Corporate Manager: Moving Or To Stay? (Essay Sample)
This writing assignment should be in an essay format. It should use two or more published news or academic articles which are less than a year old as cited references. This writing assignment addresses the values learning outcome (LO7) as detailed in the syllabus.
For this assignment, assume that you are a corporate manager that needs to make an important decision. Your company currently has its largest factory (700 employees) located in the Midwestern United States. This factory is currently not competitive in international markets and its poor results are threatening to force the entire company into bankruptcy.
The company employs 3,000 in other areas of the U.S.
You have to decide whether to keep the factory where it is or move it to Canada or Ireland.
You can only keep one factory open. The corporate tax rates of Canada (20%) and Ireland (15%) are much lower than the U.S. (35%). Labor costs will not change significantly because the cost of training new employees will be offset by the replacement of highly paid senior employees with younger employees in other countries. The old factory needs extensive renovation which will still not leave it as efficient as the new factories planned for the new countries. Therefore, the NPV of the capital investments involved is equal for all three countries.
Corporate Manager: Moving or To Stay?
Corporate Manager: Moving or To Stay?
The company will remain in the Midwestern United States after consideration of various factors. There is no doubt that there are some advantages linked to relocating our company to Canada or Ireland. However, the risks accompanying moving our company from the current location to a new country outweigh the challenges we are facing today. The taxation rate, NPV and labor cost in these countries could present a mouth-watering deal, but other important factors such as start-up cost, loss of the customer base and adjusting to the new rules and regulations may present even a bigger challenge.
One of the biggest challenges as far as relocation to the new country is concerned is the loss of customers because there is an increased probability that customers will not follow the business to the new location (Lovering, 2018). Establishment of the customer base is one of the biggest challenges many companies face, particularly during the preliminary stages of the business. A huge amount of capital is required to promote the brand among the potential consumers in the new area. Further, the company has to work extra hard to counteract the competition from other companies located in the same area. Displacing the already established brands is not an easy task and the company must invest heavily in advertising to promote its brand both locally and internationally (Lovering, 2018).
Another challenge our company may face in the new country is startup cost. Moving to a new country will require that company to pay huge lease deposits as well as the utility cost beyond what we pay here in the United States (Lovering, 2018). Moreover, our new business will require new equipment and furniture to make it functional. Since the sales revenue will cater for these costs, it will have a drastic effect on the cash-flow in the business enterprise. Also, there is a higher likelihood that our company must sell its products at lower prices than our competitors. This may halt the development of the company because suppliers will not be offering discounts on raw materials. Pricing goods and services poorly may negatively impact the profit of the company (Lovering, 2018). Additionally, the company may incur the cost of business interruption because before and after the move, the company may shut down for a significant period of time. During the time when business is closed, there is a loss of revenue as well as increased risk of losing the regular clients who may decide to shift to competitors. We may also struggle to adapt to the new rules and regulation governing the industry within which our company belongs (Lovering, 2018). Engaging in activities that interfere with the environment may land us in trouble with the authorities and our revenue may be affected by the massive fines associated with the breach of various environmental rules...
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