EXECUTIVE SUMMARY Our Company has limited growth in Domestic Market as we are already the best seller. We are having no international business. As classified by the Government of Japan, we cannot invest abroad hence should think seriously about export. The National China Company, the largest manufacturer of good quality dinnerware in United States has offered the annual purchase of 400000 sets of our product at 5% extra price for three years.
Semmelback, Semmelbach and Whittacker, Chicago, the largest supplier of hotel and restaurant supplies in Unites States and buyers of dinnerware and similar goods for a number of department stores are willing to represent our “Chrysanthemum” brand for five years at a) standard commission rates and b) first 20% on all the sales Our Company will make during that time to recover the investment they are bearing for the introduction and promotion in United State. SITUATION ANALYSIS Our company is a market leader in domestic market. We are having no international business.
For future growth, Company has to target the other segments of domestic market and to start exporting. Classified by the Government of Japan, We cannot invest money abroad. The National China Company has demanded for fixed order and Semmelback, Semmelbach and Whittacker, Chicago is willing to represent the company in United State. Both the offers can’t be accepted together. STATEMENT OF OPTIONS ?Domestic Market ?International Market •Export to other countries. •Offer from the National China Company. •The offer from Semmelback, Semmelbach and Whittacker, Chicago. CRITERIA OF EVALUATION 1. Existing production level 2. Investment 3.
The Lacquer Company
Selling price 4. Profit 5. Brand Value 6. Time period required 7. Risk involved 8. Market segments EVALUATION OF OPTIONS 1. Existing production level: A substantial business, employing several thousand labors and production of 500000 sets of lacquer table ware each year so as to meet the demand from domestic market. Significant changes need to be done in the Company to trade internationally. 2. Growth: Company has a limited growth in Domestic Market as we are already the best seller. We are having a very little or no international business. The first offer enables us 80% more efficient company than the existing one after three years.
While the second offer brings more potential in company’s growth in United State. 3. Investment: Optimum utilization of available resources is required if we need to cut down the expenses incurred in meeting the new demand. For domestic market, there will be no major rise in production cost whereas for international business, cost involved is more for changes required in meeting the standards of other countries, labor cost, expansion of production set up and company set up as the demand will be 80% in first offer and for second offer, demand may rise to a couple of million sets. . Market segments: We need to launch the new brand with better quality to tap high-class consumers in Japan. The other market segments like Hotel and Restaurant have to be identified. 5. Selling price: No major increase in price is applicable in domestic market. In case of other market segments, the price is to be comparable with price of existing. In export increase in price is more applicable. First offer has assured 5% increase in price where as in second offer; higher prices can be induced as the customers are like Hotels and restaurants. 6.
Profit: The overall profit will be less initially if company introduces brands for segments in domestic market and will grow in the long run but the percent profit will be more or less same. The overall profit and profit percent will be more in the long run if company opts for export. First offer promises fixed rise of 5% in profit percent whereas in second offer overall profit and change in percent profit depends on the response from the customers. 7. Brand Value: Company will achieve more stability in domestic market as we will have brands for different market segments.
First offer doesn’t contribute in brand establishment whereas in second offer, after five years brand will be established in United State and company will be globally projected. 8. Time period required: Time period may vary as per the response of the other market segments to our brands. In the first offer, after three years, company will be potentially double than the existing one whereas in the second offer, minimum of five years are required to establish the brand. The time period may be more than five years if the response of the customers not found positive. 9.
Risk involved: Expansion of business in domestic market is less risky as our company is well established. First offer brings no risk as the offer is fixed in quantity and price whereas in second offer, the risk involved is very high. If the response turned out to be less promising, the cost incurred in increasing the production level, set up will be hard to recover. RECOMMENDATIONS 1. To invest for other market segments in Japan. 2. The company should accept the first offer. 3. The company should look at the similar opportunities as the second offer for the business in other countries.
ACTION PLAN: 1. A market survey of Japan to understand the exact need from the different segments. 2. Evaluation of our company’s current production capacity. Optimization of labor cost. 3. Survey of international market to understand the requirements from different countries and to know the major competitors available and their market share. CONTINGENCY PLAN: ?We need not worry about the possibility of failure while meeting the demand generated by The National china Company. ?Failure to tap the other segments of domestic market will not cost the company much.