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.