Research has argued that sending the profits away keeps the tax man away. With the current competitive business atmosphere, the term offshoring has become a daily event; no day passes without companies achieving an offshore deal. What is offshoring? Offshoring is the process of a company, moving its operations to another country overseas due to reasons such as lower production cost, taxes, and a suitable economic atmosphere. According to a recent study giant U.S based companies have been identified to triple their profits by exploring untaxed offshore stockpiles. During the past decade giant companies such Apple, Generic Electric, Microsoft Inc among others have increased their profits by offshoring. For accompanying to offshore, the company experience sufficient factors contributing to it, however, it is important to understand that offshoring has a significant effect on the business and the different parts making it.
Microsoft Corporation is an American multinational company that produces computers, computer electronics, personal computers and computer services. Being founded by Paul Allen and Bill Gates on 1975, the company has grown to establish three billionaires and more than 12000 employee millionaires. The secret behind Microsoft’s success has been strategy and consistency. As any other giant company, Microsoft Corporation began offshore procedures in the 1990’s, two decades later the company is stated to be sitting on over 135 million U.S dollars of profit (Sirota, 2014). Microsoft began to offshore as a result of heightened taxes in the U.S. Being a multinational company the corporation has an interest in exploring new markets and doubling its profits. Microsoft’s offshore procedures focused on venting untapped markets that existed globally, however, according to recent articles Microsoft's primary influence to offshore to run away from Uncle Sam's reach.
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Stakeholders have expressed a mixed amount of feelings, claiming to have lost employment due to the company’s move to offshore. However others have argued that the move to outsource and offshore has created jobs in the U.S. Over the years the American government has remained against offshoring, the U.S government evaluates the process of relocation as a process that takes away the income of America; however, due to a recent article Microsoft has threatened to increase its offshore procedures as a means of increasing profits (Rubin, 2013).
Discussion
Transformational change is defined as the modification that firm results to due to the underlying changes in the strategy and previous means of conducting operations. This mode of change takes place within the whole organization, for a defined period. A company may undergo a transformation change with an objective of developing better profits or products or even to adapt to a better competitive advantage over its competitors. In this case, Microsoft underwent a transformational change to reach untapped markets globally. Microsoft is also believed to have experienced this mode of change as a result of direct taxes from the American government (Rubin, 2013, p. 22). According to a recent article Microsoft was identified to double its profit by a system of above-showing procedures. One would argue that the company required more labor, this would explain the reason behind the company’s offshoring operations since the 1990’s up to now.
The process of relocation is considered a transformational change due to the overall change from the standard way of conducting operations in the firm. In the course of offshoring the company has to break down the business and to an extent lay off some stakeholders. In the new country, the company must begin fresh acquiring all the legal formalities and employing and training new employees. It is a transformational change because the company has to develop a new structure of leadership and lay a strategy that would facilitate the success of offshore operations. Transformational change is necessary for any business that desires to do better that yesterday. The transformational change allows the organization to accurately identify a strategy that will drive the firm to success.
A company may be forced to undergo transformational change if the current structure and strategy of the business are inefficient. Example Microsoft has to undergo a transformational change to address the losses emerging from the massive amounts of taxes in the home country. Similarly, a company may undergo transformation change if it is under new management, and the managing body feels that the organization is not tapping its full potential. In transformational modify the group is started to lay down its old structure and manner of strategy and adapt to a new regime. This would point out to the importance of the managerial body in administering the change.
Transformational change takes place through the managing body of the rest of the organization. It is through the organizing body that, the organization becomes aware of the plans and strategy of the business. It is the managing body to check and analyze the efficiency of the current approach (Rubin, 2013). Similarly, it is upon the governing body to identify newer markets and opportunities for the business; one would argue that the managing body is a vital element in transformational change. With the growth and development of technology, the business industry is currently defined as stiff competition and growth. An organization must be able to identify and adapt to new changes in the business environment. Transformation change is a process it does give a company a competitive advantage over the other; rather it amplifies the company’s strategy and development plans.
References
Rubin, R. (2013). Offshore Cash Hoard Expands by $183 Billion at Companies. New York: Bloomberg L.P.
Sirota, D. (2014). Micrososft Admits keeping $92 Billion Off shore to Avoid Paying $29 Billion in U.s Taxes. New York: IBT Media Inc.
