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1. How will these laws affect ratios such as the Total Asset Turnover and the Fixed Asset Turnover?

French labor laws limit the standard workweek to 35 hours, require at least five weeks of paid leave annually, and enforce daily and weekly rest periods (Marie, 2025; Le Global Law). These rules reduce the total number of productive hours per employee, which can lead to underutilization of equipment and facilities. Total Asset Turnover measures sales relative to total assets, while Fixed Asset Turnover measures sales relative to property, plant, and equipment. Shorter operational hours may slow sales growth compared to asset investment, lowering both ratios. For example, a factory with high-value machinery might be unable to run 24/7 due to these labor restrictions. Even if the company invests in more machinery to compensate for limited shifts, it may not see proportional sales growth, further decreasing both ratios. Automation could help offset reduced labor availability, but it increases the asset base before sales grow, which can temporarily lower both ratios. Achieving high asset utilization in a regulated labor environment is possible but more difficult due to limited operational flexibility.

2. How will these laws influence the desire of manufacturing intensive companies to locate in Europe vs. China or the USA?

Manufacturing companies often choose locations with flexible labor laws and lower labor costs. France's strict working hours policies, high overtime premiums, and generous leave policies can raise operational costs and limit output flexibility (Marie, 2025; Le Global Law). In the United States, employers benefit from longer allowable working hours, fewer mandated leave days, and more scheduling freedom, although they still need to follow workplace safety and sanitation standards enforced by the Occupational Safety and Health Administration (Le Global Law; U.S. Department of Labor). While these safety standards can increase costs, they also protect workers and help maintain operational stability. In China, lower labor costs and more relaxed rules regarding working hours and workplace protections further reduce operating expenses, giving companies fewer restrictions on scaling production (China Briefing). Companies with high labor requirements may be less likely to locate in France or other European countries with similar laws. However, Europe remains appealing for highly automated and quality-focused operations, due to its skilled workforce, regulatory stability, and proximity to large consumer markets.

3. During the development of the personal computer industry, Dell moved quickly to a just-in-time manufacturing model while competitors like Compaq did not. HP acquired Compaq in 2002. How would the just-in-time manufacturing model affect the Inventory Turnover ratio?

The just-in-time manufacturing model lowers inventory levels by sourcing materials and producing goods only after receiving orders. This method reduces raw materials, work-in-progress, and finished goods inventory, cutting down on holding costs and waste (Browen, 2023) inventory turnover by dividing the cost of goods sold by the average inventory. With just-in-time, average inventory decreases while sales and the cost of goods sold stay steady or rise, leading to a higher Inventory Turnover ratio. For example, if a company typically holds 30 days of inventory but switches to just-in-time and keeps only 5 days, its Inventory Turnover ratio would increase significantly. Dell's just-in-time strategy allowed it to build computers only when customers ordered them, helping avoid holding large amounts of parts or finished products in stock and giving it a competitive edge. Implementing just-in-time manufacturing reduces inventory levels while maintaining or increasing sales, which boosts the Inventory Turnover ratio. This allows the company to manage its inventory more efficiently, cut costs, and lower the risk of obsolete stock.