that faced lesser trade barriers including the import tariffs and import shares, which further helped in transferring the products and services from the foreign country to the different markets in Australia.
One such example could be the agreement of free trade area between Australia and ASEAN, which allowed the other foreign countries and the organizations present there to get a good place in the market. This directly impacted the business operations positively and increased the revenue generation. Eberlein et al. (2014) explained about another agreement was formed between the Republic of Korea and Australia for the main purpose of easing down the accessibility for the organizations to the market. This would also create positive mindsets among the shareholders and allow them to make investments. It also created convenience for the organizations in Korea to start and manage the business operations in Australia through cost savings and even exempt from the import duties to the MNCs. The multilateral agreements with the member nations helped in reducing the cost of products and services provided by the foreign corporations in Australia (Eberlein et al. 2014). The sustainable development was also promoted and with the multilateral agreement between Australia and New Zealand, Free Trade was possible. It has facilitated the creation of a different market share for the members present in the world economy and due to this, the prices of products and services have been lowered as well, thus kept the customers satisfied as well. The multilateral agreement considers the contract signing between the two parties, i.e., the nations for ensuring smooth flow of business operations and processes (Too and Weaver 2014).
There has been a major project related to the expansion of Olympic dam and the configuration of the project has been modified with time for maximizing the performance of the environment, furthermore improve the economic return and operational effectiveness. To manage the project properly, the Australian and South Australian Government’s approval were required, which could assist in utilizing the Port of Darwin for exporting the copper concentrate that contained various components required to manage the project effectively (bhp.com 2018). According to Dunoff, Ratner and Wippman (2015), the general agreement on trade further created more scopes and opportunities for the global competition in the Australian market and it created pressure over the Australian companies, which might be a major issue for gaining a sustainable position in the marketplace. To overcome these kinds of issues and critical situations, the companies could make necessary changes to the systems and get involved in joint treaty agreements for completing the transactions integrated in the various business modules. Often the trade barriers and low customs duties hinder the proper management and flow of goods and services from one country to another, which could also affect the transportation process and result in high priced products (Dunoff, Ratner and Wippman 2015). This would not only make the customers unsatisfied, but could even result in sales decline and lack of profit in business.
One such example could be the agreements made by BHP Billiton with the three First Nations present in the Treaty No. 4 Territory of Saskatchewan, Canada. It has been managed by signing the agreement of Opportunities during the Jansen Project. Another agreement is formed with the Potash Industry to make sure that the people present in the First Nations can get a good position and establish their present at Jansen. Due to this, the company has remained committed to the sustainable measures, which allowed the organization to become socially response by benefiting the people within the community and at the same time, kept the environment healthy and safe (Bradley and Goldsmith 2017). The new agreement not only created innovative approaches to maintain environmental sustainability, but also improved the lives of people and the community for them to live properly in the future. Bradley and Goldsmith (2017) agreed that the free trade agreements were supported by BHP to remove the restrictions regarding the ban of oil export. Being one of the largest manufacturers of steel making materials, the company has its operations in US with a number of assets found in the onshore of Texas and Gulf of Mexico. The Trans Pacific Partnership opened new markets for the creation of jobs, which facilitated the growth in economy and fostered innovation all throughout (Dunning 2013).
Conclusion
The report demonstrated the various important aspects of international trade and discussed about the legislations and regulatory frameworks that affected the business functioning. Few of the legislative regulatory frameworks included Environment Protection Act, Aviation Transport Security Act, Australian Radiation Protection and Nuclear Safety Act, etc. while the trade agreements and treaties were signed to form good relationships between the nations. The Free Trade agreement and agreement based on the Treaty No. 4 of Saskatchewan, Canada further contributed to the creation of employment scopes and promoted innovation to ensure proper business functioning and higher revenue generation too for BHP, Australia.
References
Beamish, P., 2013. Multinational joint ventures in developing countries (RLE international business). Routledge.
bhp.com. (2018). BHP | A leading global resources company. [online] Available at: https://www.bhp.com/ [Accessed 31 Aug. 2018].
Bradley, C.A. and Goldsmith, J.L., 2017. Foreign Relations Law: Cases and Materials. Wolters Kluwer law & business.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Dunning, J.H., 2013. International Production and the Multinational Enterprise (RLE International Business). Routledge.
Dunoff, J.L., Ratner, S.R. and Wippman, D., 2015. International Law: Norms, Actors, Process. Wolters Kluwer Law & Business.
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.
Hossain, K. ed., 2013. Legal Aspects of the New International Economic Order. Bloomsbury Publishing.
Kirton, J.J. and Trebilcock, M.J., 2017. Hard choices, soft law: Voluntary standards in global trade, environment and social governance. Routledge.
McGovern, E., 2018. International trade regulation (Vol. 2). Globefield Press.
Picciotto, S. and Mayne, R. eds., 2016. Regulating international business: beyond liberalization. Springer.
Sornarajah, M., 2017. The international law on foreign investment. Cambridge University Press.
Subedi, S.P., 2016. International investment law: reconciling policy and principle. Bloomsbury Publishing.
Too, E.G. and Weaver, P., 2014. The management of project management: A conceptual framework for project governance. International Journal of Project Management, 32(8), pp.1382-1394.
Vagts, D.F., Koh, H., Dodge, W.S. and Buxbaum, H.L., 2015. Transnational business problems. West Academic.
XU, H., XU, S.R. and WANG, R.Z., 2014. Internationalization transformation and innovative paths of enterprise based on embedded global value chain: case study on six international trade enterprises. Studies in Science of Science, 1, p.011.
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