Final Global Business Plan Paper
Chris Fischbach, O.H. Hudson Jr, William Del Valle
MGT/448 Global Business Strategies
February 15, 2012
John O'Brien, MBA

Final Global Business Plan Paper * In the previous weeks, Team D set out to gain a better understanding of globalization and determine if opportunities exist for branching out their fictional company DeltaCompCarib (DCC) into a new global market. During this time the team developed a business strategy to promote DCC and bring its product line to Puerto Rico. Early on DCC had to conduct a regional analysis, country analysis, and an organization and product or service analysis. Regional Analysis Regional Alliances and Economic Integration Puerto Rico is just one of many Caribbean countries, which make up the Caribbean Community and Common Market (CARICOM). This regional integration between Caribbean countries, formed in 1973. According to the United States Trade International Commission (2008), “The purpose of regional integration is to achieve economic gains through free trade flow and investments between neighboring countries often by lowering or eliminating tariffs against imports from fellow member countries. These actions increase duty free trade, tourism, movement of labor, and the flow of capital across national borders, reducing the possibility of conflict. Regional integration promotes global business in that it removes, in stages or altogether, previous barriers to foreign investments and other business ventures” (Trade policy for Development). Duty free access and tax incentives encourage the United States firms to invest heavily in Puerto Rico to assist in promoting Puerto Rico's prosperous trade. “Puerto Rico’s industries include pharmaceuticals, electronics, textiles, petrochemicals, processed foods, clothing and textiles. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector” (Gallucci, 2009, para. 4). Physical Environment and its Effect on Trade According to the Encyclopedia of the Nations, 2012, “Puerto Rico, an island situated between the Caribbean Sea and the Atlantic Ocean, lies just east of the Dominican Republic. With an area of 9,104 square kilometers (3,515 square miles), Puerto Rico is almost 3 times the size of the state of Rhode Island. As an island commonwealth with a coastline of 501 kilometers (311 miles), Puerto Rico shares no borders with other nations. San Juan, the capital, is located on the northeastern shore of the main island; there are also 3 small islands included in the Commonwealth: Vieques and Culebra to the east and Mona to the west. San Juan's location makes it one of the Caribbean Sea's most valuable ports. The Mona Passage, off Puerto Rico's west shore, is also a crucial shipping route to the Panama Canal. Major cities include Guánica, Playa de Ponce, and Guayanilla, all 3 along the southern coast, in east-to-west order. Puerto Rico's most important cities are port cities, vital to the Puerto Rican economy.” “Since the 1950s, industry has surpassed agriculture as the primary source of economic income. Due to very few natural resources of economic value, Puerto Rico’s economy relies mainly on Federal Aid from the United States Government, which depends on the industrialization programs and the tax incentives that U.S. offers” (Gallucci, 2009, para. 4).

Political Influence “The Puerto Rican government is heavily involved in its economy. Fomento, the island's Economic Development Corporation, stimulates and guides economic growth. Since the 1950s, government involvement in economic affairs has included Operation Bootstrap, a plan to mix local labor and foreign investment by boosting industrialization based on exports; Fomento's efforts to promote petrochemicals and advanced technology industries in the 1960s; and high government spending in social welfare programs. In 1994, the government created the Foreign Trade Board to stimulate foreign investment and encourage exports. The board was mainly concerned with providing support to small businesses that had the potential to export goods to foreign markets. Puerto Rico's was the first economy in the world to become industrialized around a program that fully relied on exports, and Puerto Rico continues to focus its efforts on an economy for export, bolstering its image as an ideal location for tourism and business” (Encyclopedia of the Nations, 2012).
Economic Conditions “Constrained by the relatively small size of their economies and limited natural resources” because of these constraints, “economies of scale are difficult to achieve” (Current Level of Caribbean Economic Development and International Trade). In addition, to the small sizes of the Caribbean Region’s economic status can cause problems with debt in the different countries of the Caribbean Region and could be a concern for businesses.

Economic Sectors Before the 1950s, the Puerto Rican economy was typical for a Caribbean island, relying heavily on the plantation system. Agriculture was the primary source of income, and sugar production was particularly vital. From about 1950, largely due to government involvement in the island's economy, the industry and service sectors experienced exponential growth and quickly replaced agriculture as the foundation of the economy. As of 1999, agriculture provided only 1 percent of the island's GDP and provided jobs for only 3 percent of the island’s work-force. GDP per Capita (US$) | Country | 1996 | 1997 | 1998 | 1999 | 2000 | Puerto Rico | 8,200 | 8,600 | 9,000 | 9,800 | 10,000 | United States | 28,600 | 30,200 | 31,500 | 33,900 | 36,200 | Jamaica | 3,260 | N/A | 3,300 | 3,350 | 3,700 | Cuba | 1,480 | 1,540 | 1,560 | 1,700 | 1,700 | Note: Data are estimates. | SOURCE: Handbook of the Nations , 17th, 18th, 19th and 20th editions for 1996, 1997, 1998 and 1999 data; CIA World Factbook 2001 [Online] for 2000 data. |
Foreign investment incentives offered by the U.S. federal government have attracted much foreign capital, and by 1999, the industry sector produced 45 percent, and the service sector 54 percent, of total GDP. The island depends heavily on trade, commerce, and tourism, the latter of which is the most rapidly growing sector of the Puerto Rican economy currently. Finance Options Regionally several banks are available to DCC. The banks provide debt financing options for business and residents. Puerto Rico draws upon the added benefit of the United States small business administration that offers government secured debt financing to companies. Every country in the region is suffering loss of foreign direct investment due to the current economic downturn. Social, Health, and Environmental Conditions The Caribbean region’s social issues include high levels of poverty, unemployment, low wages, and crime. Health conditions suffer due to the lack of health care facilities and staff to address the growing health care needs. The entire Caribbean region enjoys a tropical climate but also suffers through a hurricane season. Terrorism Threats The Caribbean region threatened by terrorist activities from land, air, and sea. The proximity of the islands enables potential terrorist transportation via small boats between islands. The homogeneous nature of the population enables terrorist activities to be well hidden and the regional trade agreements facilitate transport of goods and services used directly for terrorist activities or indirectly to fund terrorist activities.

Country Analysis Political Stability Puerto Rico has a representative government established by the United States internally, governed by a democratically elected four-year term governor represented in both the House of Representatives and the Senate. Puerto Rico has four political parties. These parties consist of the Popular Democratic Party, which proposed to maintain free association with the United States. According to "Puerto Rico-Politics, Government, And Taxation" (2012), “the pro-statehood New Progressive Party emphasizes that the island is already economically dependent on the United States and believes that making the island a state would gain it representation in Washington” (para. 2). The Socialist and Independence make up the remainder of Puerto Rico’s political parties. Although Puerto Ricans have governing authority over internal affairs, under the Commonwealth formula, residents do not participate in presidential elections although considered American citizens. Residents do not pay federal income tax on locally generated earnings, but do pay Puerto Rican government income tax rates, which parallel federal-plus-state levies on the mainland. Economic Conditions Puerto Rico's currency is the United States dollar. Puerto Rico economically considered an independent taxation authority according to the United States Congress.

Economic Conditions Puerto Rico's currency is the United States dollar. Puerto Rico economically considered an independent taxation authority according to the United States Congress. The residents have to pay import taxes, export taxes, commodity taxes, social security taxes, and much more. Despite the current economic downturn, Puerto Rico’s economy has improved dramatically because becoming a Commonwealth. Currently the island's industries include technology, tourism, apparel, leather, tobacco, pharmaceutical, petrochemical, printing, and publishing. One problem that the current economy is facing is the effect of globalization as factories are moving their manufacturing business to other countries in Latin America and Asia in an effort to capitalize on lower labor costs. Finance Options Puerto Rico has many banks including local and the United States corporations. “The government owns and operates two specialized banks- the Government Development Bank (GDB) and the Economic Development Bank (EDB)” (Welcome to PR.com, 2008). Banks in Puerto Rico carry FDIC insurance and offer the same services as banks in the United States. Physical Environment and its Effect on Trade Puerto Rico strategically located within the Caribbean. “Puerto Rico’s coasts measure approximately 580 km and if the adjacent islands Vieques and Culebra are included, the coast measures approximately 700 km” (Welcome to PR.com, 2008). In essence the discovery of Puerto Rico’s coastline has made it an efficient and popular and centralized trade location. Puerto Rico has large ports for import and export along with the necessary infrastructure and accommodations to support a vibrant trade market. Puerto Rico and the United States face encounter the same challenges when dealing with regulations and trading. Social, Health, and Environmental Conditions Puerto Rico’s social framework tied to several cultural axioms that have transcended generations, immigration, and American acculturation. One such cultural axiom is familism. Familism is a social trend enabling the family to assume a level of ascendance over personal concerns. This value of family helping family is important to note because family opinion plays a strong role in the perception of businesses and companies including expectations of the company. Additionally, social issues typically associated to income-challenged communities such as drug and alcohol abuse, HIV/AIDS, violence, and sexual abuse also exist within Puerto Rico. Heart disease and cancer are the leading cause of death separated by less than a percentage point (17.3% and 16.6 % respectively). “Heart disease, malignant neoplasms, and diabetes have been the three leading causes of death for many years, accounting for nearly half of all deaths, 44%” (Health in Americas – Puerto Rico, 2007, p. 599, 601). Puerto Rico has a tropical climate where heat and humidity may be a benefit or issue for companies. Puerto Rico is in a hurricane region therefore; stringent building codes are in place for the business community. Businesses must be aware of their proximity to or potential disruption of several nature preserves. Cultural Considerations Puerto Rican culture centers on family and food. Strong family ties are acculturated at a young age. Corporate giants such as MasterCard International successfully have targeted these cultural traits through target marketing programs (Caribbean Business, 2009). Another cultural axiom is language. Puerto Rico’s native language is Spanish. Companies that wish to do business in Puerto Rico must understand that Spanish is the native language even though many Puerto Rican’s speak English. Organization and Product or Service Analysis Description of the Organization DCC is product field is the computing industry. The company provides Computers, Technology, and Office Equipment to industry. The company specializes in designing, manufacturing, and marketing innovative products, services and technologies including Desktops, Servers, Notebooks and Printers for business, education, and home use. The team’s marketing efforts will be strategically tailored to communicate value, price, and specifications to a wide array of customers. Product “Needs Assessment” of the Target Country Puerto Rico imports chemicals, machinery and equipment, clothing, food, fish, petroleum products, and raw materials; it exports pharmaceuticals, electronics, apparel, canned tuna, rum, beverage concentrates, and medical equipment (Encyclopedia of Nations, 2011). Therefore, there is a need for Team D’s product and service in Puerto Rico and the surrounding countries. * Country Risk Analysis and Strategic Planning * Learning Team D’s endeavor to expand its business venture to Puerto Rico the United States Territory has certain country risk, therefore the research team of analysis and consultants are providing detailed strategic planning analysis. The patent pending trademark name of DeltaCompCarib (DCC) will define the business venture and its new product line of computers and peripherals. The new venture will pursue a global standardization strategy that will focus on increasing profitability and profit growth, achievable with economies of scale. The implementation process must first undergo a rigorous and detailed comprehensive analysis of the following areas of concerns: Puerto Rico’s political, legal, and regulatory risks. The analysis will include a stable and controlled concern for exchange and repatriation of funds risk. Assessment of competition in the country combined with taxation and double taxation risks, covering the market price, promotion, place, and product. The risk the business must hedge against in the area of its distribution and supply chain to include challenges posed by the physical makeup of the environment specifically within the location of the target market. The business must learn and understand Puerto Rico’s social and cultural structure, thereby mitigating any demographic risks. The research team will thoroughly analyze any cyber-technological risks that may pose a threat to the business venture. The country risk and strategic analysis will conclude with a summary of a clearly defined mission and objectives of the business venture. Inclusive in the summary is a SWOTT analysis of Puerto Rico, along with the best strategy selection, mode of entry, and justification of the products and services. Finally the analysis will close with how the business executes control and evaluations, followed by a smart contingency plan. * * Political, Legal, and Regulatory Risks * The political stability in the country may pose some threat to the business venture; high unemployment continues to stifle economic growth. The governor of Puerto Rico Luis Fortuño’s has made some necessary and unpopular decisions implementing fiscal austerity measures, which brought on strikes by students opposing the tuition fee increase at the University of Puerto Rico. Jobs remain scarce indicative of the 14.0% unemployment in 2011 and projected 12.0% for 2012. The country current short-term economic risk rating is 59.4. “Annual real gross national product (GNP) is forecast to average 0.9% in the next five years” (“Latin American Monitor: Caribbean Monitor,” 2011, p. 6). DeltaCompCarib (DCC) thoroughly will comply with local regulations including those actionable requirements by the Permit and Endorsement Management Office (OGPE) the Spanish acronym (Santana, 2009). The government of Puerto Rico has an urgent need of new enterprises to help jumpstart their weak economy, hence the rationale for selecting this country for a global business venture. Exchange and Repatriation of Funds Risks Puerto Rico is part of the United States of America and does not have an independent currency, therefore no exchange rate risk exist because the country uses the dollar as its currency. The business venture of (DCC) is a foreign company, simply because it was not created in Puerto Rico, Santiago (2010), “Any entity not created in Puerto Rico is considered a "foreign" entity regardless of its place of origin” (para. 3). The corporate tax rate for business venture (DCC) doing business in Puerto Rico is negligible or comparable to doing business in the United States “If the foreign income is earned in a country with tax rates lower than the U.S. rate, the system results in an incremental U.S. tax, commonly termed a repatriation tax” (Albring, Mills, & Newberry, 2011, p. 1). Competitive Risk Assessment Team D’s research team and consultants have compiled some statistical numbers, which consistently show upward growth of computers and Internet use on Puerto Rico. The data comparison to a Gaither International poll revealed favorable facts. The results yielded comparable findings it included 1000 interviews with adults acquiring a diverse sampling of the island-wide cultural representation. The question asked by interviewers was trying to determine how many computers are in the home. “A significant 37% responded that they own one computer, 11 % stated they own two and 4% reported having more than three computers in their home” (Frances, 2011, p. 14). The business must strategically position company to have an alliance with Claro Puerto Telecommunication Company, which sells computer tablets and mobile devices. “Claro has developed unique market alternatives to close the digital gap by making it easy for consumers to have access to new Internet-integrated technologies,” (Jose, 2011, p. 38). Direct competition with Claro would prove difficult to DCC to thrive at onset of operation; therefore the company is endeavoring to establish the company on small-scale test platform. Taxation and Double Taxation Companies or entities doing business in Puerto Rico can operate without worrying, on November 15, 2006 a bill passed preventing double taxation. The bill received 47 votes collectively from the Popular Democratic and the new progressive parties giving it the overwhelming majority of the votes. The House of Representatives unanimously approved the bill and subsequently ordered the elimination of excise taxes (“Caribbean Business,” 2006). The business venture DCC can operate risk free of double taxation in the country. This savings further enable the business the opportunity to invest more capital into the product and services. Distribution and Supply Chain Risks DCC faces many risks, but one concern is lack of transportation. Puerto Rico has two major highways to get around the Island, but unpaved roads to reach inner Island locations. The company discussed possible solutions to this problem. Building a railway system to relieve traffic congestion is an option for Puerto Rico. This poses concerns for DCC to distribute products throughout the country. DCC must decide on an economic way to distribute products within Puerto Rico and surrounding Islands. Physical and Environmental Challenges Puerto Rico, known for its mature shipping channels will increase product availability to the Island and surrounding countries. DCC relies on its product reaching its destination in a timely manner. The shipping channels and ports will mitigate this risk. The company depends on the Worldwide Web for its business and also relies on the Internet for customers to access its website. Another strategic discussion the company is involved in is to communicate via the Internet and wireless cell phones across the mountains, which serves as a barrier. The possibility of installing towers in the mountain ranges is a concern because of the nature reserves throughout the Island. Social and Cultural Risks DCC will benefit in a market where technology is a symbol of social status. However, the economy and poverty levels make it difficult in Puerto Rico and surrounding Islands for the people to purchase high-tech equipment with cash and rely on a credit-base system. The risks of credit purchase and the possibility of not qualifying because of low credit scores is a concern for DCC. Cyber/Technology “Internet and networked technologies have changed many aspects of how business operates. The ability to readily store and share data across interconnected networks has created new efficiencies in sales and marketing, data access and retrieval, and vendor relations and interaction” (Cyber Risk, 2011). Puerto Rico’s tech industry is crucial to local economy and serves as a foundational element of DCC’s competitive advantage. A company concern is Cyber-attacks such as unauthorized access, theft, Website defacement, and cyber-extortion. Managing Risks The risks are mitigated using the comprehensive business strategies. Puerto Rico’s Commonwealth status provides DCC protection against exchange and repatriation risks. The company must ensure that it is protected through patent and trademark, which reduces risk. DCC’s four P’s strategy positions the company to succeed despite a slumping economy. DCC’s projects will focus on improving transportation and wireless communication throughout the island and surrounding countries. Puerto Rico’s technology industry continues to make strong strides and is a favorable environment for new technology. Initial Marketing Plan DCC is not Apple or Dell, which are two of the most successful computer providers in the world. Therefore, DCC must provide products and service that set itself apart from its competition. Millions of consumers are familiar with the Apple brand, its record growth in the industry, and the company’s distinctive logo. In time, DCC intends to be viewed in a similar light. DCC’s initial marketing plan includes its products, an organizational overview, DCC’s mission and objectives, a SWOT analysis, and the preferred marketing research approach for the company. Organizational Overview As stated previously, DCC’s product field is the computing industry. The company provides Computers, Technology, and Office Equipment to industry. The company specializes in designing, manufacturing, and marketing innovative products, services and technologies including Desktops, Servers, Notebooks and Printers for business, education, and home use. The team’s marketing efforts will be strategically tailored to communicate value, price, and specifications to a wide array of customers. Name of organization - DeltaCompCarib (DCC) Mission DCC’s mission is to bring the best business and personal computing experience to business professionals, students, housewives, and every consumer who uses its innovative hardware and software products. To meet this mission, DCC will provide Puerto Rico, and the surrounding area with the best product, service, support, and customer experience in every market the company serves. Objectives The objectives in support of DCC’s mission statement are simple. DCC believes there are many factors, which will enable DCC to separate itself from the competition and promote repeat business. These factors are product offerings, customer intimacy, value-added services, global reach, and www.DCC.com. The advantage that DCC brings to the industry is their business strategy, which is to segment the market into customer groups. By creating customer groups, DCC can focus each group’s computing needs and create products and services, which meet those needs. Geographic Location Puerto Rico Product Mix * Enterprise Resource Planning for Business * Network solutions * Servers * Laptops * Storage * Tablets * Desktops and All-in-One PCs SWOTT Analysis of Puerto Rico Strengths * Large ports for import and export. * Well-developed infrastructure and transportation network * Puerto Rico is a United States Commonwealth * United States monetary system; banks have same laws * Tropical Climate Weaknesses * Small economy * Increased debt * Low wages * Healthcare needs Opportunities * Tax incentives * Duty Free access Threats * Few natural resources * Poverty * Unemployment * Natural disasters (Hurricanes) * Crime Trends “Puerto Rico has excellent prospects for future economic growth and development. The incentives for domestic and foreign investment provided by the U.S. government are highly successful and show no signs of slowing down. The island's severe lack of natural resources has been overcome by the practice of mixing local labor with external capital to produce a booming import/export economy. Furthermore, the improving social and economic conditions on the island may slow economic progress as Puerto Rican outmigrants return to the island from the continental United States. Realistically speaking, the Puerto Rican economy is strong and well developed, and all signs point to a future of growth and prosperity” (Puerto Rico Future Trends, 2012, Para. 1). Marketing Research DCC’s market research team went to Puerto Rico and conducted detailed research including consumer analysis, demographics, purchase behaviors of the island, and industry analysis. The marketing team found that Puerto Ricans are no different than many American citizens in their buying habits. Therefore, DCC needs to follow the “consumer purchase funnel” model and create awareness, gain consumer opinions and consideration, then consumer preference, and finally purchase. Strategic Selection The strategy that DCC plans to implement is to attempt to differentiate itself from the competition and needs to gain a competitive advantage. Therefore, the best strategy for competitive advantage in their market is to employ a customer orientation niche strategy. A customer orientation is a method for a business to focus its product or service to customers. The niche strategy involves finding an audience and aiming a product at the audience (Van de Graaff, 2010). As stated in the mission and objectives section, DCC wants to “bring the best business and personal computing experience to business professionals, students, housewives, and every consumer who uses its innovative hardware and software products.” To accomplish their mission statement, DCC plans to incorporate a Customer Relationship Strategy.

Customer Relationship Management (CRM) DCC wants to foster customer relationships in an attempt to meet its mission and objectives. The best approach is through CRM. CRM is about customer interaction, whether that interaction is from the first meeting with potential clients, throughout the sales process, the service contract, or any other phase in the product lifecycle. Through CRM, DCC will have a better understanding of its customers, be able to retain customers through better customer experience, attract new customers, and increase profitably. Mode of Entry As stated in the text, “there are six different ways to enter a foreign market; exporting, turnkey projects, licensing, franchising, establishing joint ventures with a host country firm, and setting up a new wholly owned subsidiary in the host country” (Hill, 2009). The best method of entry for DCC is to either establish a joint venture with a Puerto Rican firm or to set up a new wholly owned subsidiary. Each has advantages and disadvantages. Major advantages of DCC setting up a wholly owned subsidiary are the protection of their technology, ability to realize location, and experience the economies, whereas risk and high costs are disadvantages. Control and Evaluation DCC is a company that continually looks to improve performance. To accomplish this goal, the company must maintain control within the organization. For DCC, this will be simple because the company is still relatively small. For a company as large as Dell this becomes an enormous task. DCC will use several control mechanisms to maintain the continuity in Puerto Rico that they have in stores in the U.S. Control mechanisms are used to measure performance and to assess different aspects of the business. The control mechanisms at DCC will employ are management audits, budgetary controls, financial controls, and managerial controls. These control mechanisms will give management at DCC a good idea of daily operations and company performance. How the company manages their internal strengths and weaknesses, affects the four functions of management. Contingency Plan The DCC Company will ensure the best measures are in place prior to entering into this business venture in Puerto Rico. Contingency plans will be in place to make sure that when the business is experiencing an unexpected event, which affects the company, the impact will be minimal. This will ensure that business will proceed unimpeded and without disruption. Through these contingency plans, DCC will continue to support its customers and provide the customer experience and satisfaction in accordance with its mission statement. Marketing Mix and Plan Products DeltaCompCarib will supply the island with high quality, durable, long-lasting, computing equipment, and peripherals, which come with a one year warranty on products and services (extended warranties also available). Consumers will have selection options between laptops, notebooks, tablets, “DCC Pads”, desktops, printers, scanners, and a wide variety of associated peripheral equipment. DCC plans to keep ahead of its competition by continuing to modify its products to meet consumer demands and by providing products with the latest technological advancements in computing while maintaining affordability. Price Options The heavy demand for computers on the island of Puerto Rico dictate that company meet the consumers affordable price ranges. The company will start selling its products initially at lowest profit margin until economic conditions improve and disposal incomes increase. The installment payment option is also available to aid in reaching the other half of Puerto Rico’s population, which yet to acquire a computer in their home. As DCC becomes the brand of choice for the Puerto Rican consumer, many affordable options will remain as will a multitude of product options for consumers from every income range. Place The location of the business will rest in the heart of downtown San Juan business district. The location of the store will display clear glass viewing windows under bright lights where the majority of island foot traffic passes. Promotion The company will advertise on the local television networks, stream live over the Internet, place advertisements in the local newspaper, and will use out-of-home advertising (billboards, street furniture, and transit areas). DeltaCompCarib (DCC) will feature the slogan “Reliable Computing Equipment.” The company will further offer a ten percent discount to anyone turning in or exchanging and older model for newer or upgraded version of the brand. Other promotional plans include: * Educator discounts * Club DCC Frequent buyer program – Club DCC is free to join. Club DCC members receive a 5% discount on software purchases. Points are accrued on purchases and once members reach various levels of points, rebates or coupons are mailed out to their homes or business.

Financial Overview of DCC The financial overview of global business venture DeltaCompCarib illustrates how the company’s budgets monetary assets and the proper distribution of those funds to achieve profitable financial objectives. The general budget fundamentally based on a predetermined period; therefore it is reflective of a comprehensive strategy to increase cash flow going forward. The budget is a quadrant of elements: currency receipts, disbursement of funds, the period’s net fund change, and future financing needed. DeltaCompCarib endeavoring to become the region’s most profitable company providing consumers with an affordable product portfolio consisting of laptops, printers, notebooks, tablets, scanners, “DCC Pads” desktops, and several choices for associated peripheral equipment. DCC accounting management team prepared the following monthly general cash budget for the period covering January through April 2011. DCC’s seasonal promotional events, results in peaks sales during the month of February and March. The accounting team managers used the following data to build the general cash budget: approximately 30% of DCC’s receives sales 30 days post sale and the remaining 70% returns 60 days post sale. DCC’s strategy is to coordinate its procurements to coincide with the forecast of upcoming sales. Procurements are equivalent to 60% of sales, therefore developed 30 days in advance coinciding with future sales. The company makes payments within 30 days following procurements. The general cash budget for this predetermined four month period, derives its formula from the listed data in the chart containing employees salary, wages, rent, and other expenses. The company must make a $4,000 interest payment deriving from its long-term debt. The interest payments match data covering the first quarter January through March. During the same period a subsequent short-term note interest payout is due in the amount of $200 in March. DCC’s accounting and management team did not follow any strict rules when formulating the general budget period. However, ample time was allotted to demonstrate the team’s management policies, yet concise enough to permit accurate assessment of the data (Keown, Martin, & Petty, p. 119, 2005).

General Budget Chart for Delta Computer Caribbean Inc., Four Month period ended April 30, 2011 (Keown, Martin, & Petty, 2005, p. 119).

* Foreign Exchange Risk Puerto Rico used peso as currency in the early 1800s although under Spanish rule. The currency did not change on the island until passing from Spain to the United States in 1898. If Puerto Rico was using peso as its currency today DCC would use hedging as a strategy to mitigate fluctuations in its value. The strategy would seek to compensate both sides of fluctuations in this manner, “The hedge involves taking an equal and opposite position in response to the underlying FX exposure to protect against adverse currency movements” (Gibbons, 2011, pp. 53-54). The ideal hedge ensures the company will not incur major losses with currency fluctuations. The hedge further removes risks from the calculations leaving the company with precise numbers forecasted at the time of the agreement. This enables DCC to concentrate on its core competency and remain confident the fluctuation will not have severe negative consequences on the business. Another option is to use a forward exchange to help mitigate fluctuations they usually set at 30, 90, and 180 day future intervals. “A forward exchange occurs when two parties agree to exchange currency and execute the deal at some specific date in the future” (Hill, 2009, p. 326). Puerto Rico is currently a commonwealth of the United States and use the dollar as its currency; therefore DCC does not face foreign exchange risks globally from its business venture. Sources of Financing for DCC Business Venture There are many emerging markets in today’s global economies new financing sources have also emerged from a reliable new investor the Islamic finance market. Latin America continues to make strong economic growth, thereby increasing the need for more traditional and alternative sources. DCC finds the Islamic Finance market worth one trillion dollars in assets, particularly attractive to build and sustain venture capital for the business. “For Latin American markets, the introduction of Islamic financial institutions will likely expand the sources of capital available to the region, which is crucial for development” (Guerrero, 2011, p. 27). The CARICOM region has its own well established financial institutions as well, which also serves as sources of financing. “With assets of $11.85 billion, Barbados based First Caribbean is the largest regionally listed bank in the English-speaking Caribbean” (Fittipaldi, 2008, p. 64). The island of Puerto has its own fast growing established financial institutions strategically positioned to remain a reliable source for venture capital. The Eurobank achieved notoriety when it became the island’s fastest emerging commercial bank with assets escalating from $607.7 million to one billion dollars in the fourth quarter of 2002, a substantial jump of 70.3%. The banks president and Chief Executive Officer (CEO) of Eureobancshares Inc., said “The bank has reached a threshold that places us in an even more competitive position than before,” (Oliver-Mendez, 2003, p. 48). * Centralized versus Decentralized Operations for DCC * * The company business model primarily based on developing highly qualified innovative and creative talent to complement the business model. The core competency of the organization differentiates its operations by providing a unique services and offering along with its technologically advanced products. The operations require its employees to possess the ability to communicate well and promote the product and services effectively. The most important decisions like expanding the global business venture to Puerto Rico, rest primarily with the Chief Executive Officer and top management. This centralized function of DCC corporate operations design function improves communications on major decision only. * Managers and local employees operate within DCC’s structured chain of command and communication flow. This function of the business operates in a decentralized mode to enable local managers and subject matter experts to make decision concerning problems that directly influence them. When problems or extenuating circumstances in local area require senior management notification the chain of command chart Illustrate the proper communication flow. DCC uses both centralized and decentralized functions in its operations. However, the daily operations require a more frequently use decentralized function to resolve issues efficiently. “In centralized organizations, most important decisions are made by top managers. In decentralized organizations, many decisions are delegated to lower levels” (Bateman & Snell, 2009, p. 300). * * * * DeltaCompCarib (DCC) Chain of Command * * * * * * * Exit Strategies When starting up a business the company plans to grow but also need to discuss an exit strategy. An established business is a company that generates income and developing an exit strategy is common in a business plan. Exit strategies include mergers, sale, mergers, Buyout, or initial public offering (IPO). “Some may not find laying too much importance of exit strategies as correct, arguing that you will never want to build something by always having a motive of leaving. But whether a business wants to move on to the next venture or whether to stick to a business plan for a long time, it is important to have a succession plan in place” (Exit Strategies For Startups, 2011). DCC strategies has pros and cons and the decision on which to choose will be evaluated by the company. Begin with the end in mind is an exit strategy the company uses to plan for the best, but prepare for the worst. DCC’s exit strategy is to sell the business to another company, preferably to a local company. By selling to a local company the transaction can be conducted without the government regulations and oversight that occurs with an initial public offering (IPO). Selling to another company will allow DCC to recover capital that was invested at the inception of the company. Selling outright provides for an easy exit. The Owners can take the money from the sale and sever themself from the company. Another option is selling controlling interest to a business in Puerto Rico or surrounding Islands. This strategy keeps current owners involved and able to share the company with another business and still have some control of the business. DCC owners will benefit from this strategy because they will share the business profits. Dees (2011) stated “Those who have created a successful business know it does not happen without planning, hard work, and a little luck. Yet most have no exit plan for leaving their business. The truth is that most business relationships do not have happy endings. To have a successful business, you must plan for a business exit strategy” (p. 45). Recommendations Developing an exit strategy is a part of any global venture. Plans for success is the company’s goal; however, with success also may come failure and developing an exit strategy is important to battle any unforeseen circumstances that prevent the project from reaching its intended outcome. DCC’s plan to sell or selling controlling interest to a business in Puerto Rico requires detail planning. The company must decide on the steps in the turnover. First priority will be to turnover management and building maintenance roles. The next priority would be to train executive teams and operators. Finally, discuss what employees will maintain employment with the buying company. DCC will be a consultant within the country for a certain time and would be available from its office in the United States. Puerto Rico operates under the United States of America regulation and laws. Because the country is not a threat of any civil or political unrest there is still the chance of major natural disasters. Hurricanes and earthquakes are a common occurrence in the Caribbean islands and DCC will ensure to take a major role in the rescue and rebuilding efforts when this occurs. Under these circumstances, it would not be good policy to abandon such locations. DCC decided to continue with the venture in Puerto Rico based on findings by the research team. If executed properly DCC will benefit from this global venture and also establish a strong base in Puerto Rico and surrounding Islands. Conclusion DeltaCompCarib (DCC) decided to expand its business to Puerto Rico and surrounding islands. Through research in Puerto Rico and surrounding Islands by the companies research team and determining the marketing mix for the area, seems like the right move for the company and a very successful venture for the company and local communities. The team’s financial assessment proves that international and domestic sources will work for this venture. The business plan is created for success; however, with any plan for success there is a plan for failure. DCC has developed an exit strategy to benefit the company and countries involved. The Global Business Plan for DeltaCompCarib is feasible and recommendation to proceed is approved.

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