The Structure of a Business Decision
The Nakamura Company of Kyoto, Japan is famous for making quality and for middle class lacquer containers for the daily table. The company started selling the product under the brand Chrysanthemum which eventually became the leader in the market. The product became famous with the American GI's after the World War 2 back when Japan was under rehabilitation with assistance of the United States. Aside from the purchases made by the GI's, the company practically had minimal business with other tourists. Most purchases by the tourists come only from those Chrysanthemum stocked up in Nakamuras's local stores and outlets.
The popularity of the product to American customers became the impetus for 2 large U.S. firm to consider distributing it to the Mainland America market. Both firms were convinced that Mr. Nakamura is the only capable entrepreneur to partner with for the project. However, the two companies have come up with completely different offers for Mr. Nakamura.
The first company was the National China Company which is the largest manufacturer of good quality dinnerware in the United States. It distributes the dinnerware under the 'Rose & Crown' Brand. National China wanted an exclusive 3 year contract with annual purchases of four hundred thousand sets of lacquer dinnerware at 5% more. However, the products will not be distributed under the Chrysanthemum but would be added to the Rose and Crown Brand. The other offer was from Semmelbach, Semmelbach and Whitaker, Chicago which is the largest supplier of hotel and restaurant supplies as well as various department stores in the US. The offer was for Semmelbach to just represent the Chrysanthemum and charge the standard commission rate. Nonetheless, they projected that sales would balloon from 600,000 sets annually in the first 2 years up to millions of demand at the end of the contract. Semmelbach will would also initially absorb the initial...
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