PICA As A Multinational Corporation REVISED
PICA As A Multinational Corporation REVISED
PICA As A Multinational Corporation REVISED
Contents
Abstract.......................................................................................................................................................2
1. Introduction.........................................................................................................................................4
2. The readiness of PICA to go global...................................................................................................5
2.1. The Factors and Issues Involved in Becoming an MNC................................................................6
2.1.1. Currency Conversion Questions...............................................................................................7
2.1.2. Taxes........................................................................................................................................7
2.1.3. Market Seeking........................................................................................................................7
2.1.4. Regulation................................................................................................................................7
3. Suitable entry mode for PICA as an MNC.................................................................................10
3.1. Alternative Entry Modes for PICA Corporation....................................................................11
3.1.1. International Joint Ventures..................................................................................................11
3.1.2. International licensing...........................................................................................................12
3.1.3. Franchising.............................................................................................................................12
5.1. Limitations to Explicit Freedom.................................................................................................15
5.2. Currency Exchange and Inflation Rates......................................................................................15
6. Conclusion.....................................................................................................................................17
References.............................................................................................................................................18
Abstract
1
Transforming a nationwide company into a multinational corporation is associated with
significant benefits that promote local operations, productivity, performance, and higher
profitability (Andrews et al., 2022). As a result, recent international reports have recorded an
increased number of companies entering the global market. This report offers a comprehensive
analysis of the Prudential Investment Company of Australia Pty Ltd (PICA Group). This is an
Australian-based foreign-owned private company that derives its revenue through the provision
of strata management and professional property services and acts as a mercantile agency
The analysis has primarily focused on evaluating the readiness of the organisation to go
multinational, the best entry modes, and the main issues and factors surrounding the host country
(Ireland). Based on the study findings, PICA is fully equipped to become a multinational
corporation, with Dublin, Ireland, as the ideal overseas target location for its first external
venture. Ireland shares cultural similarities with Australia, as evidenced by Hofstede’s six
cultural dimensions (Hofstede Insights, 2022). Also, one of the two joint owners of the PICA
Group is Fexco International Limited, which is based in Ireland and may be able to help establish
Company Profile, 2022). Another advantage of Ireland is that PICA may restructure itself to take
Based on the analysis, the acquisition entry method will be the preferred entry mode in
Ireland since this method is a fast entry, will take over a known company with an established
operation and can create an immediate cash flow. Furthermore, Australia's strata management is
world-class. It is being implemented in other nations such as Dubai, Abu Dhabi, Canada, and the
Philippines, where the need for such services is vital (“The strata collective,” 2019). It may be
2
used in other nations, including Ireland, with some alterations according to local legislation.
Alternative entry modes considered include joint ventures, franchising, and licensing. PICA
Group knows that social inclusion encompasses more than real estate, assets, and possessions.
Practical community living involves taking care of other individuals as well. The group supports
individuals and their properties with managerial services and technology platforms to improve
3
1. Introduction
This report aims to analyse PICA, an Australian company that deals with service
provision and enhancing community living. Since its establishment, the firm has been
performing exceptionally and aims to expand its operations overseas to become a multinational
company (MNC). The analysis has identified prospective international regions to expand its
operations which will help transform the company into a multinational corporation (Avdeeva et
al., 2019). The PICA Group is jointly owned by Fexco International Limited and Nippon Kanzai
company. Therefore, the analysis focuses on opening a new branch in Ireland, Dublin, to extend
its geographical location, market share, and service provision across international regions.
Ireland is likely one of the ideal locations for PICA to expand its operations since it is culturally
establishing a presence in the nation (Jordaan et al., 2020). PICA might also take advantage of
Ireland's status as a tax shelter by moving its headquarters there ("About Us | PICA Group",
2022). The first and second section has discussed the readiness of the PICA organisation to go
international while analysing the main issues and factors revolving around the entire process.
This entails the evaluation of benefits and weaknesses that results from the incorporation of
PICA as a multinational corporation in Ireland. The third section covers the best and alternative
entry modes for PICA in Ireland. At the same time, the fourth and five-part provide an analysis
of the factors that affect the entry mode and issues revolving around the host country.
4
2. The readiness of PICA to go global
The primary country of choice for PICA to establish its operations in Ireland. This is
mainly due to more significant benefits associated with the host country. Among them,
advantages include similarity in cultural practices between the two nations, a ready market since
some of PICA’s shareholders exist in Ireland and the availability of a tax haven for PICA.
Market strength and geographical expansion: Based on the company reports, the
organisational, geographical reach and market strength show higher capabilities to provide
exemplary services locally and globally (Jordaan et al., 2020). The company has become a
market leader for community living as they manage more than 200,000 units in Australia,
making it the biggest strata management company in Australia. This signifies that the
organisation has the experience and size needed to expand into other nations. The local
Australian market may be saturated and have more profitable overseas opportunities.
countries without failure or strain (Andrews et al., 2022). This is due to its capacity to provide a
broad range of solutions through a vast network of companies. The firm keeps improving civic
society in Australia, from strata management systems to debt collection and litigation. Further,
PICA cares for the most substantial assets: investment and household, irrespective of the asset
class, whether domestic, industrial or combined ("About Us | PICA Group", 2022). These aspects
have prepared the organisation to provide all kinds of markets from both local and global
locations.
5
Understanding laws and regulations in Ireland
PICA is ranked among the top companies in Australia that strictly abides by the laws and
regulations of the country ((Nguyen et al., 2019)). Therefore, going international means the
company will adhere to the rule of law, including tax payment and other legal practices. Just like
other jurisdictions across the globe, Ireland inherits the same English common-law language as
Australia. Also, reports shows that the basic rules and regulations that covers strata management
Ireland and Australia both had cultural and historical connections to the British Empire before
gaining their respective freedom. Australia, meanwhile, costs 7.4% more than Ireland does has
continued to develop its economy to greater heights. The Appendix below has detailed various
Industrial capitalism is a crucial factor when a firm becomes an MNC. For PICA to go
global, it must continue growing while generating higher profits from one period to another
(Nguyen et al., 2019). The partial reinvestment must also build and create increased profits to
keep up with the international business levels. Capitalism must continue offering more services
to existing clients or acquiring new customers to thrive and make greater profits from the
creation of new services (Avdeeva et al., 2019). These new marketplaces can be located outside
of national borders. MNCs are ideal platforms for this internationalisation or geographical reach
in search of new customers and higher profitability (Andrews et al., 2022). A joint-venture
corporation is another idealised version of capitalism, and MNCs are a contemporary version of
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2.1.1. Currency Conversion Questions
The exchange rate between the dollar and euro as well as the euro and the yen is dynamic. The
value of the dollar could be 1.75 euros on Tuesday and.95 euros on Wednesday. Therefore,
currency changes must be monitored by multinationals to determine how they will affect
present operations and plans for the future (Jordaan et al., 2020).
2.1.2. Taxes
By routing their income through foreign nations with more favourable economic tax laws,
corporations can save a significant amount on corporate taxes. When faced with increased
charges at home, reincorporating a business in nations like Ireland, which taxed businesses at a
relatively low 12.5 percent during the same period is an appealing choice (Lunnan et al., 2019).
By routing their income through foreign nations with more favourable economic tax laws,
corporations can save a significant amount on corporate taxes. When faced with increased
charges at home, reincorporating a business in nations like Ireland, which taxed businesses at a
relatively low 12.5 percent during the same period is an appealing choice (Cooke et al., 2019).
2.1.4. Regulation
A corporation may be able to develop, grow, and take chances more readily abroad than it might
at home if it relocates to a nation with fewer or laxer restrictions. Economies that permit
businesses to operate with little intervention and oversight from the government may be viewed
as desirable locations for conducting business (Jordaan et al., 2020). Also, a business could
decide to evacuate if the move would enable it to dodge labour restrictions, price-fixing
7
In the current world, businesses of all kinds are opening enterprises in emerging economies in
the modern global marketplace. As PICA prepares to enter new markets in Ireland, this
diversification will offer several benefits, including more potential for worldwide diversification
and development (Nguyen et al., 2019). The opportunity to take over new lands and access more
significant numbers of these customers through global expansion presents itself to PICA
Corporation as a means of boosting revenue. Further, many companies branch out globally to
broaden their holdings, shielding an organisation’s bottom line from unexpected circumstances.
For instance, businesses that operate internationally can counteract negative growth in one area
by doing well in another (Avdeeva et al., 2019). Companies can also capitalise on global markets
to launch distinctive products and services, which can support the maintenance of a healthy
stream of revenue.
PICA's decision to go global will help it beat off rivals in the competitive market, as no
other strata management company has ever become an MNC (Avdeeva et al., 2019). For
instance, companies that grow in sectors where their competitors do not operate frequently
benefit from the first-movers benefit, which enables them to develop significant brand
recognition among customers before their competitors (Jordaan et al., 2020). PICA's exposure to
new technology and business environment will come with its overseas operations, which might
significantly enhance its activities. Establishing the firm in Ireland will assist in establishing a
system that promotes potential business events, such as contractual issues, new advertising
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Therefore, businesses considering going global should also overlook the many investment
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3. Suitable entry mode for PICA as an MNC
The preferred entry approach to Ireland would follow the acquisition model used by
PICA in Australia (Nguyen et al., 2019). Given that PICA's business model entails purchasing
local strata firms in NSW, QLD and VIC, this approach offers marketplace options as each
subsidiary strata company has its brand, reputation, and pre-existing presence in the marketplace
(Avdeeva et al., 2019). Furthermore, Australia's strata management model is world-class and
used as a template in other regions and countries, such as Dubai, Abu Dhabi, the Philippines and
also be ideal to utilise this management model in other nations, including Ireland, with few
alterations according to local legislation. The value of the acquisition is that it gives the business
portfolio could be the best entrance approach. This works best when the firm has no other
method of entering the marketplace as a result of federal rules, the presence of a sizable business
share of the market, or there is a strong competitor already existing in the foreign country
(Jordaan et al., 2020). Significantly, the entry method may give PICA the advantage of the
available business and the reputation of a local firm right away. The acquisition process further
offers a company the opportunity to acquire a long-term customer base, which can be highly
The acquisition entry mode is the preferred method for PICA in Ireland due to its higher
benefits. First, the firm can enter a new foreign market and provide better services using existing
premises, equipment, and networks. The firm will experience lower staffing and training
expenses because the company already employs personnel while incorporating any current
10
government or regulatory licenses and permissions. Based on studies, a brownfield project is
much more affordable than a Greenfield investment based on how well the structure is designed
to fit, whether changes are necessary, or whether it can be used without significant renovations
However, specific difficulties are associated with the acquisition mode, such as the
possibility that the portfolio is facing legal cases, lack of general organisation, the office facility
may need renovation due to unsafe working conditions, all of which will increase the cost of
foreign direct investment (Cooke et al., 2019). If the premise cannot be modified to meet new
service provision requirements, there can be logistic inefficiency. Using existing facilities could
lead to scalability and growth problems, geographical restrictions, and unexpected tax and
regulation problems.
foreigner collaborate to share ownership of a company. Based on their agreements, both firms'
equity involvement differs. Significant varieties include an equity stake, an equal stake, a
minority stake, or a majority share. Fexco International Limited is the ideal company that PICA
could enter a joint venture with since it aims at providing financial services company with a
strong foothold in Ireland. Mainly, Fexco aids in connecting businesses and people across the
globe through continuous innovations in foreign exchange, payments, business solutions and
new opportunities (Fexco International Limited, 2022). Therefore, these two companies can form
a partnership, thus allowing PICA to operate under Fexco ownership, thus forming a Greenfield
investment.
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PICA can alternatively use this entry mode to establish its new market in Ireland since it also
offers significant benefits. For instance, it avoids the necessity of beginning from the start in a
new state, which is often costly and risky. The entry also gains from the connections and
providing appropriate goods for the market (Sharpe, 2018). On the other hand, many companies
steer clear of joint ventures because they are a complex and occasionally drawn-out process
This entry model entails the usage of an agreement across borders that give other
organisations in target nations the right to utilise the property of the Licensor. Typically,
these include production techniques, copyrights, and company trademarks. The operator should
pay a charge for the privileges described in the agreement between the parties (Cooke et al.,
2019). Due to its minimal risk, limited vulnerability to macroeconomic conditions, good
investment return, and preference by some state municipalities, major firms commonly select
licensing as an entry model for MNCs. PICA can incorporate this entry mode and acquisition to
occupy the foreign market fully. A perfect example of this entry mode is Netflix in India, where
e-licencing was used to permit the airing of firms. Licensing agreements might fall through
3.1.3. Franchising
This entails paid charges and royalties by an independent business owner to use a company's
trademark and market its goods or services abroad (Dzikowski, 2018). Depending on the deal, a
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franchisee's plan's conditions and restrictions change. The process also entails incorporating the
permission. Though franchising is commonly known for its success in breaking into overseas
countries, it is essential to consider all the negative and positive aspects before taking them into
account (Liou & Rao et al., 2021). One of its most pervasive advantages is that franchising
expands on an established market structure. This is because the franchisees often have local
knowledge, and the franchisor is not immediately attacked by the global market risks (Jordaan et
al., 2020). For this reason franchising would not be the ideal entry mode for PICA.
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4. Factors Affecting Market Entry Mode Choice
Based on the nature and potential of the business, various variables may be considered
while choosing the appropriate entry mode for PICA. The size of the host country, economy
growth and expansion, cultural differences, administrative and geographical changes affect how
likely the new firm dedicates its resources on expansion (Stallkamp & Schotter, 2021). This
indicates that the PICA group is highly likely to establish an entire affiliate or seek acquisition
when joining a large market with promising growth potential. How easy it is to access the market
largely determines the type of entry most appropriate. Also, import tariffs and customs charges
corporation and foreign investors can make the business feel challenged and apprehensive, thus
affecting the entry model the company wishes to take (Dzikowski, 2018). It is significant to
devote more resources to the incoming market segment for adaptability in the presence of unique
culture, product choices, and consumer behaviour between the intended audience and the
industry's product (Liou & Rao et al., 2021). These investment obligations can lead to the
creation of joint ventures with a nearby associate who may advise PICA's new experience on
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5. The Possible Issues involving Host-Country Relations
Setting up a new corporation in Ireland will cost PICA their strategic freedom of
operation, commonly utilised in Australia (Jordaan et al., 2020). This is due to the adoption of
new rules and regulations of the host country which PICA was previously unfamiliar with. As
foreign direct investment and commerce reduce national markets' receptivity to tried-and-true
economic strategies, and stimulating demand to boost service delivery, PICA has gradually
shifted toward more burdensome regulations, which hinders them from venturing into new
markets (Liou & Rao et al., 2021). This legislation has particularly impacted multinational
corporations in areas that are sensitive domestically, such as the selection of market place,
utilisation of technology, employment levels, and state balance of trade (Stallkamp & Schotter,
2021)
The dollar value in one country cannot be equal to the same value in another state; this
also applies to Ireland, where the value of one dollar is higher than in Australia. The differences
in monetary value affect the provision of services offered in foreign nations since the profit
realised might be more minimal than expected (Stallkamp & Schotter, 2021). To overcome this
issue, PICA should understand the differences in currency conversion values between Australia
and Ireland. The exchange rate represents the relative worth of currency between two countries.
It is also important to constantly watch the inflation levels to determine the influence of
proportional increases in price rates over time in an economy (Dzikowski, 2018). The cost of
labour, resources, and the price of commodities can also be negatively affected by differences in
15
inflation rates in different nations. Also, Ireland is a member country of the European Union and
multinational corporation. Therefore, entering a new market requires careful consideration of all
rules and regulations to avoid experiencing trouble from foreign authorities (Lunnan et al.,
2019). Also, political leaders' choices can impact several factors, including taxation, labour rules,
the cost of raw materials, mass transit, educational systems, and much more (Jordaan et al.,
2020). You must regularly monitor news regarding the nations in which you conduct business
It can be challenging to consider time zones, language difficulties, cultural variations, and
different levels of digital literacy and dependency while attempting to work as a team (Stallkamp
& Schotter, 2021). PICA should therefore encourage frequent reviews with their worldwide
team, primarily via video development, so you can communicate in real-time to build and keep a
solid professional relationship (Liou & Rao et al., 2021). According to studies, workers who
often check in and follow up with their managers are twice as likely to be invested in the
workplace. It is also essential to consider the language used by teammates of your firm operating
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6. Conclusion
The company findings and analysis undoubtedly show a higher tendency and readiness of
the PICA group to go international. Based on the company website, there are different private
and public shareholders of PICA, both within and outside Australia, who work tirelessly to
ensure the organisation runs successfully ("About Us | PICA Group", 2022). By handling more
than 200,000 units, the company has clear potential to function as a multinational enterprise
across numerous nations (Jordaan et al., 2020). Also, PICA is a market leader that offers a wide
variety of solutions via a vast network of businesses. Acquisition becomes Ireland’s most
attractive entry mode, given that PICA's business model entails purchasing local strata firms in
most Australian states. This approach offers marketplace options because each limited
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References
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18
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19
Appendix
20