Firm growth and M&A ; Firm Internationalisation Essay

Firm growth and M&A ; Firm Internationalisation - Essay Example Internationalization is a multifaceted process. Before a firm can engage in going global, a firm must grow from within. In this context, the firm must be dominant in the home country. When a company has a competitive advantage, it suggests that it has strategies, which it can apply in the global market to survive. The firm is likely to face substantial challenges before it can achieve growth. Once the firm overcomes financial, managerial issues, and gain shareholder’s confidence, then, it can go global (Buckley et al., 2007). Owing to the intention of growing in the external market, the firm can utilize mergers, takeovers, or joint ventures. On the other hand, internationalization involves entering foreign markets. The firms may employ many strategies to enter the foreign markets. This may include licensing, exporting and foreign direct investment (FDIs). Licensing involves giving another company production rights to use the licensed material. The organisation given such rights (licensee) will have paid the other organisation giving the license (licensor) some payment. Exporting is another strategy that companies employ to enter foreign markets. Exporting involves selling of goods produced in the home market of the company to other markets in the world. On the other hand, FDIs involves the intention to obtain a long-term interest in a business, which operates in a different economy (Rugman, 1975). Companies can seek to serve goods or services through licensing. Licensing is the easiest way to enter international markets, and companies prefer this strategy owing to the minimal risk and low investment. Producing in the target market will help the company overcome trade barriers, such as potential cultural distance. This is possible because people in the target market can view the company as an outsider (Rugman and Verbeke, 2004).

Effects of Taxation on Macro & Micro economics Term Paper

Effects of Taxation on Macro & Micro economics - Term Paper Example Adam Smith, the famous father of economics was behind the classification of economics. This term paper seeks to evaluate the effect of taxation on both the Macro & Micro economics. Taxation is a key facet in any economy as suggested by Adam Smith in his work on Canons of Taxation .The paper also suggests the areas of further study, in which researchers and other scholars are invited to work on. The Overall the study of economic environment is divided into two halves, microeconomics and macroeconomics. The "Micro" originated from a Greek word. The word means small. Microeconomics entails the study of individual economic units. It is concern with particular individual elements in the economy. It thus gives a worm’s eye view of the economy."Macro" originated from Greek word whose meaning is large. Macroeconomics entails the study of global perspective of the economy. It combines the national or international economy concepts of economy e.g. Total Output, Income and Expenditure, U nemployment, Inflation Interest Rates and Balance of International Trade, etc and what economic policies a government can pursue to influence the conditions of the national economy. It thus gives a bird's eye-view of the economy (Gupta 409) This term paper will focus on taxation as a factor that affects both micro and macro-economic fields. The overall function of taxation is to provide funds to finance the activities of government and can be discussed in the following terms: First, Tax revenue is required to pay for goods and services which government provides: These could be public such as defence or merit goods such as education and medical services respectively. Second, a major function of taxation is to bring about some redistribution of income of income – progressive tax system. Third, Tax revenue may be used to pay interest on national debt. Fourth, Taxation may be used as a fiscal policy instrument to influence full employment levels. Fifth, Social welfare function: i s the use of tax to discourage the production of harmful commodities. Sixth,-Protection policy Function. The Seventh function is the economic stability goal by discouraging unnecessary expenditure (Marshall 87). Adam Smith was the first economist to study the principles of taxation and how they affect the economic environment. Adam Smith came up with principles of taxation; these are equity, certainty, economy and convenience. He came to believe that when a tax is imposed certain conditions must be fulfilled. These conditions are what he called canons of taxation (Marshall 324).These are: The Canon of Equity: This refers to the fairness of a tax system. It’s borne out of the feeling that â€Å"the states’ subjects should support the government in a proportionate way in regard to the revenue they derive’’ (Marshall 324). This means that every person should pay the tax based on the ability; they don t pay the amount. There are three approaches of achieving equity, namely: The Benefit Principle; under this approach, benefits derived from the consumption of goods and services are used as the basis for taxation. Thus people should be taxed according to the benefits they derive from the consumption of public goods. The disadvantage here is to determine the benefits and expenditure of each tax payer. First, The ability to pay: Here the argument is that citizens of a given country are differently endowed in wealth and earnings. Besides the government cannot raise enough funds to finance public expenditure if each and everyone was asked to pay the same amount of tax. So ability to pay should be the basis for taxation because the tax burden is distributed equitably. However, ability to pay is very difficult to effect because of