Case Study
Automobiles and Ships
1. Case description
This case is about an international business
negotiation between a Japanese vehicle
manufacturer that has developed a strategic plan
to export its product to Hawaii, Alaska and the
United States west coast and a United States
transportation enterprise that owns a fleet of roll
on/roll off vessels. Issues include national
cultural and foreign market penetration
considerations.
2. Case synopsis
The negotiation involves the transportation of
vehicles manufactured in Japan to Hawaii,
Alaska, and the United States west coast. The
specific elements of the negotiated contract
include the number of automobiles and thus
vessels to be used under the agreement as well as
the identification of the destination ports. Also,
the logistical support provided by the United
States transportation enterprise will be
negotiated. Finally, the shipping costs will be
determined.
3. The companies
This case study presents the operations of Nippon
Automobile Corporation (NAC), a Japanese
vehicle manufacturer, and US Shipping Lines,
Inc. (USSL), a United States transportation
enterprise. These two business entities have
entered into negotiations to discuss the possibility
of transporting vehicles from Japan to Hawaii,
Alaska and the west coast of the United States.
The following public information about the two
companies and their industry sectors is provided
for review:
3.1 Nippon Automobile Corporation (NAC)
3.1.1 Company profile: Nippon Automobile
Corporation is an emerging manufacturer of a full
range of passenger automobiles, SUVs, pick-up
trucks and motorcycles. NAC has been run by
engineers since it was founded. The company is
the most research and development oriented
corporation within its domestic industry;
allocating R&D spending at 5.9 per cent of
corporate sales. The company prides itself on its
superior engineering efforts and the use of
advanced technology in the vehicles that it
produces. NAC started producing vehicles only in
the past few years. NAC’s strategic plan calls for
it to become one of the top three Japanese vehicle
manufacturers within the next five years. To
achieve its strategic goal, NAC must double its
manufacturing capacity and penetrate export
markets. To date, nearly all of its output has been
sold domestically. The company’s deep
commitment to export its products is reflected in
the recent formation of a 200 person technical
task force to design its vehicles for foreign
markets and negotiate arrangements for overseas
dealer franchises as well as contracts to transport
the products to the foreign markets. NAC expects
to be exporting 60 per cent of its production
within five years. The NAC profile is shown in
Figure 1.