Case study:

Lets start with a real-life case study, as featured in BBC.

I am highlighting some keywords which will be useful to refer later, as we attempt to solve the problem
using our platform.

If you've bought a luxury leather handbag in Milan or Manhattan recently, chances are high that it was
made in Sanjay Leekha's three-storey factory in Faridabad on the outskirts of Delhi.

But on Wednesday, 5th June 2019, the 33-year-old family-owned business - along with thousands of
other Indian manufacturers - will become the latest victim of the Trump administration's effort to
reshape its international trading relationships.

Exporters of goods including imitation jewellery, building materials, solar cells and processed food will
face a hike of up to 10% in the US tariffs imposed on their products, following the White House's
revocation of India's membership of the Generalized System of Preferences, or GSP.

First introduced in 1976, the GSP is a preferential trading agreement between the US and more than 120
countries and territories. It's designed to help developing countries grow their economies, while
bringing down the price of imported products for American consumers.

India was by far the largest beneficiary of the GSP - $6.3bn (£4.9bn) of its exports enjoyed concessionary
tariffs - or no tariffs at all - in the United States last year.
Among the companies to have gained a significant competitive advantage from GSP exemptions is Mr
Leekha's firm, Alpine Apparels, which produces as many as 40,000 handbags a month. But US buyers of
his bespoke products are already asking the firm to absorb the cost of higher levies by reducing its
prices.

If he is forced to do that, Mr Leekha says, he will eventually have no choice but to lay off some of his
1,000 employees.

The Coalition for GSP, a US-based campaign group, say the Trump administration's retaliatory decision
will ultimately prove counterproductive, and cost American businesses over $300m in additional tariffs
each year.

In their written testimonies to the US government, some of the country's largest businesses seem to
agree.

Retail giant Walmart, for example, says India's membership of the GSP programme benefited its US
customers "by removing millions of dollars of duty costs that act as a tax" on its products.

But Mr Leekha says the impact will largely be felt by Indian suppliers, who will have become less
competitive overnight after being "singled out" by Donald Trump's team.
"The removal of GSP is only happening to India and Turkey, giving other developing economies an
economic advantage," he explains.

Exporters like him, he insists, will be forced to slash their profit margins.

"This will lead to us having to say no to some business, or some business actually moving away from us
to others countries which are still availing themselves of the GSP benefit, countries like Cambodia and
Indonesia."

His fears may not be unfounded.

The American Apparel & Footwear Association, which represents brands including New Balance and
Adidas, has warned the US government that the withdrawal of India's GSP benefits would leave
companies with "no choice but to return to sourcing from China."

It added that tariffs on Chinese imports meant that "American consumers will pay far higher prices for
their travel goods as a result."
For discussion :

Who are the key players in this story ?

Ans: The US and Indian Government and Manufacturers.

How are they impacted ?

Ans: The Indian Manufacturers are impacted because The US demands for the removal of GSP which
would lead Indian manufacturers to bear loss and eventually layoff many employees.

What stages in the supply chain are disrupted because of this situation?

Ans: This situation disrupts the third stage of supply chain management which is money flow. This
situation basically affects the profit margins of the Indian traders and Manufacturers.

What are the options in front of each player?

Ans: 1. The US could either negotiate terms with India inorder to pay them the GSP that they deserve.

2. Incase The USA does not agree on the negotiation terms, India could aim on a different country
to transfer their goods.

What could be a defensive response of each player ?

Ans: India would say No to the removal of GSP. The US would aim on a different country to fulfill their
needs.

What could be an offensive response of each player ?

Ans: The US will start trading from China. India could lookout for a new country to transfer their goods
inorder to gain profit via GSP.

Who are the new players who will step in to take advantage of the situation?

Ans: Indonesia and Cambodia

What new market opportunities arise during this crisis?

Ans: Sourcing from China will be the new opportunity which would lead to the US to pay comparatively
higher prices for transfer of goods.

If you had a magic wand, what information or help can you offer each player to respond quickly to this
crisis?

Ans: Since India is a cluster for making leather hand bags, I would suggest the USA to continue trading
with India and agree on paying them GSP because if they start transferring goods from China, the quality
of goods may differ which will lead to costumer dissatisfaction.
 List of players
Player Example What they do Type of Player Location How they are impacted

Leather goods Alpine Apparels Leather SME Faridabad 1. High costs

manufacturer products (Small/Medium New Delhi 2. Possible cancelled orders
Naz leather Manufacturer Enterprise) from US
export, BN and Exporter 3. Reduce prices
Enterprises
Importers of New Balance Clients Retail agency Milan, Italy Milan – can get better deal
Leather goods Adidas Sell luxury Importer Manhattan, US Manhattan – will look for
leather products Brand owner alternative Manufacturers
and exporters
Exporters of Purnima, Kanhai Manufacturer SME Mumbai GSP removal affects them as
imitation Jewels and Exporter well. Face similar issues to
jewelry Alpine Apparels
Exporters of Vision India Manufacturer SME Tamil Nadu, GSP removal affects them as
building and Exporter Bangalore well. Face similar issues to
materials Alpine Apparels
Exporters of Navak Manufacturer SME Uttar Pradesh, GSP removal affects them as
solar cells Consultants and Exporter Bangalore, well. Face similar issues to
Coimbatore Alpine Apparels
Exporters of APEDA Manufacturer SME Bangalore GSP removal affects them as
processed food and Exporter well. Face similar issues to
Alpine Apparels
Exporters of Trend Gold Vehicles, SME Fatih, Istanbul GSP removal affects them as
Gold Computers, Iron TURKEY well
steel, Gold,
citrus fruits
Manufacturers Colia Leather Manufacturer SME Sihanoukville Need to build relationship
of Leather and Exporter Special with US importers and
goods Economic Associations
Zone (SEZ) They will suddenly get more
Cambodia orders and must be ready to
supply them

Manufacturers Myhands leather Manufacturer SME Bekasi City,

of Leather and Exporter West Java
goods Indonasia
Association of American Represent Industry USA. Texas, CaliforniaAffects all their
Importers and Apparel & Importers of Association member companies.
brands in Footwear Leather goods – Need to help them
Leather Goods Association like New source from other
Balance, Adidas countries like
JR Palacios Cambodia, Vietnam,
Enterprise, EI China
Pack import Liaison with US govt on
behalf of members to
pressure them to
reinstate GSP
Ministry of US ministry of Represent Govt. USA. 1401 Manufacturers and
commerce trade and Government Institution Constitution Ave., NW Associations from
commerce interests and Washington, DC 20230 India, Turkey,
policies Cambodia, Indonesia
will lobby them for
access
Association of National Institute Represent SMEs Industry India. Affects all their
Manufacturers of and exporters Association member companies.
and exporters Entrepreneurship of Leather Noida, Uttar Pradesh Need to help them sell
and Small goods, Imitation in other countries
Business Jewellery, Solar Liaison with US govt on
Development cells, Building behalf of members to
(NIESBUD) materials, pressure them to
Processed food reinstate GSP

like Alpine
Apparels
Logistics and HTL Logistics, Transport of SME Bangalore, India Change in
Transportation Total Logistics exported goods Export/Import location
from India – Port of exit and entry
as goods gets re-
routed
Consumers of LVMH, Kering, Use the Brand Manhattan
leather goods, Coach, Prada imported leather owner Milan
imitation Group, etc goods and sell it Etc
jewelry etc in their city
Suppliers of Udhaya Bhaskar Rice mills, Oil SME Andhra Pradesh Pressure from Indian
raw material, Rice mill, etc mills, Graphite SME manufacturers to
equipment, Crucibles reduce cost of
labor, land production
Need to collaborate
among each other to
find cheaper supplies
Suppliers of Pei 1000, CV Plastic and SME Cambodia and Pressure from SME
raw material, Aneka Solo cosmetic raw Indonesia raw manufacturers to
equipment, material material clusters produce more
labor, land suppliers Need to collaborate
among each other to
fulfill rush of new
orders
Any others ???
Features to build in the platform to support players
Player type Locations What information do What actions they
they need to see on should be able to do on
the platform to the platform to support
respond quickly ? their goals ?
Suppliers India, Cambodia, The platform should be Third party inclusion.
Indonesia able to broadcast the India could supply their
new rates to the goods to Indonesia and
players so that they Cambodia in order to
can stratergize increase their profit
accordingly. margins since both the
countries are eligible
for GSP hence India can
act as a third party
here to supply goods in
order to earn some
profit.
Manufacturers India, Cambodia, The platform should be Market switch. India
Indonesia able to see what other could target other
markets are there countries like Italy,
apart from the US. Spain, France, etc
where fashion is
trending and the
leather goods are more
likely to be sold so that
India does not lose out
on their profit margins.
Exporters India, Cambodia, India could negotiate Since India won’t be
Indonesia terms with the USA eligible for GSP
anymore, India could
negotiate with the US
to increase the cost of
their goods. If the US
do not agree on this,
India would not be a
supplier to the US
which would lead to
disappointing the US
consumers.

Logistics India The platform should be They should be able to

able to show prices and place the orders for all
location of desired raw their requirements
materials. from the same
locations.
Retail Stores USA The retail stores should They should be able to
be able to find see the relevant
cheapest import and suppliers who would
readymade materials & be willing to sell it to
Info about trending them.
fashion.
Importers USA They should be able to They should be able to
find raw materials in procure the same.
bulk in good price.
Association USA, India Monitoring of stats of They should be able to
different countries in decide their next move
order to decide target based on these stats.
countries for the
transfer of goods and
service.
Brands USA They should be able to They should be able to
compare the quality of procure the same.
goods like leather
coming from different
importers.
Consumers USA They should be able to They should be able to
find the relevant retail contact these retail
store for goods close to stores.
them.
Ministry USA They should be able to Profit stats of various
see relevant statistics countries should be
corresponding to seen on the app.
import and export of
different goods.