Fluent Essays

What are the three most important takeaways/lessons from the material provided in this module?  Refer to the files I uploaded please!!! You need write 300-350 words.9 Industrial Recruitment Case Scenario: ABC’s bargaining 255 Introduction 257 Cluster Theory 258 Political Context of Local Economic Development 262 Industrial Recruitment 271 The Factors Determining the Bargaining Positions of Business 271 How Government Should Protect the Public Interest 276 The Strategies that Business Can Use to Increase Its Success in Bargaining with Government 278 Analytical Case: Winter Park 279 Practical Skill: Investigate the bargaining used by your city or county 280 Summary and Conclusion 280 CHAPTER CONTENTS CASE 9 SCENARIO ABC’s bargaining Previously we learned that Zach’s father Zeddic, CEO of Acme Bottling (Chapter 2), was considering moving the company, a large operation of 800 employees. His profit margin was becoming too squeezed for things to remain as they were, and any technical improvements, including shedding some employees, would not be sufficient for the profitability he wanted to achieve. When he approached the city administration about getting a rent reduction, he was graciously brushed aside with the argument that his rent was already low, given the prime location and the upgrades the city had provided in the past. By negotiating with a city that was trying to lure his company, his financial analysis discovered that he could reduce production costs by an enormous amount—a figure approaching 20 percent. Zeddic knew the first logical step was to discuss the decision to move with the board, which was keen on increasing profitability. Still, Zeddic had not anticipated the torrent of reactions that he had gotten in the press, ranging from anger in the community, to a sense of betrayal from his family, whom he had not yet consulted and who would also need to relocate. In hindsight, Zeddic now realizes his focus on financial matters had led him to ignore political and community realities. However, he is now trying to rectify the situation. Initially, everyone in Somewhere blamed Zeddic for threatening to abandon the city that they felt had nurtured and helped launch his successful company. Zeddic has his work cut out for him. He needs to change that perception to one in which Somewhere has, over time, come to neglect his company. And he needs to show that the neglect will have to change—and quickly—if the company is not to move. Using talking points from a report he prepared, he points out the following issues: • The rent the company pays in the city-owned industrial park has doubled. The company is now too large to be in that industrial park, and cannot afford to make changes to infrastructure on a property it does not own. • The city has given three- to five-year tax abatements to most substantial start- ups. ABC has never gotten a tax abatement. • Several new companies were sold city land at a price far below market value. The appearance is that his industry is no longer a priority for the city, and relocating the company to a more hospitable town only makes sense, as matters cChapter 9 Industrial Recruitment * In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context. Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment. Economic growth contributes to an increase in consumption which benefits all sectors of the economic community. Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited). * An economy will reach a natural equilibrium if capital can flow without restriction Capital mobility: capital will flow from high cost areas to low cost areas Equilibrium: overall market and all areas will reach a state of equal status No government intervention: opposing government regulations on the movement of firms attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.) * Location theory Factors affecting a firm’s location choice Government should enhance the location with government performance, policies, and resources Economic base theory Local demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries. Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services. Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs. * Growth pole theory A dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth. Government should help expand the core industry. Central place theory Critical role of urban centers Government should direct resources to the development of a central place Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow