Quattroporte Inc. offshoring to Delaware Case Study Solution
Disadvantages
The drawbacks of setting a subsidiary in Delaware are as follows;
Dual Registration
Since, the Quattroporte Inc. has contemplated to expand the business in the international markets through establishing subsidiary in Delaware, the company would be entitled for the dual registration. In short, the company would be required to make two reports on the status of the business for each year. There will be 2 state tax returns to file. Not only this, the company would be required to pay for 2 sets of filing fees to renew and incorporate each period.
In addition to this, the company would need to pay the franchise tax per year in both states as well as following the reporting requirements for both states.
Annual reporting requirements
The company is subject to make the required reports in the state where the company originally operates, besides the company need to comply with the annual reporting requirements of Delaware.
International/ Regional Banking Factors
Delaware likely poses number of advantages from the security perspective. In 2008, the economic downturn in US has resulted of the large number of privatized banks and consequently backed by the larger institutions abroad, thus providing the level of security. Offshoring to Delaware State would provide various benefits to company in term of security required in choosing a bank account within an institution.
As Quattroporte Inc. is the Canadian based organization, the company would easily and quickly transfer the funds in the currency as per choices across the borders, and the company would also take advantage and be in more control of the exchange rate.
International Trade
As such, considering that the subsidiary would be founded with the means of processing the international transaction outside North America, Delaware is not good option. It is due to the fact that the location is not linked to the larger markets outside the US because it is one of the state of US and surrounded by the bodies of water due to which it cannot engage in trading activities with the other counties or it has ties with international trade.
Due to the massive size of the US economy, the country has imperative impact on international trade. The exports and imports are considered one of the most significant economic markets in the US. Even though, the international trade has been rapidly expanding in American markets as well as creating the economy of scale situation which can provides exceptional benefits to those business which are established there, the issue is that the Delaware state most likely deal in physical goods trading and the Quattroporte Inc. is service based organization which means that the international trade might be advantageous for other companies, it would not exhibit the comparative advantage to Quattroporte Inc.
On the other hand, it would be no exaggerate to state that the organizations in Delaware are established to be in state of international trading, expanding sales to the global markets as well as to be engage in business activities with a tax free entity and helps in reducing the overall tax expenditure, to get more privacy and protect assets when doing business. The offshore companies gained these benefits in Delaware which are specific as well as constitute comparative advantage in Delaware over other regions.
Pros and cons pros merchants’ services offer
There are various advantages and disadvantages in setting the merchant account services which should be taken into consideration to take viable decision.
Advantages
- Due to the increased use of credit cards for ordering than cash orders, this would lead to the increased sales and generate more revenues.
- It would most likely speedup the checkouts due to the fact that accepting the payment from credit card is easy and instant.
- It is inexpensive to accept cards because of the huge order amount.
- To deal with the heavy amount of cash would lead to more risk and troubles, so the credit card usage involves less risk.
- The company can offer more payment options to its customers, due to which reducing the likelihood of reducing sales.
Disadvantages
- There is a cost associated with accepting credit cards similar to any cost the organization incurs.
- The degree of fraud is involved in providing merchant account service to customers. The possibilities of risk and frauds are rare.
Economic advantage
It is to notify that Delaware State in comparison to other counties has inherent economic advantage due to its backbone extends from the fastest growing and largest economy all around the globe.
As such, to reside in United States has the added benefits of political and economic stability as well. In relation to the relative size of Gross Domestic Product (GDP) and total population, the state is comparatively large. It is 5th largest GDP per capital state among all states in US. The economy has full potential to further grow and the finance industry is fostering the economic stability and growth in Delaware.
In Delaware, the consultants, financial investors as well as global headquarters received many advantages from its strategic location, uncomplicated business climate and internally trusted business law system. Delaware State is uniquely positioned to be at the forefront of the financial services and business and rapidly growing credit card capital. The state is recovering from the effects of the economic crises in 2008 due to the combination of its exposure to the diversity of markets that US had to offer and financial aid packages from the deferral government………….
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