You are an attorney for a boutique law firm and consultancy group that focuses on cross-border transactions. Your client is a company called Baseline Electronics (“BE”) that is based in Albuquerque, New Mexico. Rising transportation costs for shipping its products from their plants in the United States to Europe and Asia have compelled the BE’s management team to start an international expansion. The client has hired you to help them: 1)pick the right region, 2)pick the right countries within the region from which to source raw material and manufacture/export the finished product, and 3)advise on the method of entry. The Scenario Due to pricing constraints, BE can only expand to Western Europe or Southeast Asia. The company aims to buy a manufacturing facility that is 25,000 square feet. It will source the raw materials of its product from one of three countries (sourcing countries) in Western Europe or Southeast Asia, export them to the another country (host country), and export the finished product to two others countries. The management team has already conducted a feasibility study to measure the potential upside of investments in each region and each country. Regardless of which region and country you choose, the expansion will require a lot of work with government officials, who will be regulating the product and providing approvals for the sale and distribution of its products. In addition to selecting the source country and the host countries, BE has asked you to advise them on the best method of entry for their investment. As a reminder, the variables that drive the different forms of investment are the risk and reward. For the purposes of this exercise, assume that the economic upside is the same in all countries. You are asked to assess the risk and based your advice on the risk exposures. The methods of entry from which you can choose are: 1)wholly owned subsidiary or joint venture and 2)acquisition or greenfield investment (greenfield is starting from scratch) The Questions Question 1: What region will you pick? Why? What factors did you consider? Question 2: What country do you pick for the host country? Why? What factors did you consider? Question 3: What country do you pick as the source country? Why? What factors did you consider? Question: 4: What method of entry will you select for your investment in the host country? Why? What factors did you consider? a) Western Europe Source country selections: Belgium, France, the Republic of Ireland Host country selections: Luxembourg, Monaco, or Netherlands b) Southeast Asia Sourcing country selections: Laos, Malaysia, or The Philippines Host country selections: Singapore, Thailand, or Vietnam Legal and Regulatory Factors 1) Economic freedom https://www.heritage.org/index/explore (Links to an external site.) Property rights (freedom from government confiscation), investment freedom (freedom from government interference), trade freedom (exporting product with ease) 2)Corruption https://www.transparency.org/en/cpi/2020 (Links to an external site.) Determine the likelihood that CP will need to pay off government officials to get things done. 3) Ease of doing business https://www.doingbusiness.org/en/rankings (Links to an external site.) How difficult will it be register your company, obtain licenses, etc 4) Rule of Law https://worldjusticeproject.org/about-us/overview/what-rule-law (Links to an external site.) Speaks to regulatory stability and the likelihood that local courts will not give your company a fair trial because you are a foreign company. For example: 6.2 measures the extent to which Formatting Requirements: 1000 – 1250 words Double spaced Font of your choosing Midway Paper Grading Rubric (GLO 306) A: Writing is polished, first paragraph provides conclusion, correct data is used, data is applied and to the specific transaction/explains relevance of data to the specific project, and overall product is concise and persuasive
