Quattroporte Inc.

Only available on StudyMode
  • Download(s) : 1174
  • Published : May 31, 2013
Open Document
Text Preview
Quattroporte Inc.
PLG#2: Ireland, Guernsey, Malta
Sandra Hamilton
Abdullah Hanna
Jatin Kot
Presented to Professor
Geoff Reid
EMBA 602
University of Fredericton
February 24th, 2013

Contents
Executive Summary3
The Business Model3
National profiles Political and Policy Direction 4
Guernsey……………………………………………………...……………………4 Malta………………………………………………………….……………………6 Ireland………………………………………………………………………….…..7
Globalization & Comparative Advantage7
Primary Factors Most Influencing Profitability7
Corporate taxation7
Productivity and Availability of Human Resources8
Currency exchange rates9
Consumer Taxation – VAT9
Capital Gains Tax Policy9
Banking10
Foreign Direct Investment10
Intellectual Property Protection & Future Strategic Opportunities10 Repatriation of Profits12
The Cost of an Exit Strategy12
Conclusion13
Bibliography14
Appendix…………………………………….…………………………………...16

Executive Summary
Quattroporte Inc., a Canadian-based software company has experienced an exponential increase in international sales and it’s in a position to move to the hyper-growth phase. This opportunity has prompted the management team to establish a task force whose goal is to evaluate the benefits and risks of creating a subsidiary in one of the following jurisdictions; Ireland, Guernsey or Malta. This report provides a summary of the analysis and outlines recommendations for leveraging the rapid growth in sales to maximize Quattroporte’s global profits over the next three years. The Business Model

At the time of writing Quattroporte management envisions limiting the business activities of the new foreign subsidiary to the processing of financial transactions from sales outside of Canada and the United States. Customer sales, support services, research and product development will continue to operate from the global HQ in Canada. It has also been determined that preferred merchant account rates of 1.75% - 2.25%, as offered in England, can be secured by a Quattroporte subsidiary operating in the “offshore” jurisdictions either of Ireland, Guernsey or Malta. Based upon the proposed business plan, a capital cost investment of $2,943,865 CAD in Canadian dollars should cover the initial setup costs and required cash flow for the first six months of operations for the new subsidiary. Based upon calculations (see Table 2) a Quattroporte foreign subsidiary could become quickly profitable. The business plan recommends a transaction-processing subsidiary, operating with thirteen staff and augmented by two senior level managers from the Canadian HQ. After extensive analysis and discussion, the team has recommended that the most profitable location for Quattroporte’s first overseas financial transaction processing subsidiary is Guernsey. National profiles Political and Policy Direction

Table 1. Guernsey, Malta and Ireland Economics Profiles
Guernsey
A boasting a zero corporate tax rate, Guernsey utilizes the Guernsey Pound, which is directly tied and equal to the British Pound, as their national currency. Guernsey is a small island in the Channel Islands, geographically located between the United Kingdom and France and maintains a population of approximately 66,000 (Guernsey, 2012). Politically and financially, Guernsey is neither part of the European Union regional trading agreement nor part of the UK. Therefore, it is a free and independent of the laws governing of these bodies. As a tax haven, more than half of Guernsey’s income is derived from banking, fund management and insurance and it relies heavily on corporate entities that have established themselves as “off-shore” subsidiaries. One of the country’s aims is to diversify and augment its revenue streams as a hub for Intellectual Property (IP). The combination of a zero-percent corporate tax rate and strong copyright protection laws makes Guernsey an ideal selection for a company such as Quattroporte to locate a subsidiary. Guernsey...
tracking img