Question

INSTRUCTION: Read the case and Answer ALL questions:

Spire in Scotland

Spire is a nanosatellite and data analysis company based in San Francisco. The company specializes in gathering unique data from small satellites in a low-earth orbit. Spire collect this data, pull it down and through a network of ground stations, and sell. The Spire opened its European headquarters in Glasgow, Scotland. Data, like that provided by Spire’s nanosatellites, can be the key factor in fighting the extreme and unpredictable weather events that cause so much destruction globally.

Scotland has a well-known reputation for providing a first-class welcome to all its visitors and Spire management were very impressed by the warm and open reception they received from the Scottish Government agency. CEO and Co-founder Peter Platzer stated 'Where Scotland won out was the access to risk capital, the flexibility and, importantly, the Scottish Government’s eagerness to support innovative companies – this really stood out here’. His vision when he co-founded Spire was to be able to provide satellite powered data from any location on earth. He also claims that his staff are very pleased; ‘We had a number of overseas staff come here for a temporary position to help set up who have since decided that they want to stay here permanently. Glasgow is a really great place to live and Scotland in general - our people really enjoy being here. The words friendly and hospitable are really not rich enough in meaning to describe the experience of being a part of everyday life here in Scotland’.

As well as the positive welcome and help that they have had to settle into life in Scotland, Spire management also point out that a key factor in their location decision was the access to a talented work force. ‘When we looked at Scottish staff, we found that the passion for what they do, their character and work ethic, is absolutely world-class’.

1. Why did Spire choose to locate in Scotland? [1]

2. Why do companies set up overseas manufacturing and service operations? Discuss. [2]

3. Are reduced labour costs the main reason for relocation? Comment and justify your comments [2]

Answer 1

Spire chose Scotland for reasons being extremely friendly government, accessibility to capital, flexibility and scalability and lastly the people, characters amd work ethics.

Companies set up overseas operations to expand and distribute and cintinue to grow as large market Capitalization and capitalise on its brsnd image of global player and access to new emerging markets where profits and growth both are high thus enabling them to remain competitive and sustainable and also increase shareholders value.

Reduced labor costs are never main reason as labor laws and trade unions are different and compliance protocol to minimum wages is different and complex at times. Relocation is majorly to seek cross cultural experience and grab global market share and grow the pie of profitability.

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