What would be the implications of each policy

Assignment Help Managerial Economics

Reference no: EM13921313

When Ford purchased Volvo AB's car division in 1999, they had to decide what to do about the differences in the fringe benefits received by the employees. Although Ford plants have fitness centers, these centers do not have the amenities offered at the Volvo plants such as Olympic-size pools, badminton and tennis courts, tanning beds, and saunas. One reason for the high level of fringe benefits at Volvo is the extremely high tax rates in Sweden. Company- supplied services such as plush health facilities are not taxed by the government. However, Ford employees in the United States might be tempted to argue for "perk parity" especially during union contract negotiations.31
Suppose UAW negotiations argue for upgraded perquisites for Ford's U.S. employees to match those available in the Swedish plants Ford acquired from Volvo.

a. Ford might achieve perk parity by upgrading U.S. facilities or by reducing Swedish facilities. What would be the implications of each policy?

b. Ford might live with different levels of perks. What would be the implications?

c. Suppose the difference in perks between U.S. and Swedish employees is reduced fol- lowing the merger. What are the efficiency implications for the merger?

Reference no: EM13921313

Questions Cloud

What is the estimated dollar size of economic loss : Suppose you are CEO of a drug company with market cap of $ 1 billion. Your company drug failed a clinical trial. your stock fell by 10%. on the same day market fell by 5%. What was the abnormal return of the stock on the announcement day? what is the..

Research benchmarking related to product design : Research the following topics related to Product Design:-Benchmarking, Reverse Engineering, Computer Aided Design

Calculate the historical growth rate in earnings : Radon Homes current EPS is $6.50. It was $4.42 five years ago. The company pays out 40% of its earnings as dividends and the stock sells for $36. Calculate the historical growth rate in earnings (hint this is a 5-year growth period.) What is Radon's ..

Think the requirements analysis process : The requirement analysis process is so difficult because this is the beginning of the process. Oftentimes, this step becomes a mess because the person may not understand the requirements.

What would be the implications of each policy : Ford might achieve perk parity by upgrading U.S. facilities or by reducing Swedish facilities. What would be the implications of each policy? Ford might live with different levels of perks. What would be the implications?

Prepare a pro-forma income statement : A company anticipates revenues next year of $3,000,000. Interest expense is expected to remain the same at $50,000. The company expects to pay $40,000 in cash dividends. Prepare a Pro-Forma income statement for December 31, 2015 using the percentage ..

Do you agree that firm is necessarily wasting company profit : Do you agree that the firm is necessarily wasting company profits? Explain using concepts from class. In answering this question assume that employees would be more productive if they stayed at the client's office.

Potential amount of credit available on home equity loan : Yara owns a home that was recently appraised for $189,000. The balance on the existing mortgage is $84,450. If Yara’s bank is willing to loan up to 75% of the appraised value, find the potential amount of credit available on a home equity loan.

Which of the following is true about rebt : Which of the following is true about REBT? In reality therapy, the environment or counseling or psychotherapeutic atmosphere includes which of the following

User Account

All Pages