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Project 4: Structuring A New Business Venture

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PROJECT Review the Norms and Nations Case
Norms and Nations Case Study
Colossal Corporation maintains a subsidiary in Serafini, a small country in Eastern Europe. This subsidiary is incorporated in the state of Delaware as New Brand Design, Inc. (NBD), a company that designs, brands, and manufactures innovative electronic products and markets and distributes them for resale across the globe. NBD has been admitted to conduct business in Serafini.
NBD’s executive board is composed of ten members from three different countries, including a vice president of design, a vice president of marketing, and a vice president of manufacturing. Due to recent conflicts among the board members, communication among them has been less than efficient, and they are regularly blaming each other for mistakes made by NBD.
The design vice president’s staff originally proposed two alternative materials for laptop cases that are packaged and sold with certain high-end laptops manufactured by NBD, such as its best-selling product, the Dualplex 360: real leather (pig skin) and faux leather made from a synthetic material (polyurethane). Both laptop cases were very similar in appearance, although the real leather case was a little heavier than the faux leather case. Both cases could be sourced from an established supplier in China, with whom the design VP had a long-term relationship. The marketing VP evaluated the cost of the two cases from this Chinese supplier and decided that he would go with the faux leather case because it was available at a 20 percent lower cost in comparison to the real leather case.
An initial order of 500,000 faux leather cases was placed with the Chinese supplier, and within about a month, the shipment of cases arrived at NBD’s South African facility, where the laptops were assembled and packaged for sale all over the world. When the newly delivered cases were inspected by NBD’s product team in South Africa, they discovered that more than two-thirds of the cases were actually made of real leather. After NBD’s VP of manufacturing contacted the Chinese supplier to complain about the cases being “out of spec,” he was told that it was not an error—the supplier was aware of the fact that over 300,000 cases in the shipment were made out of real leather. After some persistent questioning, the supplier revealed that as a result of an order cancellation from another customer, they had suddenly found themselves overstocked with an inventory of pig leather. Rather than let this extra inventory go to waste, the Chinese supplier decided to use up that inventory toward fulfilling a major part of NBD’s order!
The Chinese supplier was not willing to apologize for their decision to ship over 300,000 real leather cases to NBD without first obtaining approval for the switch. In fact, the supplier did not feel that NBD had any grounds to complain because the supplier was willing to accept the lower payment as per NBD’s original order of faux leather cases. Instead of insisting that the supplier take back the 300,000 or so cases that were out of spec, the manufacturing VP accepted the entire shipment and then conveyed this news to the marketing VP in an internal company memo.
Upon receiving the memo, the marketing VP realized it was too late for the real leather cases to be returned to the supplier in China, and he would have to make the best of out of an undesirable situation. He made a decision that the faux leather cases would be packaged for laptops shipped to Europe and North America, given that they were lighter in weight. The real leather cases would be used for laptops packaged and sold in Africa and Asia. Previous marketing surveys conducted by NBD had revealed that consumers in the West preferred lighter laptop cases, while consumers in Africa and Asia equated heavier cases with better quality and longer life. Of course, the marketing VP forgot that the advertising materials and product inserts for the laptop had already been printed in multiple languages and all of this product literature stated that the laptop case was made of synthetic material.
The laptop cases were shipped to retail outlets, and within a couple of weeks, the marketing VP had a potential crisis on his hands. Tech writers and product reviewers from two well-known South African and Kenyan newspapers had called and emailed to inquire about what they rightly suspected was a pig leather case and not the synthetic material that was specified in NBD’s product literature. They informed the marketing VP that if they revealed the truth about the origins of the case material in their reviews, it would have a tremendously negative impact on NBD’s sales in Africa and Asia, where a significant number of consumers opposed the use of pigskin in products on religious grounds. They wanted to know how the company was going to resolve this issue before they went to press.
The marketing VP contacted the manufacturing and design VPs to find out what they should do to get the company out of this potential crisis. After a lot of finger-pointing and talking past each other, the three individuals arranged a conference call with Colossal’s CEO and brought the CEO up to date. The CEO promised the three VPs that her international task force would research and address the issue.
Step 1: Review the Norms and Nations Case
This case involves an internal dispute among three of NBD’s executive board members—the VP of manufacturing, the VP of marketing, and the VP of product design—arising from a series of mistakes made when distributing a product.
The CEO has asked the task force to write a report with its findings and recommendations for how NBD should handle this situation. Specifically, the report needs to answer the following questions:
· Was the Chinese supplier ethical in shipping more than 300,000 cases made of real leather instead of the requested faux leather material, even though the supplier was not charging NBD anything extra for the higher cost of real leather? Explain why or why not using ethical theory and principles.
· When the manufacturing VP contacted the Chinese supplier to complain, the supplier could not understand why NBD was not pleased about receiving a real leather case, given that NBD was still paying for the less expensive faux leather one. Is there a cultural difference between customer expectations and business transactions in the West and in Asia? Explain.
· As an organization, what strategic errors did the task force observe in the decision making by various individuals in this situation? By the design VP? By the manufacturing VP? By the marketing VP?
· What is the appropriate strategy going forward? Conduct a SWOT analysis and PESTEL analysis to decipher what NBD should do in light of these strategic errors.
To answer these questions, you realize that you will need to gather information about the cultural factors that are in play in this situation, by reading about managing in a global environment, country cultural differences, and cross-cultural ethical business decision making. Although these sources are a great introduction, you realize that you may need to do some additional research on the internet and in the library to fully answer the CEO’s questions. The task force wants to back up its responses with information about relevant differences in cultural expectations in China, South Africa, and the United States and will conduct further research on cultural differences and their impact on global business transactions.
Using your outline and research notes write a report for the CEO. Be sure to meet the following requirements:
Include APA-formatted in-text citations and an APA-formatted reference list (do not format the body of the report using APA style, just the reference list). See references and citations for details.
Include a specific recommendation on what action, if any, the CEO should take based on your analysis and conclusions.
Support your conclusion with references to cultural norms, strategy, and the principles of SWOT and PESTEL.
The report should be no more than five pages (double spaced, 12-point font; the reference list does not count towards page limit).
Templates for Report
· Background
· Answer questions
Analysis (explain why/ why not using theories, cultural norms, strategy,
Full analysis using SWOT and PESTEL)
· Conclusion and Recommendation to the Director
Step 2: Prepare Your Norms and Nations Report
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