Question

Equator, a U.S. manufacturer of pharmaceuticals, has acquired a firm in the same industry in Ireland. It plans to transfer one of its key managers from its plant in St. Louis to Ireland. Which of the following is the major threat to Equator's plan to transfer competencies from itself to the Irish firm?

Answer 1

Answer:

The St. Louis manager may quit Equator in order to remain in St. Louis.

Explanation:

"Only at the last stage can the plant manager be measured on a profitability basis, and even that measure depends greatly on negotiated transfer prices and the smooth functioning of the rest of the system. He will not have much opportunity to exercise independent decision making, since most variables under his control (capacity, output, specifications, and so on) will affect everybody else. Thus he will probably be regarded as a “cost center” and be measured in large part on his ability to work smoothly within this highly interdependent system."

Reference: Schmenner, Robert H. HayesRoger W. “How Should You Organize Manufacturing?” Harvard Business Review, 1 Aug. 2014