Currently Avon Products Inc. (AVP) is based in New York in the United States but is planning to move their headquarters to the United Kingdom instead. The move will cost America approximately 2,500 jobs by losing these headquarters. Although this is the case, it will save AVP money due to the decreased jobs needed to man the headquarters and the ability to be closer to its commercial operations. It is estimated by the company that they will need 7 percent less people to run the new headquarters. The CEO of AVP assures Americans the move is not an inversion, which is when American companies are purchased by a foreign firm to take advantage of a tax break. It simply is a move to bring the commercial and corporate worlds closer together to improve
…show more content…
FDI is defined as purchasing a significant amount of stock or physical assets of a company in a foreign country in order to gain more control. AVP is looking to completely move their headquarters and production to a foreign country, which would classify as purchasing physical assets in another country. In doing this they will gain the highest amount of extra control that there is, even though this is a risky form of FDI. Along with this, home countries may try to restrict FDI for several reasons. These reasons include: loss of jobs, imbalance it would cause in the balance of payments, and it is sending assets out of the country. In this particular article, America is the home country and would possibly want to restrict FDI because of the 2,500 jobs that are being lost due to the move. The article does not specifically state that America has tried to intervene, but I speculate that it is possible they will in the near future since the announcement just came on March …show more content…
They are 130 year old company, and although they profits are not as high as they used to be they still are an asset to the American people. The jobs they provide to Americans through their headquarters here likely make a significant impact on the community in New York they are based in. Some other obstacles that AVP may face are lost sales from Americans due to their move to another country for their headquarters. Many people take pride in the “made in America” trend and keeping jobs at home, so there may some fallout from patriotic customers that are unhappy with the choices the company has made. Another hit to sales in America may also come from the sheer fact that they do not have a strong online presence, and they are decreasing their door-to-door sales force in the country. Their stock prices jumping so drastically after the announcement may indicate that I am wrong, and that people may still be supportive of the company in the long run. It will be interesting to see if this move benefits AVP as much as they are predicting and hoping that it
FDI is defined as purchasing a significant amount of stock or physical assets of a company in a foreign country in order to gain more control. AVP is looking to completely move their headquarters and production to a foreign country, which would classify as purchasing physical assets in another country. In doing this they will gain the highest amount of extra control that there is, even though this is a risky form of FDI. Along with this, home countries may try to restrict FDI for several reasons. These reasons include: loss of jobs, imbalance it would cause in the balance of payments, and it is sending assets out of the country. In this particular article, America is the home country and would possibly want to restrict FDI because of the 2,500 jobs that are being lost due to the move. The article does not specifically state that America has tried to intervene, but I speculate that it is possible they will in the near future since the announcement just came on March …show more content…
They are 130 year old company, and although they profits are not as high as they used to be they still are an asset to the American people. The jobs they provide to Americans through their headquarters here likely make a significant impact on the community in New York they are based in. Some other obstacles that AVP may face are lost sales from Americans due to their move to another country for their headquarters. Many people take pride in the “made in America” trend and keeping jobs at home, so there may some fallout from patriotic customers that are unhappy with the choices the company has made. Another hit to sales in America may also come from the sheer fact that they do not have a strong online presence, and they are decreasing their door-to-door sales force in the country. Their stock prices jumping so drastically after the announcement may indicate that I am wrong, and that people may still be supportive of the company in the long run. It will be interesting to see if this move benefits AVP as much as they are predicting and hoping that it