Case Study Analysis

Problem Identification:
Mr. Nakamura has a the business of making lacquer ware. He got expansion options from Mr.
Phil Rose and Mr. Sammelback to expand his business from Japanese market to United States
market. Now his problem is to expand or not and continue to do well in Japanese markets as
the market leader. And if he decides to expand then he should choose which offer

Problem Cause:
Main cause of this problem is that if he doesn’t choose the offer from both of the potential
investors then they might give the same offer to his competitor which would suddenly become
big and which may in future eat up his own market share. And if he decides to go for an offer
then both are very big orders much more than his production capabilities, so he has to decide
about the expansion of his current setup. Once he decide about expansion then he has to
choose should he go for confirm order and higher margins or go for brand name which could be
carried out through up life.

Long term and short term goals associated with problem:

Short term Long term

 Has to substantially increase his
present production capacity
 Has to go for lesser risk as he would be
taking finances on debt
 Requires high margin
 Should think of high profits
 Continuously have large orders even
after contract are over as in Japan
labour once hired is not fired
 Higher the risk higher would be gain
and he would think of long term gains
 Requires high demand even after
contract is over
 Should think of long term survival of
the organization
 Should create a brand value with USA
market.

As we could see there are few long term and short term goals that could be there for Mr.
Nakamura are contradicting each other. So he needs to decide about tradeoff between each
and go for the one which he can think in his vision of the company for next decade.
Decision to be made:
Mr. Nakamura has to decide that which offer he should accept and whom can he make partner to
supply goods for next few years.

Decision Criteria & Alternative solutions:

Proposition I:

Mr Nakamura should accept orders from Mr. Phil Rose and have a contract for next three years
for supply material for US markets. Salient features of the deal would be:

 Mr. Phil Rose’s company “Nation China Company” is largest manufacturer of good
quality dinnerware with brand name “ROSE CROWN”.

 He would introducing the Nakamura lacquer to a small but discriminating public in US.

 He has order of three years for annual purchase of 400,000 sets at 5% more amount
than the current rate.

 All merchandise would be sold under trademark “ROSE & CROWN”.

 Mr. Nakamura will not sell any merchandise to USA client’s during the contract period of
next 3 years.

Advantages:

 100% surety of orders for next 3 years.

 Higher margin with high demand.

Disadvantages:

 If contract is not renewed then company would have large production capacity but no
demand in the market.

 Company would not be able to create brand value for itself even by suppling large
number of lacquer ware.

 All the work done in past 3 years would be zero.

 Government policies would pose hurdle again after 3 years.

 Dilution of brand name with Rose & Crown brand.

Proposition II:

Mr Nakamura should accept orders from Mr. Walter Semmelback and have a contract for next
five years for supply material for US markets. Salient features of the deal would be:

 Mr. Walter Semmelback from Sammelbach and Whittacker is largest supplier of hotel &
restaurant supplies and buyers of dinnerware.

 He has predicted a forecasted of 600,000 sets of lacquer ware a year and millions in five
years.

 His proposition in accordance with the Government policies of Japan.

 He is willing to pay a budget of 1500,000 for next two years for introduction and
promotion.

 Wants exclusive representation authority for “Chrysanthemum” brand for five years at
standard commission rates.

 First 20% in all the sales would be used to pay off the money for introduction and
promotion.

Advantages:

 Brand equity would increase.

 No brand dilution.

 Expansion into U.S. markets.

 Plan in accordance with government policies.

 Sale of 600,000 sets a year according to forecasts.

Disadvantages:

 Risk higher than previous proposition.

 Sharing of profit margin.

 Payment of commission rates.

 5 year term period.

Recommended Solution:

At present scenario I think he should go for preposition 1 because

 He would get his sufficient profit which won’t be there on second preposition.

 He would reduce his risk.

 He might not have any brand value at maturity of contract but he can try to resign the

contract or during the period he would get competency that he could go for product

individually or get another investor.

 If he goes for proposition ll then he might get market value after 5 years but before that

he can’t justify his expansion to meet the demand as all his margin would be eaten by

American’s.

 After nuclear bomb blast it won’t be good to directly trade with Americans. So he might

consider to bring Chinese in between the deal.