Goodbye, Sampson Inc. Case Solution
- The Metropolitan area faced a huge economic downturn. To keep its 2nd biggest employer, Sampson, Inc.; local authorities had to make a decision on what steps they should or should not take.
- Metropolitan areas, like other Northeastern cities in the mid-1960s, had a shrinking population and tax burden, lack of business and industries, with outdated production facilities, housing stock and public infrastructure, and a concentration of elderly, low-income and disadvantaged residents. Industrial jobs were rapidly declining.
- Since 1950, no new non-manufacturing corporations had been formed, and the state’s twelfth largest non-manufacturing businesses had grown at a minimal rate during that time frame.
- Unemployment was considerably higher in the Metropolitan area than it was in the other states.
- The Metropolitan area is a vital hub for banking, healthcare and social, information exchange, cultural and historical resources and education.
- The district was desperately required to preserve the city’s level of economic activity, not only to maintain or to improve its employment rates but also to offer additional jobs for citizens of neighborhoods and to boost the re-development efforts in the area.
- Sampson leased 360,000 sq. ft. in the Metropolitan area but required 600,000 sq. ft. for a new company’s headquarters. With 1,350 employees currently serving at its downtown location; it is the city’s second-largest employer, after Clemson.
- Hammer was especially frustrated by the government’s income tax framework, which levied a 20% tax on the highest incomes. His assessment as well as that of other corporate executives, was that the state’s high tax rate deterred other corporate entities from locating in the state, thereby harming the state’s reputation as a business center.
- Hammer grabbed the governor and the legislature’s concern. Work began on a federal income tax reduction that would reduce the highest rate from 20% to 14%.
- The governor also noted the significance of the state’s main city’s economic stability. The Metropolitan area was the “apple core,” and it was in the state’s greatest advantage that it kept its second-largest employer.
The city’s administration comes up with a system for cost-benefit analysis about Sampson Inc.’s tax breaks, development expenses and the concern of all the stakeholders before developing a strategy.
In this instance, the stakeholders and their names, titles, and interests are as follows:
- Harold Hammer was the president as well as the chief executive officer. Hammer was particularly upset with the state’s income tax structure, which taxed top income levels at 20 percent.
- Area population, Neighborhoods, Neighborhoods faced the following challenges, Dust, waste materials, traffic jams, design concerns, displaced workers, and massive unemployment.
- The government, the City administrator,projected $10-$20 million in the government grants.
- Other companies, the private sector, would lead to more development in the metropolis and the creation of new long-term job options.
- David Dunworthy, Chief Administrative Officer of Metropolis, recommended a strategy to meet the Sampson threat.
- Mayor’s administrative cabinet, budget director, he was worried about the cost to the city of retaining Sampson Company.
- Mayor’s administrative cabinet, commerce director, considered that keeping Sampson in the metropolitan area was essential. Who knows what company would take its place if Metropolis’ second-largest employer left the city.
- Mayor’s administrative cabinet, planning director, saw the circumstance as a chance to reconsider downtown’s development.
- Government, City officials, reviewing the financial impact of moving the company’s headquarters from the suburbs to the downtown.
- Neighborhoods adjacent, if the headquarters were constructed on the vocational school area, the 10 households would have to be relocated.
Issues to be considered in a recommended course of action fall into four broad groups:
- Social issues.
- Technology issues.
Economics issues include:
- Population and tax rates are declining in this state and so are businesses and sector growth rates.
- The state has a massive unemployment rate as compared to other regions.
- Since 1950, no additional non manufacturing companies had been created.
- The city’s 12 largest non manufacturing businesses grew at a minimal rate throughout that time.
Political issues include:
- The government’s federal income tax, which imposed a 20% tax on the higher income.
- Increase of minority and historically disadvantaged groups’ rights and protections. Concerns highlighted the high unemployment rate and the degradation of some communities.
- The city was financially able to offer tax incentives to Sampson to offset the additional expense of staying in the city.
Social issues include:
- If the headquarters were constructed on the vocational school area, the 10 households would have to be relocated.
- Neighborhoods faced the following challenges, dust, waste materials, traffic jams, design concerns, displaced workers, and massive unemployment.
Technological issues include:
- Outdated of its production facilities, housing stock, and infrastructure facilities…………………….
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