Ricardo "Rick" Martino, president and chief operating officer of Merrimack Tractors and Mowers, Inc., of Nashua, New Hampshire, felt that his job had grown much more complicated during $2007$ and $2008.$ Merrimack was a major regional manufacturer and seller of large commercial grass mowers based on a design developed by his grandfather in the years after World War II$.$ The company's major competitors were John Deere, The Toro Company, Simplicity, and Husqvarna$-$much older and larger corporations with extensive lines of lawn care and maintenance equipment.

Originally, Merrimack mowers were manufactured and assembled in a workshop and factory in Nashua. However, by $2008$ the company was buying all of its tractors and machines, manufactured to its specifications, from a contract manufacturer in China, and it was operating almost exclusively as a machine$-$and$-$parts designer and distributor. The company had incorporated in $1980,$ and an initial public offering was followed by additional offerings of shares over the next decade. By $2008$ the company had about $4,000$ shareholders, including some mutual funds. About $25\%$ of the outstanding stock was held by members of the Martino family, and shares were traded on NASDAQ. Rick had been elected president after the death of his father late in $1995.$

Martino's father had initiated several changes and made decisions that led to the company's current situation. In the early $1980$s$,$ management closed down the last manufacturing operations in Nashua. Labor costs in Japan, and later in China, had historically been well below those in the United States, so it made sense to outsource manufacturing to Japanese and, later, Chinese manufacturers. Even with shipping costs, the mowers' variable cost was substantially less than it would have been in Nashua. The China arrangements had worked well, and there had been no problems meeting demand in Merrimack's markets at competitive prices. Through the years, the Martinos had thought about expanding beyond their regional base but, in contrast to their competitors who had developed national and international sales forces, had never done so$.$

However, by $2008$ a number of things had changed. Economic development, including activities supporting the $2008$ Beijing Olympics Games, had increased wages and labor costs in China, and material and energy costs were also rising. These cost increases were compounded by the ever