D080 Module 1: Political, Legal, and Economic Systems Case Study ( with expert solutions + rationales )

Read the following 10 parts prior to answering questions >>>

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Sure Start Batteries is a manufacturer of automotive batteries. The business was started in Wilmington, North Carolina, in 1994 and has focused its business on traditional car batteries throughout North and South Americas. The corporate headquarters for Sure Start are in and around Wilmington, where the majority of the battery manufacturing still takes place. However, when Sure Start expanded to South America in 2011, they also opened a small corporate office in Buenos Aires to help manage the business throughout the continent. They have no major contracts with auto manufacturers to have the batteries placed in new cars, but Sure Start batteries are a commonly found brand for replacement batteries. Although the company has been mildly profitable since its founding, the Chief Executive Officer, Charlie Wicker, has hoped for opportunities to grow the company beyond its traditional market.

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Charlie recently began a new research division within the company to focus on a rechargeable battery for use in electric cars. The electric car industry is still fairly new, and there are many companies still trying to establish themselves as industry leaders. Thus, Charlie feels there is an opportunity for Sure Start to enter the market at the early stage and become a mass producer of electric car batteries. Sure Start is still continuing the production of traditional car batteries, but it does not plan to invest any more into future research and development. When Charlie first announced the new research division, there was some pushback from long-term employees and managers who were concerned about the change in focus. Their main complaint was that the financial investment required may be too big of a risk considering electric cars still yield such a small percentage of total automotive sales. They worried that if the new research results in financial losses for the company, it will ultimately result in a loss of jobs.

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The new electric battery completed development late last year and became available to purchase in January. The battery has been highlighted by several trade publications for its impressive performance and competitive price. Because of the positive publicity and good reputation, the firm has been able to sign contracts as a battery supplier for small, electric car manufacturers in both Europe and Asia. Similar to when Sure Start first expanded into South America, they will be required to place corporate offices on both continents. Charlie and most of the senior leadership team are from the United States. They have some concerns about the expansion into Europe and Asia because of the many variables they may not be prepared for.

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For example, they are unsure what to expect for work culture in these new markets. Additionally, they recognize that there will have to be significant changes to how the company handles marketing, sales, and product pricing. Finally, it is expected that new manufacturing facilities will be established in these new markets because transportation costs of the heavy batteries would be too high if they continue to handle all manufacturing in North Carolina.

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While Charlie wants to focus on manufacturing the electric batteries in Asia, employees in North Carolina are concerned Sure Start may eventually decide to move all battery manufacturing there. So far, Charlie has assured employees that they do not have intentions to move current production out of the United States. Additionally, he believes the expansion of the company will ultimately make Sure Start a more profitable company. He hopes becoming a more profitable company will make them an even more stable employer long-term. In addition to helping with these concerns, Charlie also recognizes there will be a large need for effective hiring and training for the new offices in Europe and Asia.

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The current plan is to temporarily relocate the Chief Operations Officer, Carl Spith, to the Asian headquarters in Vietnam and the Chief of Human Resources, Kim Arkle, to the European headquarters in Germany. Charlie believes that having these two trusted leaders on location as they term-18open these new offices will help with hiring decisions and maintaining the corporate visions as they start with many new employees. Charlie has specifically chosen Carl to be in the Vietnam office because they plan to focus rechargeable battery manufacturing in Vietnam where labor costs are low.

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Shortly after Kim begins working in the company's European headquarters, a new trade policy is enacted that requires electric cars in Germany to contain 75% domestically produced parts or the automakers will have to pay a 10% ad valorem tariff on parts from other countries. Kim and Charlie make plans to establish manufacturing operations in Germany within two years. Before Sure Start is able to establish manufacturing in the country, several electric cars in Germany are reported to have issues with overheating. The German Transportation Agency suspects that the batteries are at fault and is investigating the incidents. All of the batteries in the affected cars were manufactured and imported by Sure Start.

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Charlie is tasking the Chief Marketing Officer, Cynthia Troutman, to develop and communicate a marketing brand and vision that will win over customers with the new electric battery by communicating its safety while also recognizing the firms' longevity in traditional car batteries to help keep existing employees motivated. This will be a challenge because the marketing strategy must balance the concerns of existing employees and stability of the long-term business plan with the promising future of a new product offering. Additionally, the marketing strategy must translate across multiple continents, cultures, and languages.

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Because the majority of senior leadership and other employees have been in and around the same location, there was never a strong emphasis on corporate communications. However, with four corporate offices spread throughout the world, and a physical separation of senior leadership, there must be an effective channel for them to communicate and be unified in their decision-making. The vision and communication for the company must then extend internally to employees around the globe to ensure a unified vision and message that builds employee morale. Finally, communications to suppliers, investors, customers, and communities must be coordinated to maintain a unified message from the firm and sensitive to the many cultural practices where they operate.

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The Chief Financial Officer, Darris Johnson, wants to be proactive about managing the cost implications of a significant and rapid expansion. In an effort to avoid major financial mistakes, Darris recommends that all current management and all new managers hired have clearly defined goals for achievement. He believes each department and division should identify current deficiencies and methods for improvement as part of their goals. Darris would additionally like managers to prioritize the goals into short-term and long-term categories, prioritizing the most important of each category. Darris hopes that these goals will form the foundation of financial decision-making if and when resources become more constrained.

Q1: Which type of globalization is represented by Sure Start expanding into South America, Europe, and Asia?

A. Legal

B. Political

C. Cultural

D. Economic

D. Economic

Economic globalization is the globalization of production, sales, and finance activities in international markets around the world.

Q2: Sure Start is starting a new division for rechargeable batteries in different parts of the world.

What was the globalization driver of this decision?

A. Competition

B. Cost

C. Government

D. Market

A. Competition

Competition drivers are about entering new markets to beat competitors. Sure Start has identified a market that does not have a lot of competition since it is a fairly new market.

Q3: Which antiglobalization argument could lead to Sure Start continuing to maintain its current factories instead of moving them to Asia?

A. Moving manufacturing to Vietnam will result in lower profits for the company.

B. Tariffs for batteries made in Vietnam will make them less expensive.

C. Labor laws in Germany will ensure the company maintains ethical labor practices.

D. Factory workers fear their jobs will be moved to another country.

D. Factory workers fear their jobs will be moved to another country.

Labor in Asia can be cheaper than in NC, and critics argue that outsourcing manufacturing could lead to job loss in the home country.

Q4: Which action should the U.S. government take to encourage Sure Start to keep electric battery production in the country?

A. Enact more strict environmental regulations of U.S.-produced batteries

B. Allow dumping of batteries made in Vietnam

C. Levy a value-added tax on manufacturing activity in the United States

D. Impose tariffs on batteries made in Vietnam

D. Impose tariffs on batteries made in Vietnam

Imposing tariffs on batteries made in Vietnam will make them more expensive.

Q5: Which economic system facilitates the global expansion of Sure Start?

A. Mixed

B. Market

C. Command

D. Traditional

B. Market

The law of supply and demand applies to the market economy, and the goods are privately owned. Government interference is minimum.

Q6: Which legal system will Sure Start be following when they begin operating in Germany?

A. Religious Law

B. Civil Law

C. Cannon Law

D. Common Law

B. Civil Law

Civil law is applied in continental Europe. Germany uses a civil law system.