International Business & Taxes

Alexander Jones went to school in the Philadelphia region, he joined LaSalle University’s leadership and global immersion program while enrolled and currently works for the world largest automotive distributor and retailer, Inchape PLC which operates on 5 continents. He has worked in Chili and has been in Argentina since March 2020.

As an exit himself, Alex talked about why it’s important to be able to do business in different parts of the world. Having a diverse portfolio minimizes risk for everyone and companies alike. So that’s why working with people from different cultures requires you to adapt to them.

While doing business abroad, you must be aware of the conditions of the local market, in Alexander’s case, some markets in the regions have low barriers of entry because of the economic environment. This creates an hyper-competitve market where a few competitor can grab a majority of the market share.

In the case Alexander gave, automotive companies managed to establish themselves in the region after markets opened up following a coup d’etats in the 1970-80s.  During the rest of the decade, markets became more fertile as the middle class got larger and fueled the growth of some of those companies, including Subaru.

The automotive world is still mainly retail oriented, however, retail is frequently unprofitable, but not always. There is a shift away from physical retail going on right now toward vertically integrated retail(VIR) which is easier to develop a digital sales process for. Online platform aren’t as popular everywhere as they are in the U.S but keeping in mind that things could be moving toward that direction would be wise.

Lastly, it’s important to understand how a country’s tax structure can affect an industry and companies looking to enter foreign markets must learn what to do in that situation. In markets with heavy import taxes, brands assembling locally take a heavy foothold on the market as they have an economic advantage on the competition right away. Import taxes aren’t the only kind of taxes that affects international business however, other heavy taxes around an industry can force a company into keeping small operations in their host country and thus stunt growth or ambitions to gain a greater marketshare. For example, relevant markets for Subaru are restricted to upper-end price and product segment. Top brands might control a majority of the market in this type of environment.