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area51newmexico
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PostPosted: Thu Oct 29, 2009 1:02 pm    Post subject: Foreign Takeover! Reply with quote

You'll often hear about local businesses being taken over by foreign firms.

My friend and I were discussing this topic yesterday and she's very passionate about it and she's against it. She has said that often a foreign company will take over, shut the factory down in here (making people redunant) and move the business back to their home country and she gave several examples of this happening in our local area. So it got me thinking:

Do you think this should be allowed? Should companies only be allowed to sell out to other companies from the same country? Or should they be allowed to sell up to whomever they like?
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PostPosted: Thu Oct 29, 2009 8:27 pm    Post subject: Reply with quote

Wouldn't this limit a countries economy due to the size of the country itself? ( or is this only in 'buying companies out' not in a 'a company can set itself up anew in a new country' type of role )

Kind of like a reverse of this

http://www.whylinuxisbetter.net/items/other_countries/index.php?lang=


If a company fails in a location then it's because it's either not making money due to poor management or it's because it's not viable in the current location, however a business that may survive elsewhere can continue in a place where it would survive?
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PostPosted: Thu Oct 29, 2009 8:45 pm    Post subject: Reply with quote

Ah ha! But this is where franchises come in surely?

For example many Spar convenience stores are franchises therefore a smaller local newsagent could be part of the spar chain but only as a franchise, but this opens up a whole new realm of possibilities, such as access to a much wider range of groceries, but still remain independent, No?

Ooo another example is McDonalds in Iceland as in the people that run the franchises in Iceland, this it isn't viable anymore, because they have to have McDonalds food, it comes all the way from Germany which isn't cost effective. But the people that own these restaurants are going to run them as something else with local food instead!
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area51newmexico
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PostPosted: Fri Oct 30, 2009 1:00 pm    Post subject: Reply with quote

minty wrote:
Wouldn't this limit a countries economy due to the size of the country itself? ( or is this only in 'buying companies out' not in a 'a company can set itself up anew in a new country' type of role )


Yes, I guess so. Although with a country like the UK, we have a fairly large economy. This method can be a good way for businesses to set up in a new country - they will probably inherit the customers, market, staff & buildings.

minty wrote:
If a company fails in a location then it's because it's either not making money due to poor management or it's because it's not viable in the current location, however a business that may survive elsewhere can continue in a place where it would survive?


Depends what their reason is for selling up - they could be doing extremely well. The other company may offer them a huge amount of money to sell up.

pickle wrote:
Ah ha! But this is where franchises come in surely?


Franchises are a little different. With a franchise, you buy the right to use their logos & branding. Propiretior usually sets up a new premise to have the shop/resturant etc. Another good way for businesses to set up in another country - you get other people to do it for you!

Interesting re McDonalds in Iceland.

Back to my original question, I personally don't believe a government would be able to pass such a law. If a company wishes to sell up, they can do to whoever they wish, whether they are national or foreign (as long as it doesn't create a monopoly situation). I think it would limit business development far too much if we did that.

My friends point was that the UK doesn't own much industry anymore - we have sold off the majority of car brands (e.g. Rover, Jaguar etc), British Steel and several banks have been sold off etc
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PostPosted: Fri Oct 30, 2009 1:55 pm    Post subject: Reply with quote

All in all I think it's a bad idea for foreign countries to buy much business in other countries. A little bit would be negligible but when you have enough homeland business run by foreigners you loose your own sovereignty.

You are either owned by the dominate owner or worse you are owned by so many there is no controlling interest. Neither is good IMHO.

Ford bought Jaguar once upon a time. Right now Ford is the only US car maker not in trouble and not owned by the government and or unions.

Where would those British jobs be (in fact where *are* they now; I honestly don't know) if GM or Chrysler had bought it and fell apart like they have?
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PostPosted: Fri Oct 30, 2009 2:43 pm    Post subject: Reply with quote

Helly wrote:

Yes, I guess so. Although with a country like the UK, we have a fairly large economy. This method can be a good way for businesses to set up in a new country - they will probably inherit the customers, market, staff & buildings.


I was merely musing over the idea of the difference between a foreign company buying property in another country and setting up, and buying a foreign company out.

I couldn't see the difference hence my question, if you wanted to stop companies buying out others but not stop them from 'taking root' elsewhere well, I couldn't see the logic, so was fishing for clarification.

If a company is failing ( Rover ) and a company sees it and thinks 'we can make a go of this' ( BMW ) are they to be prevented from trying to save a company and safeguard jobs ? because of other foreign firms ?

Ok there was more to the story than that, but the point highlighted was what I wanted to show.

Crux of the matter is your friend being against foreign firms moving in, taking over other firms and then shutting them down.

This is perhaps a fair comment like saying a frying pan shouldn't be used to smash people in the face, (unless it was in self defence because someone was in your house that shouldn't be) but we can't ban them because I do love a good curry.

If a business offers a large amount of money to only then shut them down makes me wonder about getting a good ROI on your recent investment.

You could shut a business down and move production back home, but who will fill in the vacuum left behind in the other companies home country?

You now have to make the same product to the same standards as what it was before or face loss of credibility in your products.

Eg, XYZ were good until they got bought out by ABC and moved all their production to India. Now the quality is crap, we buy JKL now.


Deli wrote:

Back to my original question, I personally don't believe a government would be able to pass such a law. If a company wishes to sell up, they can do to whoever they wish, whether they are national or foreign (as long as it doesn't create a monopoly situation). I think it would limit business development far too much if we did that.


Yeah I agree with this, however beyond a certain size of company may be worrying, as is a lot of companies that run the infrastructure of another country. Water companies, electrical companies etc.

Deli wrote:

My friends point was that the UK doesn't own much industry anymore - we have sold off the majority of car brands (e.g. Rover, Jaguar etc), British Steel and several banks have been sold off etc


It doesn't matter who owns the industry, what does matter is which way the money is going.

For example Toyota is perhaps owned by some small Japanese man, but as the production is done here for lets say Ireland, money comes into Toyota UK.

Yes you are right if the money is ultimately leaving the country and nothing is being used to generate revenue then you perhaps have a imbalance, but in today's world of 'the global economy' and various products being geographically locked ( you can't call champagne champagne unless it was made in Champagne, France. You can't call a Lincolnshire sausage a Lincolnshire sausage unless it was made in Lincolnshire, you can't have Newcastle Brown Ale unless it was made in Newcastle etc - though I hate the stuff) we will always have exports. Just so long as exports are higher than imports.
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PostPosted: Sat Oct 31, 2009 5:00 pm    Post subject: Reply with quote

In the US large companies apparently can't be bought by just anybody anytime. We hear about takeovers and hostile takeovers that have to be approved by some legal authority. I'm not up on it because I'm just not in that league.

But it is accurate to say MicroSoft can't just up and decide to sell controlling interest to the Chinese.
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area51newmexico
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PostPosted: Sun Nov 01, 2009 12:53 pm    Post subject: Reply with quote

metal wrote:
Crux of the matter is your friend being against foreign firms moving in, taking over other firms and then shutting them down.


The latter the mainly.

you again wrote:
Yeah I agree with this, however beyond a certain size of company may be worrying, as is a lot of companies that run the infrastructure of another country. Water companies, electrical companies etc.


There are Schools of Thought that think it is more financially beneficial for there to be just one company that runs the infrastructure. For example, it would be silly to have 5 gas, electricity and water pipes running to every house encase the owner wanted to be supplied by a different company. The cost and the work involved would be huge! Instead, we just have one pipe for each, run by one large company who's names escape me (all I can think of is Network Rail), and the resident chooses which company they wish to go with to supply. The gas/electric/water is the same stuff no matter which company you go with.
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PostPosted: Sun Nov 01, 2009 3:54 pm    Post subject: Reply with quote

area51newmexico wrote:

The latter the mainly.


Then I wonder about the motivations of a foreign business doing this and getting a good ROI and maintaining customer loyalty. The owner of the business must of agreed to the sale, so could the blame be laid at the feet of the owner of the business ( who would of the same nationality as the host country ) just as much ?

The Helly one wrote:

There are Schools of Thought that think it is more financially beneficial for there to be just one company that runs the infrastructure. For example, it would be silly to have 5 gas, electricity and water pipes running to every house encase the owner wanted to be supplied by a different company. The cost and the work involved would be huge! Instead, we just have one pipe for each, run by one large company who's names escape me (all I can think of is Network Rail), and the resident chooses which company they wish to go with to supply.


For the company that looks after the electricity / gas etc infrastructure I thought it was National Grid - http://www.nationalgrid.com/uk/Electricity/UKES/

Are they who you mean ? Smile

Welly wrote:

The gas/electric/water is the same stuff no matter which company you go with.


Yes, the electricity is generated '$Deity knows where' ( http://www.goodenergy.co.uk/ ) for example, but we all plug into the same grid it's which company generates it for you that's different Smile

If one company provides crap customer service, and another provides much better service and cheaper rates ( because they have better offers ) you'd go with them. Without other companies it'd be a case of like it or lump it.

Some people have such efficient homes that generate their own electricity that they have a surplus and they sell this surplus back to the 'grid', so your electricity may be coming from someone just like you.
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