DELAWARE AND BRITISH VIRGIN ISLANDS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

DELAWARE AND BRITISH VIRGIN ISLANDS Case Study Solution

ABSTRACT

The report illustrates the expansion policies and issues that shape the company’s strategy in term of globalization.The report outlines the globalization strategy of Quattro PorteInc., a software company that offers the services online to the clients, in developing, managing and streamlining the operations.In the recent year, the demand from outer part the world has increased for the software, for which merchant agent is asking the company or a subsidiary in one of the offshore region, in order to expedite the process of payment and deliveries. Each region has a separate interest rate system and tariffs that shapes the revenue structure and also the sales margin in the particular area.The off-shore regions that are most profitable and prefer by the company are Delaware and British Virgin Island. These two regions are sectioned on the basis of low tariffs and low government intervention, which strengthen the business and also anchors the company’s position.However, the company has to decide the region based on the comparative advantage that will enablethe company to globalize the operations with sustainable growth in market for a longer period of time.

Keywords: Comparative advantage, Tariffs, demographic.

Introduction

Quattro PorteInc. is a software house that offer the services of customized software’s offering to the clients that helps them to manages the operations and also manage the cost of operations.The company designs the software in a way that caters the needs of the business effectively. Over the period of time, with the increase in technology and industrialization, the trend of going global has been emerged. Many businesses due to high customer interaction and link building through digital mediums have gone global by analyzing the market potential without even going setting up the business on the basis of trail ad error.

This has made Quattro Porte to attract huge sales from the outer part of the county of off-shore.However, since the company operates only from US and caters the outside sale through merchant account, the increasing demand and rising business activity has made the company to decide the location for offshore businesses.In currents cenario, if the company set up the offshore account in England, it will charge the company 1.74% to 2.25% which is considerably low. While, if the company opts for Australia, Asia and Europe, the rate will rise up to 2.95% to 3.95% range which is quite high and will erode the profitability graph and also the margins.

However, if the company opts for the off shore jurisdiction like Costa Rica, BRITSIH Virgin Islands, Delaware (USA) and Singapore, the rates will go down to the lowest as compared to the other region, this is because of the low tax haven policies in these regions. Considering the profitability and government policies, the company has selected the two offshore jurisdictions,namely Delaware and British Virgin Islands to locate itself globally.

Though the locations are best preferred for the low rates ad high businesses and customization, the selection of the location is totally accounted for the location feasibility and its competitive and comparative advantages for the company. Apart from that there are multiple factors and benefits of moving the company offshore, which includes tax aversions, low government interventions, right to acquire the property and sustain abletariffs and tax duties along with the sustainability of the exchange rates.Since Delaware and British virgin islands offers favorable tax terms as an incentive to draw new business, many new and old businesses’ tends tolocate the offshore stores, franchises, merchant accounts in these location.Also, since the company has started attracting the external markets and consumers, these locations can offer a new direction to the business in setting the globalization strategy, that will sustain the business model and allow the company to tap the new market opportunities effectively.

Analysis

Since we have selected the two offshore locations for the business set up, an in-depth analysis of the two locations will enable us to see the picture more clearly and understand the comparative advantages accordingly.

DELAWARE AND BRITISH VIRGIN ISLANDS Harvard Case Solution & Analysis

Delaware (US)

Delaware is one the thirteen states that drafted the federal constitution to authorize it in the worlds operations and thus known as the first state.The state carries one third of the total population of the U.S and is located centrally between Network and Washington D.C The geographical location of the stare offers it the competitive advantage since due to the particular location, the state offers a major access to the domestic and foreign trade through highways, trains and by air. This reduces the irrational and supply chain cost of the company while offers the state a maximum number of foreign direct investments and trade surplus, which makes the state to continuously manage its taxation and other tax duties to promote the trade.In 1992, the state embraced or designed a limited liability corporation law, to control and also promote the foreign businesses. In doing so, it ruled out extensive bureaucracy from the system, and developed an easy system attract businesses. Under the LLC constitution law, the states designed the Delaw are general corporation law which to date is the friend liest law for the business to enter and expand in Delaware.Due to this act and the ease of movement of business within Delaware, it has become the home of about 50% corporation listed in New York stock exchange and over 60% of the fortune 500 companies call Delaware as their legal home. The location is best for the business due to number of facts, some of which are listed below...................

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