Category: Globalization

U.S. Taxes: Try a carrot instead of a stick

Posted by MIT Sloan Executive Education - 26 days ago

In late September, the U.S. Treasury Department proposed new regulations to help curb corporate inversions—the merging of a U.S.-based company with a foreign company so that the foreign company becomes the parent of the combined operations, resulting in significant tax benefits.

Inversions have captured headlines and mindshare since late August, when Burger King Worldwide merged with the Canadian chain Tim Hortons. Once joined, the company will be the world’s largest quick service restaurant company. The firm will also be headquartered in Canada, which has a lower tax rate than the U.S. While Burger King’s expected inversion brought the issue into the general consciousness, many other companies have similar stories. According to Reuters, 76 U.S. corporations have completed inversions since 1983; 47 of those deals have occurred since 2004. Some of these companies are obscure, others well known. The name brands that have essentially relocated as a result of inversions include Fruit of the Loom, Seagate Technology, Accenture, PricewaterhouseCoopers Consulting, Herbalife International, Tyco Electronics, Covidien, and Medtronic 

MIT Sloan Professor of Accounting Michelle Hanlon recently surveyed 600 tax executives to better understand the impact of U.S. tax policy on corporate decisions about investment location and profit repatriation. Hanlon’s research showed that both the tax and financial accounting effects lead to greater foreign direct investment by U.S. companies and lower repatriation [of taxable funds.]

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The need for supply chain flexibility

Posted by MIT Sloan Executive Education - 5 months ago

According to David Simchi-Levi, Professor of Engineering Systems at MIT Sloan, “a growing number of U.S. executives are moving some production operations back from overseas.” While there are a great number of factors driving that trend, one is the need for supply chain flexibility. Today’s global supply chain presents a significant amount of risk, mostly due to the combination of geographically diverse supply chains and Just-in-time (JIT) manufacturing that results in low inventory levels. 

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How to manage effectively in the face of risk

Posted by MIT Sloan Executive Education - 9 months and 7 days ago

With globalization comes increased risk and uncertainty in nations, environments, communities, and businesses. As growing complexity makes it more difficult to determine the source of risk in these complex systems, it also reveals the interdependent nature of risk within a greater ecosystem. New studies show the best way to manage an organization in the face of risk is to build resiliency—the ability to withstand, recover from, and maintain function through a crisis.  But in order to manage risk effectively, resiliency must be built into the entire interrelated system of an organization.

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Business success in the U.S. doesn’t guarantee international success

Posted by MIT Sloan Executive Education - 11 months ago

Today, companies large and small are expanding their operations globally for a variety of reasons: lower labor costs, the possibility of a skilled talent pool, and the anticipation of newer, more lucrative markets. However, just because a company is successful stateside doesn’t mean that success will automatically translate overseas.

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Mobile money on the rise

Posted by MIT Sloan Executive Education - 1 year ago

While the developed world continues trudging through a slow economic recovery, parts of the developing world’s economy are being rapidly transformed by a new form of disruptive technology: mobile money. Mobile money—a cash management service available on mobile phones or the internet—is having more than a moment; it’s making a profound impact, powerful enough to shift economies across country borders. Studying the impact of mobile money in its most successful beta launch to date in Kenya can teach us a lot about the impact and adoption of disruptive innovations within a country and beyond its borders. 

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