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Global Commerce The president of Eastvaco is considering recommending to the Board of Directors expanding into the Asian market.
Global CommerceThe president of Eastvaco is considering recommending to the Board of Directors expanding into the Asian market. He suggests that the Company open a manufacturing facility similar to the Charlotte facility. The plant would purchase its raw material from local sources and produce envelopes, paper cups and packaging. He contends since the Charlotte plant is having difficulty obtaining recycled material and he does not want to tarnish the plant’s “green” image the Asian plant could produce non-green products. The product would be marketing heavily in China and Indonesia (where the plant would be established). Excess production would be sent back to the States to meet market demand. The President tells you that additional funding, if needed, should be obtained from Asian sources.Required:You are asked by the President to prepare a short report regarding the following issues:Organizational Structure and Inter-company TransfersYour answer should be organized and well written.3. The Charlotte plant receives some products used in the manufacturing of envelopes, cups and packaging from the South Carolina plant. Recently there have been some heated discussions about the prices charged Charlotte by the South Carolina plant. The product, cremodium, has cost Charlotte $80 per batch. This covers all marginal costs incurred by the South Carolina facility. The South Carolina facility is a profit center and agues that they can sell cremodium on the open market for $120. Which method, as presented in your text, should be used in this instance and why? Does it make a difference if the South Carolina plant has no idle capacity?
