Case Study #3: Contract for the International Sale of Goods
A chip off the new block
Semicontronics is an Australian manufacturing company that has been in the business of semi manufactured electronics for over a decade. Semicontronics has a solid reputation for meeting customer demands for quality products on time and on budget. The majority of Semicontronics customers are international, mid-market manufacturing companies that produce generic electronics such as cell phones, digital media players and game consoles. Retail stores in foreign countries purchase the generic products and rebrand them for sale. Recently, Semicontronics has been approached by Phoneson to act as a supplier in their supply chain. Based in Japan, Phoneson is an original design electronics manufacturing company specializing in high-end mobility devices including cell phones, navigation systems and PDAs. Phoneson is impressed with Semicontronics’ reputation and wants Semicontronics to supply several components for its next release of legacy products. Phoneson has a reputation for producing best in class brands of electronics, and is recognized for cutting edge technology and aesthetic design. It has built a loyal following from electronics enthusiasts in its native Japan as well as other Asian and European electronics markets. Phoneson wants to extend its brand into the highly competitive North American market and sees standard Internet and GPS functionalities in its cell phones and PDAs as the key to its success. In order to offer its products as a high end alternative to the established North American competitors and at its existing top market price, Phoneson has decided to spend millions of dollars on aggressive marketing. It plans to cut production costs by having Semicontronics produce its computer chips instead of its existing supplier. Let the chips fall where?
Semicontronics has enthusiastically accepted Phoneson’s invitation to join its supply chain. If Semicontronics...
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