21Sep / 2014

Economic Incentives: beneficial for both parties?

(http://www.blogcdn.com/slideshows/images/slides/292/666/1/S2926661/slug/l/gigafactory-aerial-1.jpg)

As the SWOT analysis entails a scrutiny in regards to the Tesla Motors, I have furthered my research onto the topic of Tesla’s upcoming project, which is the implementation of the “gigafactory” in Reno, Nevada. The successful settlement involved a $1.3 billion in tax cuts for Tesla Motors. In Richard Florida’s article “Stop the corporate extortion” (2014), the author describes the development incentives announced by the government as an aggrandized statement and the prospects delineated by such incentives were simply a company tactic in order to obtain more benefits.

The author’s perspective has garnered my interest because as big corporation offers promises of economic success while settling into a less-developed community, the existing residents will often push up the demand as they are afraid of the inflation due to the company movement and the prices for goods will increase even more after the settlement is complete. However, if the corporation fails to deliver its promise, the inflation will likely to negatively affect the locals as well as the government because of the large tax cut. Despite of the latent risk, the community is pushed to the weaker side of the negotiation process, as it does not possess any distinct differentiability other than the low labor cost and the the location convenience. Using this as an advantage, the firm is then able to construct a more profitable contract for itself. In the end, even though the high price for incentives is regarded as a “gamble” by the city as the investment is made in hope of obtaining new economic opportunities, the odds are likely to be against the community itself.

References:

http://www.post-gazette.com/opinion/Op-Ed/2014/09/21/Stop-the-corporate-extortion-Richard-Florida-tax-breaks/stories/201409210041

http://www.teslamotors.com/blog/gigafactory

Permalink Leave a comment

11Sep / 2014

Mending The “Swoosh”

As a world-renowned corporation reputed for its innovative sportswear and acknowledged for its “swoosh” trademark, Nike was placed under the spotlight when the company was revealed to have adopted the operations of sweatshops,

According to Max Nisen’s article “How Nike Solved Its Sweatshop Problem”, despite of the garnered contention, Nike was able to mend its broken reputation by building a nearly transparent business through practices such as the corporate social responsibility reports.

From the preparations that were done for class 3, Nike’s predicament obliquely divulges the significance of business ethics and its impact on the corporation. As R. Edward Freeman deliberately discloses how the stakeholder theory renders to the success of a business: “to create values for customers, suppliers…community”, the equal importance of each group was emphasized as well. Nike’s triumph in obtaining a new image corresponds to this idea as the transparency reveals the brand’s recognition for the “issues of corporate responsibility” and its effort to correlate with the customers. Thus it is by shifting the focus on every faction of the stakeholders, the company is then able to obtain success. Although one is to argue the real intention behind Nike’s endeavor to appease the unsatisfied consumers. Nike has indeed made effort toward the publishing of CR reports and has delineated its sustainability prospects – which means the company has divided its focus towards becoming an ethical business.