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Group Project (Written Report) (15%)
Each peer-learning group (PLG) will be responsible for researching and preparing a written report on the below current international economic topic. The written project report must be typed and presented in no more than 12 double-spaced pages (not including title page, references, and appendices), 12PT font, and one-inch margins (top, bottom, left and right). You should reference articles and books in your paper and list the sources in your reference section. If you use sources from the Internet, you should include the site addresses (URL) in your reference section. Wikipedia is not considered a suitable source for graduate-level work. [See: APA Style for Written Assignments under “Course Expectations”]
The written report must include an introduction, a well-developed analysis, and a conclusion. Graphics (graphs, tables, charts) are acceptable in the report within reason and should be used if they contribute significantly to the narrative contents.
Have one member from your PLG submit your final project in Word (not PDF) to the dropbox on behalf of your group.
PLGs will consist of 3 members unless instructed otherwise. Each PLG will study 3 Jurisdictions. Members and Jurisdictions are determined as follows:
PLGs are formed based on alphabetical surname order, meaning using example names: Abbott, Beechey, and Belfort would form PLG#1; Cameron, DelBello, and Haney would form PLG#2; etc. (If there is one person remaining s/he will join the last group formed. If there are two people remaining, they will form a group of their own and will be responsible for analyzing two of the three jurisdictions assigned. Further, if there are only two groups in the class, they will both do assignment PLG #1.) Finally, if there are more than six groups, repeat the rotation of jurisdictions.
Jurisdictions are assigned as follows:
PLG#2: Ireland, British Virgin Islands, United Arab Emirates
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 each of the three assigned PLG locations 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.