Answered: Questions: 1. a. Discuss all other…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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became standard practice among major businesses. Nowadays AMSUPP uses the "futures"
ordering online program, which allows retailers to order five to six months in advance of delivery
with the guarantee that 90 percent of their order will be delivered within a set time period at a fixed
price. The system is also used to network some 47,000 retailers worldwide, with independent
distributors, licensees, and subsidiaries in 140 countries, branch offices in 42 counties, 19
distribution centers (DCs) in Europe, Asia, Australia, and Canada, and manufacturers in 28
countries.
Questions:
1. a. Discuss all other modes of entry as discussed in the course. b. Based on the issues discussed in
the case AMSUPP utilises a joint venture. State the benefits and issues evident from the use of
this mode of entry. You must use information from the case to support your discussion. c. Which
is the most appropriate alternative foreign market entry mode for a relatively big and well-
established firm such as AMSUPP.
2. a. Discuss the cultural issues faced by AMSUPP in the Japanese market. You must utilize
Hofstede Dimension to first assess Japan with consideration of the products offered by AMSUPP.
b. i. What ethical challenges were faced by AMSUPP in the Asian market. This must be linked to
the relevant ethical issue as discussed in the course when addressing each challenge faced. ii.
Provide suggestions to alleviate each of the issues faced. Specifics on how each will be actioned
must be included.
•
N.B. Challenges were briefly mentioned in the case, you are to expand on these and make
suggestions for the aspects not addressed.
3. After a discussion on the international strategies discussed in the course, which strategy could
AMSUPP use to attract customers in Singapore? You must use information from the case to
support your discussion.
4. In the case it was mentioned that Asian sourcing is of crucial importance to guarantee a uniformly
high quality not only for AMSUPP but also for all firms that market products with an increased
element of labor cost, in order to maintain low manufacturing costs with different partners and
different production countries. As a group, what tools would you suggest AMSUPP utilize to
ensure that high quality is maintained and risk is reduced as discussed in the course?
5. Discuss all aspects of the global sourcing strategy with clear details on the strategies that can be
used when assessing all six (6) aspects if AMSUPP is to operate in Singapore as discussed in the
course. For example, what sourcing strategy would they use, how would they contract suppliers
(in terms of tools to be utilised), etc. Information for the case must be used to support the
discussion
• N.B. Some aspects were briefly mentioned in the case, you are to expand on these and make
suggestions for the aspects not addressed.
6. Provide at least two (2) examples/case studies of international modes of entry utilized by
multinational corporations in Japan, USA and Singapore that have succeeded or failed. The name
of the multinational must be clearly stated in each example. Be sure to state the mode of entry
utilized in each example in each country. Why do you think they would have succeeded or failed
in each example included? Provide details on this.

Transcribed Image Text:Case- The AMSUPP-NIPPONSUPP Story An American multinational company, "AMSUPP," had a very strong market position in an industrial supplies business in all major countries except Japan. They manufacture, process distribute and provide production materials such as machinery, electrical and metal products and rubber, There they had set up a joint venture with the leading Japanese company in the industry, "NIPPONSUPP." The venture gave AMSUPP a 45 percent ownership in return for technology transfer as well as capital investment. In discussing global coverage and global market share, the AMSUPP managers included Japan in their calculations. With Japan, AMSUPP's global market participation looked very complete. Japan's inclusion was particularly important and AMSUPP's managers identified the country as the most globally strategic country, even more than the United States. Unfortunately, the way in which the venture was set up and the way in which the AMSUPP managers operated really negated the possibility of genuine participation by AMSUPP. First, AMSUPP owned a share only of the manufacturing subsidiary of NIPPONSUPP and not a share of the parent company, which was responsible for marketing and sales. AMSUPP, therefore, had no legal right to access NIPPONSUPP's markets and customers. Second, while NIPPONSUPP had sent marketing representatives to the United States to learn from AMSUPP about the American market, AMSUPP had not done the same in Japan. Many American companies have found that in joint ventures with Japanese companies, the latter have gained far more access to their American partners' knowledge than have the former to their Japanese partners' knowledge. In effect, AMSUPP did not participate in the Japanese market in any strategic sense: They merely had a financial investment and not a very profitable one either. When the AMSUPP managers understood their problem and tried to change it, they found that they were in the proverbial position of riding a tiger: they could not get off for fear of being eaten. In this case, if AMSUPP ended the joint venture, they would lose all their business in Japan. Worse, they had created the tiger themselves by setting up NIPPONSUPP with the best technology. That, combined with NIPPONSUPP's manufacturing skills, resulted in NIPPONSUPP's products being of higher quality than AMSUPP's. AMSUPP now had to maintain the relationship in order to prevent NIPPONSUPP from becoming a fearsome global competitor. AMSUPP Activities in Southeast Asia: Ethical Dilemmas and Social Responsibility Policies Asian sourcing is of crucial importance to guarantee a uniformly high quality not only for AMSUPP but also for all firms that market products with an increased element of labor cost, in order to maintain low manufacturing costs, with different partners and different production countries. AMSUPP, though, has in recent years received severe criticism regarding its manufacturing policies in less developed countries because of its "sweatshops," where young workers receive low wages and work long hours in unpleasant and unhealthy conditions, whereas they should normally be attending school and living in decent conditions. The initial reaction of AMSUPP was to downplay the whole issue by adopting a defensive stance of doing nothing illegal since these operations where subcontracted to local agents and as such AMSUPP had neither the legal responsibility nor adequate control over these operations. AMSUPP, after all, was doing nothing more than following practices common to every other company including its competitors. However, public perception regarding this issue continued to have a negative effect on its imag Sports Marketing/Advertisement Revolution by AMSUPP AMSUPP established a policy of endorsing top athletes from almost the very beginning by persuading Steve Roberts, one of the first distance runners, to wear an AMSUPP shoe. AMSUPP has continued endorsing its brands to influential athletes, coaches, teams, colleges, and sports leagues and has thoroughly and actively sponsored sporting events and clinics. Not only was AMSUPP endorsing athletes in all sports, the company also started to advertise to everyone. And that is where "Live It" was derived from. In 1988, by introducing the "Live It" motto, AMSUPP launched its most successful advertisement campaign ever. The motto is still being used in campaigns and it successfully communicates the affiliation of the brand with popular culture. This highly successful campaign skyrocketed AMSUPP sales. Then, in 1990, AMSUPP established a new approach to improve communication with the public by opening its first “AMSUPP Town," with a goal to get people more involved in the "AMSUPP experience." Its strategic objectives thus are to "provide an environment that encourages people to maximize their contribution to AMSUPP, identify focused consumer segment opportunities, provide quality and innovative services and products internally and externally, establish and nurture relevant emotional ties with consumer segments, and maximize profits." Success for AMSUPP depends upon its skills in design research and development and in production and marketing, but in addition AMSUPP is filing application for patents on inventions, designs, and improvements. AMSUPP's Innovation through Integration Logistics and Supply Chain Management AMSUPP was among the first to implement the method of preorder inventory that allowed retailers better control over their provisions. It was a revolutionary business decision of the time, but soon became standard practice among major businesses. Nowadays AMSUPP uses the "futures" ordering online program, which allows retailers to order five to six months in advance of delivery with the guarantee that 90 percent of their order will be delivered within a set time period at a fixed price. The system is also used to network some 47,000 retailers worldwide, with independent distributors, licensees, and subsidiaries in 140 countries, branch offices in 42 counties, 19 distribution centers (DCs) in Europe, Asia, Australia, and Canada, and manufacturers in 28 countries.

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