If you have a company and do business internationally, in today’s global world you have to compete with your rivals and be strong in the market. Reducing your cost is one of the effective ways to be competitive and strong. That’s why majority of companies seek low cost producer, labor etc. As we know China is the best example with its low cost labor, outsource etc. So China is very attractive for the companies doing international business. Most of them outsource more of their manufacturing to China to maintain a cost advantage. It looks very logical and easy to benefit from cost advantage by this way but it not as easy as we thought. As we can see our case, New Balance which is one of important shoe companies chose this way and faced really annoying problem for its brand: Counterfeit goods.
1)New Balance faced with these issues:
•How to protect its intellectual properties when setting up manufacturing overseas.
•How to stop the Chinese manufacturing unit from producing the “fashion” shoe which is sold at very low price and diluting the brand.
2)Important factors that are important in understanding this decision situation:
•Since China is selling the low-price “fashion” shoes that are indistinguishable from the originals, brand value of New Balance can be damaged.
•Selling low-price shoes can lead New Balance to gain reputation of selling low-quality shoes.
3)The alternatives are:
•Getting into the overseas legal system to enforce the agreement.
•Paying the least amount of $50,000 and making a decision of setting up a price for the Fashion shoes that they cannot be sold for price lower than the standard price set.
•By closely monitoring the supply chain to partially eliminate the problem of protecting the intellectual property rights.
•New Balance can publish press release on the newspapers that explains the situation about Chinese manufacturer.
•New Balance can reach the target audience...