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The most popular story told is of a goat herder named Kaldi who went looking for his flock and found them dancing wildly. He soon discovered that they were eating the leaves and berries of a certain plant. When he tried some of the berries, he quickly felt energized. Soon, a monk noticed Kaldi's vigor, and he asked the goatherd how that came to be; Kaldi told him about the plant, and the monk picked the berries and brought them back to the monastery, where the monks used them to stay awake for late night prayer and study. Unfortunately, this story is almost certainly simply a legend, and the true story of how the effects of the coffee bean were discovered is lost to history. What is not in dispute is that coffee originated in the highlands of Ethiopia.
Reference:Galla Coffee, Unit 3 Warwick Road, Fairfield Industrial Estate, Louth, Lincolnshire, LN11 0YB, UK,viewed 28 April 2014 Tianxiang Wang
Late 2012, Starbucks was one of the multinational corporations that were under fierce attacks from the general public. Nationals from the UK were outraged by the fact that Starbucks had only paid £8.6 million in corporate tax for its 15 years of operation in the UK, while the company's sales in 2011 is close to £400 million. This doesn't sound good in spite the company's attempt to market itself green and sustainable-friendly.
Citizens are outraged by Starbuck's misconduct
June 2013, BBC reported Starbucks finally paid its first UK corporate tax since 2009. If you've been following the news, you should be aware of that Starbucks was not the only company evading tax, among it Microsoft, Google and Apple were also brought to the attention in media around that time.
How companies evade tax
By now, I know you've been asking yourselves, how do companies do that? Well, that's what I'm here to explain.
I am an high-achieving accounting merit scholar at Macquarie University (having achieved GPA 4 out of 4 so far! Yay, a nerd hey?), now is the time to put everything I've learnt into practice. There is a mechanism that corporations can use called Transfer Pricing. Transfer pricing was originally used to examine the profitability of each different business divisions within a large organisation. In other words, it is a performance monitoring and measurement tool especially benefiting multinational companies to monitor its performance in different geographic locations.
This is how it works with the use of an example (yes, we all love examples). Company XYZ Group Limited, a mobile phone manufacturer operates in two countries Singapore and Australia. The Singapore company (S Ltd) runs a factory and produces mobile phones to be sold in Australia (A Ltd). The phones cost $50/unit and sells for $150/unit in Australia. The company tax rate in Australia is 30%, in Singapore 17%. If A Ltd sells 10000 mobile phones in Australia, how much tax will XYZ Group pay? Consider the following two scenarios.
1. S Ltd sells to A Ltd at cost, which is $50/each. S Ltd makes no profit. However, A Ltd buys the phones from S Ltd for $50/each and sells for $150/each, hence makes $100 profit per mobile phone. The amount of tax payable for the XYZ Group will be:
$100 x 10000 phones x 30% tax = $300,000 tax to the Australian Government.
2. S Ltd sells to A Ltd at $150/each. It costs S Ltd $50/each to manufacture, but it sells to A Ltd for $150/each , hence S Ltd makes a profit of $100 per mobile phone shipped to Australia. A Ltd buys the phones from S Ltd $150/each and sells for $150/each, hence makes no profit in Australia. The amount of tax payable for the XYZ Group will be:
$100 x 10000 phones x 17% tax = $170,000 tax to the Singapore Government.
Starbucks and all other multinational corporations cleverly enacts international transfer pricing to shift profits between countries with higher tax rates to countries that attract lower tax rates to reduce their tax liabilities. Starbucks UK pays a high loyalty fee to its other international subsidiaries for the coffee and branding, hence, increasing the cost of operation in the UK and therefore paying less tax.
Below is an interesting video on Starbucks' tax evasion scandle:
References:
BBC 2014, Starbucks pays UK corporation tax for the first time since 2009, viewed 12 May 2014, <http://www.bbc.com/news/uk-politics-23019514>.
Transfer pricing example is from my own knowledge.
Australians have love and passion about their country and culture. That's what makes an Aussie unique to the rest of the world. When it comes to coffee, Aussies too have their love and choices - Gloria Jean's. It is named Australia's favourite coffee brand.
In recent years, the Gloria Jean's brand has gone international with operations across 39 countries with more than 1000 stores. These numbers are no match for Starbucks, which the number of the stores in the US alone surpasses Gloria Jean's worldwide figures as you may have noted in the previous blog post. But for a coffee lover, size doesn't matter! It's all about quality, taste, feel and the environment.
Gloria Jean's has a bit of twist to its history. The brand similar to Starbucks, Gloria Jean's was established in the US, by a guy called Gloria Jean Kvetko in 1979. However he is no business man. Two Australians purchased the brand and it's rights to operate in countries other than the US and eventually, the brand grew to its presence today.
Due to strong presence in Australia, the brand is one of the longest supporters of Jeans for Genes day, having raised over $630,000 since 2002. Gloria Jean's is also part of the Rainforest Alliance, which aims at protecting ecosystems and supporting the people and wildlife that depend on them. The company conducts business ethically and was awarded Rainforest Alliance Corporate Green Globe Award, becoming the first Australian company winning the award.
Sadly however, the company was acquired by Yellow Pages Singapore in 2013 for $35.6 million.
References:
Wikipedia 2014, Gloria Jean's Coffees, viewed 8 May 2014, <http://en.wikipedia.org/wiki/Gloria_Jean's_Coffees>.
The first brand for people to think about coffee should be starbucks.
Starbucks is a global coffee company from America. The general headquater is based in Seattle. Starbucks is started in 1971, and now it develops as the biggest coffeehouse shop company in the world, in 64 countries with 20891 stores, with 13279 stores in the USA,851 in China, 1324 in Canada, 989 in Japan and 806 in the United States.
The first Starbucks is built my three students who met together in the Univercity of San Francisco, on march 30, 1971.At the first the Starbucks also be called Pequod, but the name was refused by some co-founders.
Starbucks serve serve hot and cold coffee drinkings, whole-bean coffee,snacks, cakes and crosants. Some stores also sell mugs or tumblers, hot or cold sandwichs, even beers, wines and appetizers after 4 pm.
Starbucks opened at average 2 new stores per day from 1987, it expanded rocketly. Starbucks also supply some products like films, musics or books.
When it have the store in the California, it has became a fashion. The first global shop outside the USA and Canada is in the Tokyo in 1996. Now, it has became the symbol of coffee in the whole world.
Some thoughts just came to my mind today as I walked down the pavement in freezing cold wind after uni, late at night, none of the shops are open. A cup of hot drink, that's all I'm needed. Starbucks, Gloria Jeans, Max Brenner, are the list of places that pop out of my mind.
Well, it has become a household name. It is now a multinational conglomerate with annual revenue in excess of $14 billion with a history of just over 43 years.
Like any other businesses, it was started as a high quality coffee bean and equipment selling business by three students of University of San Francisco.
Named after a whaling ship's chief mate, Starbucks now boosts stores in 64 countries, according to Wikipedia, 13,279 in the United States, 1,324 in Canada, 989 in Japan, 851 in China and 806 in the United Kingdom.
Starbucks has well integrated into many of the local cultures, especially in China where I come from, it has also become a household name amongst the educated middle class throughout the nation, despite main differences between the eastern and western way of having hot beverages.
Here in Australia, Starbucks also finds itself sitting comfortably in the market.
References:
Wikipedia 2014, Starbucks, viewed 5 May 2014, <http://en.wikipedia.org/wiki/Starbucks>.
Choice of Espresso Maker - MAN Power vs Automation vs 'Jelly'
It can be a hassle when you gain entry into appliance retailers today. You are bombarded with different colours, makes, brands and types of Espresso makers. Depending on if it's your first machine or you are yourself an experienced barista, the choice can still be mind bogging.
Before you start
The recommendation is not to experience the so called 'features' or 'price-tags' of each brands and machines, but to first make it straight to yourself: what value am I looking to get out of the machine. When I say value, I don't mean the greenbacks you handover over the counter. I mean, what job you want the machine to do for you - whether it be convenience, quality taste, barista-like experience or showoffs in front of your mates.
Once you've cleared your mind, lets move on!
As you be aware of, there are three types of Espresso machines a normal consumer can buy:
manual/semi-automatic machines (MAN POWER)
fully automatic machines (AUTOMATION)
capsule machines (JELLY)
Let's start choosing
Manual/semi-automatic
Semi-automatic machine by Breville
These are suited for those who are looking for a barista-like experience. These machines usually have a lower price tag and barrier of entry for a number of reasons.
Usually doesn't come with a grinder, so prepare to spend extra to get yourself the powder you need to kick into action.
More difficult to operate, a few tries and kicks are needed to get yourself started to brew your favourite cup.
Time consuming to clean after use.
But you do have full control over the whole process, the extraction, the milk frothing and all that action!
What now? Don't buy it just for the looks, YES, you do look like a pro in front of your mates, but if you are buying it solely to show off, I recommend you to hold your fire. You won't enjoy cleaning it.
Fully automatic
Fully automated coffee machine by Delonghi
Well, made for the dummies who have cash in their pockets. These goodies are more expensive, but you do get all the convenience of the push of a button to get your favourite cup of espresso at just the right temperature and settings.
What now? If you're someone who enjoys the end result rather than the process, save yourself some bucks and get one of those.
Capsule
Capsule machine by Delonghi
Capsule machines are a new marketing child for those who prefer fancy premium looking jelly capsules and the ease of getting exactly the taste you are after. Despite the Delonghi capsule machines are generally a lot cheaper than the proper espresso machines, the running cost can be high. One capsule is used per cup of coffee and each capsule is priced between $0.80 to $1.50, adding the cost of the machine plus a milk frother over 2 years and the price of milk, you are looking at spending close to cafe money for the same cup of coffee.
What now? You make the call, whether convenience is more important to you or the barista-like experience.
References: none. all written using personal knowledge. Pictures are gathered from Harvey Norman.
