Give Me Liberty or Give Me Death by Patrick Henry Speech Analysis Select and read/watch a famous persuasive speech in history. Write a 2-page analysis of t

Give Me Liberty or Give Me Death by Patrick Henry Speech Analysis Select and read/watch a famous persuasive speech in history. Write a 2-page analysis of the talk. Type in Word – Calibri font, double spaced, formal tone. Do not write about Matin King Luther Jnr Case Study – Vita Plastics Assembly Company (VPAC)
The Vita Plastics Assembly Company (VPAC), which has its headquarters in St Louis, Missouri,
is considering opening a manufacturing plant in an overseas country and transferring much of its
current US-based production to the new plant. After extensive data collection and visits by
managers to a number of possible countries, Almeria has been identified as the most promising
country for a new plant. A site near the capital, Lasia, appears to be highly suitable and a new
state-of-the art manufacturing facility could be constructed there very quickly.
The decision on whether to go ahead with the move to Almeria will be based on the level of
monetary savings in production costs that it is hoped would be generated over the next 10 years
by opening a plant there. However, there are a number of risks associated with these savings and,
for simplicity, the level of savings has categorized as high, medium, or low. If a move to Almeria
does go ahead, VPAC will review the success of its investment after the first five years and will
have the option of withdrawing from that country and returning operations to the USA if this
appears to be appropriate.
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Almeria has a relatively new democracy which was created following the overthrow of a military
dictatorship that had ruled the country for nearly thirty years. However, there is considerable
poverty and unemployment rates have recently been as high as 38%. The current government is
therefore keen to attract foreign investors, but it only has a narrow majority in the country’s
parliament. Despite the efforts of the government, widespread corruption has persisted and
Almeria is ranked 5th in the World league table of corruption. Corruption is partly responsible for
the neglect of the country’s road and rail systems which are now amongst the worst in the region.
If a decision is made to relocate to Almeria there is a risk that a new government will come into
power and nationalize all foreign investments. There is thought to be only a 0.05 probability of
this happening during the first five years, but if it did occur, the loss of assets would cause VPAC
to be worse off by $75 million (in present value terms) compared to the returns that would have
been generated by continuing manufacturing in the US. Nationalization would also cause VPAC’s
association with the country to end immediately. There is also an estimated 0.3 probability that
within the next five years, restrictions will be imposed by the government on the convertibility of
local currency into foreign currency. This would reduce savings by an estimated $43 million
(nationalization and currency restrictions can be assumed to be mutually exclusive events).
Insurance can be purchased to cover both of these political risks for the first five years of operations
by paying a total premium which has a present value of $16 million. (Note that the insurance can
only be purchased at the start of the five years). If the company does purchase political risk
insurance and nationalization occurs in the first five years then the insurance will only cover the
loss of assets. It is expected that any savings generated before nationalization would be canceled
out by the costs of relocation and so would have present value of $0. If nationalization does not
take place it is thought that there is a 0.6 probability that in the first five years the investment would
generate high savings having an estimated present value of $85 million. There is also an estimated
0.25 probability that medium savings, with a present value $48 million, would be earned in the
first five years and a 0.15 probability these savings will be low and only amount to $5 million. If
no political insurance has been purchased currency restrictions would reduce these savings by the
estimated amount given above.
At the end of the first five years the company would have to decide whether to continue to operate
the plant in Almeria for another five years or whether to transfer operations back to the US.
However, this decision will only be considered if the savings in the first five years have been low.
If a decision to withdraw is made then the plant will be sold for a return with an estimated present
value of $10 million. If VPAC decides to continue operations in Almeria for a further five years
the risk of nationalization during this period is difficult to estimate but is thought to be between
0.1 and 0.2. However, the risk of restrictions on the convertibility of local currency is estimated to
be the same as that in the first five years. The total insurance premium to cover these risks for the
second five years would have a present value of $12.8 million. If insurance is purchased and
nationalization occurs in the second five years then it is assumed that gross savings made before
nationalization will again be cancelled out by the costs arising from the disruption. For simplicity,
the present values of other costs and savings occurring under each set of conditions in the second
five years are assumed to be the same as those in the first 5 years, with a 20% reduction to take
into account the time value of money. However, it is thought that the probabilities of high, medium
and low returns in the second five year period will be dependent on the level of returns achieved
in the first five years as shown in the table below.
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Second five years
High Medium Low
0.60 0.30 0.10
0.10 0.80
0.10
0.03 0.07
0.90
High
Medium
Low
First five years
For example, the table shows that if savings in the first five years have been high then there is a
0.60 probability that high savings will be maintained in the next five years, a 0.3 probability that
only medium savings will be generated and a 0.10 probability that savings will be low. The other
two rows can be interpreted in a similar manner. It can be assumed that if the company stays in
Almeria for ten years it will sell the plant at the end of this period and hence generate extra returns
with a present value of $6 million.
Problem #1 (50 points)
Analyze the decision problem faced by VPAC and recommend the policy that the company should
pursue. Clearly state any assumptions you have made. The approximate length of the response
should be 300 words, not including graphs, decision trees, or other figures.
Problem #2 (50 points)
Discuss the strengths and limitations of your model in terms of the usefulness of the guidance that
it would provide to VPAC’s managers. The approximate length of the response should be 300
words or more. .

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