PLG#3: Delaware (USA),
You are an Executive at the Canadian-based company Quattroporte Inc, a software company that sells and provides its services online (SaaS model). Your company's core product, originally developed by a Management Sciences professor, was in commercial use for over a decade before you joined the company. Quattroporte's software provides a full suite of tools to help customers organize their operations, staff, and clients, as well as manage their financials and communications. Working with the top-notch team you've assembled and the business skills you've learned during your MBA, you and your team have turned your company into a viable going concern. In fact, sales in Canada have quadrupled in the past quarter and you are now seeing significant interest for your product from all over the World. After a lot of hard work Quattroporte is most likely entering a hypergrowth situation. One of the challenges you face is managing significant new sales from abroad. Your Merchant Account provider (merchant account providers processes credit card transactions) has suggested that you open a foreign-based subsidiary to process sales outside of Canada. If you set up in England, your Merchant Account provider will offer you transaction processing rates in the 1.75% - 2.25% range for sales in England while sales in the rest of Europe as well as in Australia, Asia, and South America will be at a considerably higher rate, namely in the 2.95% - 3.95% range. If however, you were to open a subsidiary in one of your assigned jurisdictions you will receive the lower rate in all regions. You expect to be processing 10's if not 100's of millions of dollars in transactions annually within three years.
Analyze the PLG location PLG#3: Delaware (USA), using what you have learned in the course material to explain the key issues you will need to understand and track as you take your company global.
Note 1: Managers face many key considerations when making decisions of this nature. This case provides the opportunity to use the economic knowledge and language you have learned in this course (of primary importance in the grading of this case) as well as offering the opportunity to briefly drift outside of the silo of economics to address key business considerations that you feel important in your analysis. Below is a list of topics, by no means exhaustive, and equally, because of both space constraints and relevancy, by no means are all topics necessary for inclusion. Your analysis should at minimum cover relevant topics learned in the course applied to the decision-at-hand. Keep in mind that this is an economics paper so if you do take the opportunity to drift into other business disciplines the overriding bias of your paper should favour economics. Topics for consideration: globalization, comparative advantage, tariff and non-tariff trade barriers, trade regulations, regional trading arrangements, international factor movements and multinationals, foreign exchange and risk strategies, international/regional banking factors, professional services support, taxes, capital flow/repatriation of profits, IP rights/protection/assignment of profits & losses, political and policy direction, and country risk/freedom.
Note 2: For clarity, the end goal of your case is to select and justify a suitable jurisdiction. Preferred merchant account rates and growing worldwide sales are the catalysts. This is not a case of tax evasion, and you will not be hiding profits, skirting laws or engaging in any other illegal activities. With the recent attention on tax evasion, one may become confused on what is a very clear and distinct difference between personal tax evasion and corporate legal structure. What you are analyzing is corporate legal structure.
Recently Asked Questions
- 1- Why shouldn't a firm focus purely on maximizing profits without regard to risk? 2- How does the management of risk play a role in the success of an
- What are the three main descripive statistics for describing a set of data?
- Choose between A and B, or if they are not comparable. 1.Stock A has high risk, Stock B has low risk. All else equal, which has the higher required return?