GLOBALIZATION POLICY

OF
THE NAKAMURA LACQUER
COMPANY

SUBMITTED TO: MR SANJAY KUMAR GUPTA

DATE OF SUBMISSION: 18.08.2008

SUBMITTED BY: JOYDEEP MUKHERJEE (20081020)

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To

Mr Nakamura

The Nakamura Lacquer Company

From: Joydeep Mukherjee

Date: August 18, 2008

Subject: Report on Globalization Policy of the Company

Dear Sir

The issue of Globalization of the Nakamura Lacquer Company has been addressed in this
report. The opportunities provided by National China Company and Semmelback,
Semmelback and Whittacker have been evaluated. The provision for not opting for
globalization has also been taken into account. Considering, the total scenario, partnership
with Semmelback, Semmelback and Whittacker for expansion in the American market has
been zeroed upon as the decision that would be in the best interests of the company.

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Executive Summary:
Nakamura Lacquer Company is going through a phase where it has explored every
possibility in the domestic market and has reached an optimum level. Globalization of the
product is a policy decision, which needs to be taken. Two American companies, National
China Company and Semmelback, Semmelback and Whittacker, have shown interest to
promote the brand in the American market. After assessing the important criteria like,
company profile, growth, marginal profit, security offered, risks involved, brand building etc.
it seems appropriate that our company forms an alliance with Semmelback, Semmelback
and Whittacker to promote its product in the global market.

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Situation Analysis:
After 12 years that Young Mr Nakamura had taken over the reigns of the Nakamura Lacquer
Company, the company has conquered the domestic market. The strategy change with
effective mechanization of the trade of producing lacquer wares named the
“Chrysanthemum” brand at large volumes and effective prices bore fruit. With growth in the
domestic sector attaining levels of saturation, “globalization” was what other companies
were offering to Nakamura Lacquer Company. With the brand spreading, American
companies started showing interest in starting ventures in this domain. Two first rate
companies, National China Company and Semmelback,Semmelback and Whittacker lined up
immediately, offering Mr Nakamura, substantial growth, valid prices, increasing brand
domain and new investment opportunities.

Problem Statement:
Deciding whether to explore new territories in the global market, taking into consideration
the present opportunities and risks. The company’s own production and managerial
competitiveness to deal with the substantial growth, also is a concern for the company.

Statement of Options:
The options that Mr Nakamura has at the present moment are:

1. To maintain a status quo, i.e. to remain focussed in the domestic sector.

2. To opt for National China Company for partnership in its globalization strategy.
3. To opt for Semmelback, Semmelback and Whittacker for partnership in its
globalization strategy.
4. To opt for a Company for partnership in its globalization strategy after surveying the
market scenario itself.

Regarding the last option, we do not have sufficient data to evaluate it; so effectively we
have only 3 options to work upon in the present context.

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Criteria for Evaluation:
The following criteria have been taken into consideration, before deciding upon the
recommended decision;

a) Company profile
b) Order quantity(security)
c) Time span
d) Total Profit
e) Brand Building
f) Initial Investment
g) Risks

The other issues which also could affect the future business concern, in case globalization
strategy has been confirmed upon are:-

Capacity of the plant: Whether the company would be able to expand and maintain
production according to the demand of the future.

Demand in future in both foreign and domestic markets: Whether there will be sufficient
demand in the foreign markets so that investing companies would be interested to honour
their offers, and whether the company would be able to hold its domestic market.

Government policy: Will the policy, regarding not allowing investing in foreign markets
change in future.

Evaluation of Options:
Maintaining Status Quo:

The present demand of 500,000/year will be maintained with only marginal increase in
subsequent years as the domestic market seems to have attained saturation levels.

The profit would largely remain the same, as increase of price is not feasible with other
competitors prevailing. Further reduction in costs is an option, but further investments
would be required in more efficient mechanization.

Brand Presence will remain confined to the domestic market.

Competition in the domestic market is bound to increase in subsequent years, maintaining

dominance as well as profit margin would be a tough task.

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Inking the deal with National China Company:

This company deals with manufacturing of dinner wares, tricks of trade with respect to
manufacturing of lacquer wares can be lost.

Order quantity has been assured to be 400,000 wares/year, thereby 1,200,000 units in the
span of 3 years.

Standard Commission Rates have been offered, meaning no marginal profit. The total
revenue though would increase with the sales of larger volumes of wares.

Brand Building for the company will be completely absent, with investing company selling
the goods in its own trademark.

No data about Initial Investment revealed.

Along with fear of loss of manufacturing details, brand building would have to be completely
forgone in the deal. In the case that the company backs out after 3 years, Nakamura Lacquer
Company would be back to square one with respect to globalization of its brand.

Inking the deal with Semmelback, Semmelback and Whittacker:

This company deals with supplying dinner wares to hotels and department stores.
Marketing aspect is more prevalent in the company.

Order quantity is expected to reach atleast 600,000 wares/year. Therefore the total sales
may reach the level of 3,000,000 units in a span of 5 years. The order isn’t firm in this case.

Marginal Profit of 5% has been offered in the deal, though the initial 20% of the sales to be
handed over as compensation for initial investment.

The company gets to widen its Brand Presence in the American market and subsequently in
the world market.

Initial Investment would be the responsibility of the investing company with suitable
compensation as stated above.

The order hasn’t been guaranteed, the security is lesser than previous option.

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Recommendation:
Globalization do seems to be the need of the hour leading to more stability and growth of
the company. Partnership with Semmelback, Semmelback and Whittacker, a company
based on marketing dinner wares, seems to be the more profitable option with higher
returns, no initial investment and brand building opportunities. Security in order quantities
though is less in this venture but the spurt of opportunities the companies are providing
after market surveys, do give out optimistic signals about the demand for lacquer wares in
future.

Plan of Action:
Customization (if required) of the lacquer ware for American consumers, in consultation
with the partnering company must be planned. Production capabilities and resources, for
example new technology, skilled manpower, need to be assessed and brought into action to
deliver the products at the scheduled time. Logistics, regarding transportation, inventory
management must be worked out, for the most optimal cost. For efficient marketing of the
new product, marketing strategy inputs, which have been successful in the domestic
market, must also be shared with the partnering company.

Contingency Plan:
In case that the partnership with Semmelback, Semmelback and Whittacker fails, proper
inventory management procedure must be in place to tackle the situation (storage of goods)
and also proper funding resources must be identified to carry forward the marketing
process of the product initiated by the partnering company.