CAN PICA ENTER THE WESTERN

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

(Prudential Investment Company of Australia Pty Ltd-Australian Company Profile, 2022).

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

a presence in the country. (Prudential Investment Company of Australia Pty Ltd-Australian

Company Profile, 2022). Another advantage of Ireland is that PICA may restructure itself to take

advantage of Ireland’s reputation as a tax haven.

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

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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

communal living and boost sustainability (Andrews et al., 2022).

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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

Co Ltd, an Irish-based financial services company and a Japanese-based facilities management

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

similar to Australia, as indicated by Hofstede’s six dimensions (Hofstede Insights, 2022).

Additionally, Fexco International is an Irish-based company that can assist in

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.

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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.

Strong business case: PICA is positioned to become a multinational corporation in different

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.

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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

are identical between Australia and Ireland.

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

cultural, economic, population, quality of life between the two countries.

2.1. The Factors and Issues Involved in Becoming an MNC

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

it that sources funds and maximises returns without restrictions.

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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).

2.1.3. Market Seeking

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

regulations, and anti-competition legislation.

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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

campaigns, or even further development, thus improving a company's perception of itself.

8
Therefore, businesses considering going global should also overlook the many investment

options other countries can provide

9
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

India, (https://smallbusiness.chron.com/costs-running-trucking-business-20089.html). It may

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

immediate and reliable access to an entirely new market.

Ideally, acquiring an existing small community management company with a healthy

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

alluring, especially in a sector with competitive rivalry.

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

and changes (Sharpe, 2018).

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.

3.1. Alternative Entry Modes for PICA Corporation

3.1.1. International Joint Ventures

A joint venture is an element of strategic partnership in which a domestic business and a

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

management expertise of the local business in the marketplace, allowing it to concentrate on

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

(Lunnan et al., 2019).

3.1.2. International licensing

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

whenever there are obstacles to foreign investment in a particular nation.

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

12
franchisee's plan's conditions and restrictions change. The process also entails incorporating the

following measures: administration policies, development of staff capabilities, and site

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.

13
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

favour domestic production enterprises (Jordaan et al., 2020).

Consequently, sociocultural differences that exist between the native state of a

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

how to enter this growing industry successfully.

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5. The Possible Issues involving Host-Country Relations

5.1. Limitations to Explicit Freedom

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)

5.2. Currency Exchange and Inflation Rates

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

uses euro currency.

Nuances of Policy, Foreign Politics, and Relations

Different relations, policies, and national politics govern a specific country or

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

since these ties might be incredibly intricate.

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

in overseas operations (Dzikowski, 2018).

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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

partnership has a brand personality.

17
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Appendix

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