Debate On The Impact Of US Economic Policies On The Toro’s Shareholders

Overview of The Toro Company and Its Headquarter Location

Question:

Discuss about the Demands Of The Shareholders For Toro Public Company.

This debate aims to answer the questions and demands of the shareholders to the company’s CEO. The Toro is a public company that manufactures Irrigation supplies,
landscape & turf maintenance products. Its head quarter is in Bloomington, Minnesota, U.S. the company is working in this felid since 1914 now facing problems due to the new policies of the President.

The company is fast growing in the USA and in the other countries but the new reforms of the US president has brought problems for its shareholders. Therefore, the company’s independent directors need to review and report the process of their management in the fields of law, finance and most importantly reputational risks for the company.

• The company website states that it collects taxes in all the states including Columbian districts. Now the policies have emphasised on the physical presence for collection of taxes.
• Thewithdrawal of the Consumer Financial Protection Bureau’s director that gives the company being followed by the regulator added enticement to follow actions until the President puts state’s own appointee.
• The company branches in south western Pennsylvania are suffering due to the new policies. The job retaining employees are unsubscribing and foreseeing risk in the future programs of the company.
• In the branches of Mexico, previously the North American Free Trade Agreement enabled the manufacturers from the US migrated across Rio Grande but Trump’s policy has prevented the negotiation of NAFTA (Potrafke 2013). This has pulled down the free trade and has threatened for putting 35% tariff on the Mexican goods. This has affected the company’s trade.
• The policy has also affected the company’s trade in China. The Chinese import to the USA has 45% tax increase.
• Britain is one of the biggest exporter of services which the company utilizes but in Britain, the company’s growth also has slowed down which has affected in company’s business across Europe (Stromquist and Monkman 2014).
• The business in India has suffered most. India and Us has an optimistic economic relation and it aims to be strengthened by the policies and the new administration of US. Since USA is the biggest market for the Indian export, the policies have affected the business in Indian branches largely (Co?ar, Guner and Tybout 2016). The annual report of the Indian branch has revealed that trump’s Policies have promoted greater restrictions on the free trade and increased tariffs on the goods imported to the USA. The branch has reported net sales of Rs. 55,420.9 crores in the fiscal ended March 31, 2017.
• The company’s work force has also been suffered for the review of H-1B visa programme and has raised concerns among the employees (Crane and Matten 2016). This emphasises that the company’s policy can not alter the American workers but be given to the highest paid and most skilled employees.
• The clients or the consumers has reduced as well as postponed their spending on the products.
• The globalization component has made the rich more prosperous like the owners, investors and the managers but the chief shareholders like employees of the company are suffering.
• The branches of Africa and middle east have reported of social injustice, poor working conditions (Dauth and Suedekum 2015). This includes labour wages and working conditions in the offices, as well as lack of apprehension for environment, mismanagement of resources.
• In the offices of Indonesia and Myanmar, Workers are suffering from culture of fear as these middle class workers re getting little leverage in this global game.
• It is difficult for the company to send resources on H1 B visa due to the new policy. Therefore, it cannot hire cheap employees from other country (Stromquist and Monkman 2014).
• Beside this, the promising and skilled professional cannot be recruited by the company and they cannot get chance if they do not have seven years of working experience.

As the company has shifted from the position where it was five years ago and achieved the epitome of success but the new policies in the USA have affected the company in various aspects. The shareholders are affected due to recent economic policy which has a great impact on globalization and employee management of the company. New economic policies have affected policies of the company in its international operation but has left some optimistic aspect. These are-

• The trump effect has improved the USA’s lagging gross domestic production growth, investment in infrastructure as well as tax reform, all of these have spurred economic prosperity including improvement job opportunities as well as wage growth (Labonté et al. 2015).
• Due to the economic policy change, the company has got the advantage of reduction of barriers like tariffs, taxes, subsidies and other while operating internationally.
• It has created scope for employing new workers, lowering the product’s prices to provide the customers best deals in different nations thus increased market penetration.
• For us, globalization has helped in economic growth and guiding the management to open new branches of the company in new markets across the world.
• The globalization has enabled the company. The economic changes have started to be beneficial for the common people as getting scope to purchase the products according to their own currency rate.
• The scope of influx the information among the countries have increased therefore, the company has been benefitted. It is now able to keep open communication among the branches in different countries.
• The cultural intermingling among the employees have been increased. This has held the company to maintain a healthy and good work culture in the office.
• Since the company shares financial interests, the corporation between the government policies and company policies are trying to solve the ecological imbalance,
• The company has taken advantages of speedy travel, mass communication and quick propagation of information with the help of internet and more importantly in trade.
• The globalization has helped the company in employing labour from different countries and incorporated their skills in the company’s production.
• The policy has ensured that there will be no illegal immigration therefore, the company can securely recruit employees.
• The new economic policy has stated that the corporate tax reformation would shift profit taxation of the USA’s foreign subsidiaries to the territorial system. Under this policy the subsidiaries of the USA corporation gains profit in low tax jurisdiction. For example, Ireland pays Irish corporate tax and is free for investing after the tax profits in any countries (Ebenstein et al. 2013). This aspect will be helping our earning profit.
• The company is trying to bring back the funds back to the USA. This will help in discouraging the tax repetition if the company pays full 35% tax on its profits and does not need to pay additional tax.
• This territorial taxation system will encourage the company to return tax profits and enhance farther growth and capital formation.
• The new policies of the territorial system have attracted the company for investing more in abroad since the company can repatriate its profits gained in the foreign countries. The company has taken measures to take full advantage of these new system for encouraging different branch offices to invest more in the manufacturing sector across that globe (Walter 2017).
• In India the company is taking advantage of its new taxation system that is GST or Goods and Service tax. This will encourage the company for investing more as there is only a single taxation system.
• We have recognised the problems of rising wages and tariffs in China. Therefore, it is working to shift its production to the neighbouring countries of China which are Myanmar, India and Indonesia (Goos, Manning and Salomons 2014). These countries have shown reduction of tariffs as well as limitation of other impediments of imports like machinery and other components. The labour of these developing countries also have shown promises for improving infrastructure providing a strong growth in the Asian countries (Rodrik 2017).
• To solve the problems regarding the new outsourcing model, the company does not want to invest any advanced innovation for next few years. By this time the company will be able to come out of its comfort zone and innovate other options to solve recruitment problem.
• For being a global company, the management has taken measures to hire the local labour yet the leadership positions will always be occupied by the American people (Görg and Görlich 2015). This will help the company to grow value added higher collaborating work than only cheap resources.
• By employing local employees, the company will get more market penetration and build way for acquisition or merging with local companies.
• The company wants to do the work more in the overseas countries and emphasise profit from abroad as more work will led to gaining more profit. This will result in lesser additional tax in the USA.
• More works done in overseas branches will be resulting in expertise which is much need for this particular situation. This will also increase getting competitive advantages than the different competitors both local and overseas.
• Increased professional expertise will assist the company in getting access to the resources (Salager-Meyer 2014). This will have greater impact on manufacture as well as supply of the products.

overall, I see these new policies as huge opportunities for the company, provided all the directors, management and shareholders are able to get proper strategy and their proper implementation. There are be short term undulations, but longer span they look positive.

References

Co?ar, A.K., Guner, N. and Tybout, J., 2016. Firm dynamics, job turnover, and wage distributions in an open economy. The American Economic Review, 106(3), pp.625-663.

Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Dauth, W. and Suedekum, J., 2015. Globalization and local profiles of economic growth and industrial change. Journal of Economic Geography, 16(5), pp.1007-1034.

Ebenstein, A., Harrison, A., McMillan, M. and Phillips, S., 2013. Why are american workers getting poorer? estimating the impact of trade and offshoring using the cps.

Goos, M., Manning, A. and Salomons, A., 2014. Explaining job polarization: Routine-biased technological change and offshoring. The American Economic Review, 104(8), pp.2509-2526.

Görg, H. and Görlich, D., 2015. Offshoring, wages and job security of temporary workers. Review of World Economics, 151(3), pp.533-554.

Labonté, R., Cobbett, E., Orsini, M., Spitzer, D., Schrecker, T. and Ruckert, A., 2015. Globalization and the health of Canadians:‘Having a job is the most important thing’. Globalization and health, 11(1), p.19.

Potrafke, N., 2013. Globalization and labor market institutions: International empirical evidence. Journal of Comparative Economics, 41(3), pp.829-842.

Rodrik, D., 2017. Populism and the Economics of Globalization (No. w23559). National Bureau of Economic Research.

Salager-Meyer, F., 2014. Writing and publishing in peripheral scholarly journals: How to enhance the global influence of multilingual scholars?. Journal of English for Academic Purposes, 13, pp.78-82.

Stromquist, N.P. and Monkman, K., 2014. Defining globalization and assessing its implications for knowledge and education, revisited. Globalization and education: Integration and contestation across cultures, 1.

Walter, S., 2017. Globalization and the demand-side of politics: How globalization shapes labor market risk perceptions and policy preferences. Political Science Research and Methods, 5(1), pp.55-80.