Current situation and potential threats to the business

Current situation
Due to the unforeseen results of referendum and exit of Menai from CETA, the situation of the company may change dramatically, if no immediate action is undertaken.
When exit from CETA is completed, the area will be no longer a free and open trading area with other countires remaining in CETA. The economists forecast the following
consequences:
• Larger migration from Menai to other CETA countries;
• Adverse impact on exports from Menai to CETA;
• Increase of costs of imports from CETA to Menai due to potential weakening of Menai dollar against CETA dollar;
• Shortage of skilled staff bringing about costs of recruiting and employing staff post MEXIT.
The aforementioned factors will have detrimental impact on company’s profit margins.

Potential challenges to the company’s business

Over-dependency on local Menai market

1 In case of Menai economy decline, it could mean less demand for our products not only internationally, but also locally, leading to lower sales and profits.
Uncertainity about Menai dollar
2 Lower Menai dollar value could boost exporters’ results but it is a serious threat for importers. Since our import figures are high, it can be detrimental to our results.
People
3 Our business is based on skilled labour. Since economists foresee higher migration numbers, we should focus on providing better conditions to retain our staff.
Customs capability
4 Since Menai will be trated like a Third Country, custom declarations will be necessary for imports and exports causing additional costs.
Strategic sourcing
5 There is a risk of higher administration costs and potential delays at border crossing, threatening the supply chain.
Available strategy options in the light of MEXIT
Available strategy options
Setting up another base company in CETA country
• Having a sister company in CETA country will decrease the volume of
beaurocracy and speed up the processes
• Skilled CETA workers can be employed at sister company
• Base company in other CETA country be be a start point to further
expansion into other CETA countries
• Costs of custom fees and other beaurocracy fees can be saved
• Lower risk of currency exchange variability
Analyze free trade agreements with companies in CETA
• We should analyze free trade agreements (FTAs) in other
countries where alternative supplies and materials might be
sourced
• Cooperating with companies based in these countries can
save costs of delivery
• Nevertheless, we should also analyse current terms and
conditions of companies we are cooperating with now to
avoid punishment fees for breaking the contracts
Reviewing employment conditions
• We should review current employment conditions for out best staff and
offer them better conditions in order to prevent them from leaving the
company
Our new Automate processes to save costs
strategy • Since additional customs information will be required to comply
with MEXIT, a premium will be put on accurate recordkeeping
and precise, thorough knowledge of a company’s entire supply
chain
• Automating such processes will help to manage processes on
our own like customs declarations, product classifications, and
duty calculations in the most cost-effective way