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The Structure of a Business Decision Nakamura Lacquer Company of Kyoto, Japan became one of the best manufacturers of lacquerware.

Its brand 'Chrysanthemums' was Japans best known brand. Now the company had offers to grow in the American market which led to a dilemma for the current owner.

Statement of the problem: Though the company had brands that were most popular in Japan, it had no business outside the country. There was a huge demand of Japanese lacquerware in America. But it was not being satisfied due to the fact that Japan's government did not allow its companies to invest outside the country. Now, the dilemma occurs to Mr. Nakamura when he received offers from two different American companies. He has to decide whether he wants to expand his business or chuck both the offers. Also, if he wants to go ahead with this business expansion, he needs to decide which American company to deal with.

Causes of the problem: The huge demand of Japanese lacquerware was unsatisfied in America was due to the fact that Japan's government did not allow its companies to invest outside the country. This is a sufficient impediment for even the best company to stay in Japan. Now, the reason that Mr. Nakamura is in a dilemma is that if he does not grab this opportunity in front of him, both the American companies would take their offers to some other of the many handicraft companies in Japan. This could ultimately lead to losing its market leader position. Also the terms and conditions in both the offers are stringent and lead to lowering of its brand image in one way or the other. He has to predict which offer is the most profitable for the company's growth while causing least damage to its brand.

Objectives: To sustain in the market, the company has some short term objectives and some long term objectives. The short term objective of the company is to expand the existing business and grow beyond boundaries while making profitable decisions. The long term objective for the company should be to maintain its sales volume in the country as well as increase its presence in the global market so as to remain the market leader in the business where he has many competitors.

Decision criteria: Mr. Nakamura has two offers; one by National China Comapny and the other by Semmelback, Sammelback and Whittacker who wish to cater to the demands of lacquerware in the American market.

Key points in the offer by Mr. Phil Rose: . Largest manufacturers of dinnerware in the US. . Offering firm order for three years and annual purchase of 400,000 sets. . Paying 5% more than paid by Japanese Jobber. . Condition is that the order is made under their trademark Rose & Crown and no other business with any American company is allowed.

Key points in the offer by Mr. Walter Semmelback: . Largest supplier of dinnerware to hotels, restaurants and departmental stores. . Predicted market of 600,000 sets annually and growing to millions in next 5 years. . Ready to invest $1,500,000 for introduction and promotion for the next 2 years, with no liability to Nakamura. . Demanding exclusive representation of Chrysanthemum brand of Nakamura for next 5 years. . Of the sales in those 5 years, first 20% will be used to pay off promotion cost.

Listing of options: Reject both offers Accept offer by Mr. Phil Rose Accept offer by Mr. Walter Semmelback

Evaluation of options: 1) Refuse both offers: The company will keep running as it is in the Japanese market to maintain its brand image. But then both the companies would look for other manufacturers who are ready to accept their offer. This would lead to increasing sales of those competitors in the American markets. This could ultimately lead to Nakamura losing its market leader position.

2) Accept the offer by Mr. Phil Rose: This will definitely lead to increased production. Other than the local market, a fixed sale of 400,000 sets for National China Company will be made for next three years. The profit from it is also better than local market. But the merchandise made for National China Company will be made under their trademark. So, this deal does not provide any global presence opportunity to Nakamura. 3) Accept the offer by Mr. Walter Sammelback: There is no fixed demand but their prediction of demand is higher. The rights of Nakamura.s popular brand will be forgone for 5 years. The profit margin achieved in this deal will also have to be forgone. But brand promotion and visibility is high.

Recommended Solution: Among the available options, I believe that third option is the best. In the five years of the deal, the American company has agreed upon to introduce and promote Nakamura's established brand. It has a large base of customers for the product in the form of hotels, restaurants and departmental stores of US. So, penetration of the brand will be a huge success. Though they demand exclusive representation of the brand, it is not a bad deal for all the promotion the brand is going to achieve. The only hindering factor seems to be the fact that there is no monetary profit to Nakamura in this deal of 5 years. But as so much investment would been put into brand building, the brand has a huge market after years and the profit will be much more in the long run. Also, the offer by Mr. Phil Rose, though is profitable, is not worth it. Nakamura only remains a manufacturer for National Company with no recognition of its own brand. If this company decides to deal with some other Japanese company after three years, then no value addition has been achieved to Nakamura company. Whereas if Mr. Semmelback refuses to deal with Nakamura company after the period of 5 years, the latter would still have its established brand now having presence and demand in the American market. With the brand having power, Nakamura may have many dealers globally selling its products. The long term benefits in this offer are clearly much more promising.