Moving Headquaters Overseas
Question 1. What are the drawbacks and benefits associated with moving business unit and corporate HQ to another country?
According to the textbook, benefits associated with moving business unit and corporate HQ to another country must significantly outweigh thier drawbacks.
At the business unit level, it is likely to be efficiency gains by moving business unit HQ closer to the center of gravity of the business. It makes more effective interaction between the different unit activities and encourges development of firm’s core competitence.
At the corporate level, there are five strategic advantages in the textbook. First, a leading symbolic value is an unambiguous statement to various stake holders that the firm is a global player. Second, they can get significant effciency gains. Third, firms may benenfit from their visible commitment to the laws of the new host country. Fourth, it cleary indicates a commitment to that country’s market. Lastly, firms enhance their bargaining power in relation that of their home country government.
The most significant drawback of relocating HQ is opportunity cost occured by leaving home country. The company move their headquarter to find new opportunity and put home country advantages behind. It seems to be high risky task, because company give up all of their stayable position.
Question 2. If you were a CEO or a business unit head, under what conditions would you consider moving HQ?
The reasons why the company consider moving HQ to another country are cost efficiency(reduction) and satisfaction customer’s different needs. All the company’s ultimate goal is maximize their profit and minimize the cost, if home country’s price competitiveness low in terms of manufacturing or operating cost, it is able to be considered moving HQ to other countries where cheaper than home country. Moreover, lack of communication between HQ(specific unit such as financial, R&D department) and other...
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