Qualitative Considerations
When evaluating the position or capacity of a company from an investment point of view, it is important to consider both qualitative and quantitative factors. Quantitative analysis involves the evaluation of the quantitative factors or considerations, which are the actual numbers. These numbers may include financial metrics and may provide a clear scope of the company’s position. Qualitative considerations, on the other hand, are the intangible factors. There are factors characterized in the company that cannot quantify, for example, the employees’ morale. Both quantitative and qualitative factors, therefore, can adversely affect the success or failure of a venture (Chiarella, Flaschel & Franke, 2005).
In the case scenario, the pharmaceutical company should take time to consider both the qualitative and quantitative factors before resorting to outsourcing the manufacturing of the medication. One of the most significant quantitative consideration is product returns. The CEO must first evaluate whether the results returned in an ideal situation would outweigh the transportation costs and other overhead costs involved in the transportation of the product from the United States to Puerto Rico. If the product returns exceed the cost of transportation it would be advisable to resort to outsourcing. The CEO must also evaluate the quantitative considerations of producing the same product in Puerto Rico or another company with lesser taxation policies than the United States.
The main qualitative consideration in this case scenario is the likelihood of a hurricane occurring again in the foreseeable future. We are told from the scenario that Hurricane Maria adversely affected the pharmaceutical industry, and with the area being historically exposed to the risk of such disaster, it would be essential to evaluate the probability that it can strike again. Other qualitative considerations may include the community and prospective customers in Puerto Rico. On a close evaluation of both the qualitative and quantitative factors, I think the CEO should stop her consideration because of the likelihood that a disaster may hit the Islands and thus again affect the pharmaceutical business.