LENHAGE AG Case Summary
LENHAGE AG: ETHICAL DILEMMA
Background.
Lenhage AG is European manufacturer and seller of tools fasteners for the construction industry.
Reigo Weinhardt is expatriates president and general manager in Seoul.
South Korea construction market was booming
Best opportunity was power generation
Opportunity: Nuclear Power Generation Plants
South Korea is planning to build 8 new nuclear power generation plants in sparsely populated southeast coast of the country
Coastal area was seismically active. Recent natural disasters are fresh in people’s mind
So high quality products needed
Chun-Ha Construction would be the main contractor for all of these projects
Weinhardt and his management team developed plan a year ago to become key supplier of safety anchors for these plants
Failure of anchors and fasteners could be catastrophic
Value of anchors is tens of millions of dollars
Competition
Only one competitor in country
Competitor was not manufacturer but distributor of US made anchors. Similar quality to Lenhage AG’s products.
Competitor: no engineering or technical support staff, no technical information, no quality testing/assrunace programs.
Competitor: spend money on lavish entertainment, payment to purchasing and site managers to ensure that his product were used with few questions asked
Personal relationship is vital for business success
Kick-backs to agents and decision makers were common in this industry and were done by mot local companies to secure business. Weinhardt determined it.
He knew he had better products, better documentations, and better people than his competitors. He felt business was rightfully his.
Company actions
Full-time salesperson responsible for developing relationship with all parties from workers to mangers to site engineers
Sales engineers: purchasing department at Chun-Ha Construction’s headquarters to stay in touch and build relationship with the key purchasing officials.
Weihardt: entertaining Lee and
Background.
Lenhage AG is European manufacturer and seller of tools fasteners for the construction industry.
Reigo Weinhardt is expatriates president and general manager in Seoul.
South Korea construction market was booming
Best opportunity was power generation
Opportunity: Nuclear Power Generation Plants
South Korea is planning to build 8 new nuclear power generation plants in sparsely populated southeast coast of the country
Coastal area was seismically active. Recent natural disasters are fresh in people’s mind
So high quality products needed
Chun-Ha Construction would be the main contractor for all of these projects
Weinhardt and his management team developed plan a year ago to become key supplier of safety anchors for these plants
Failure of anchors and fasteners could be catastrophic
Value of anchors is tens of millions of dollars
Competition
Only one competitor in country
Competitor was not manufacturer but distributor of US made anchors. Similar quality to Lenhage AG’s products.
Competitor: no engineering or technical support staff, no technical information, no quality testing/assrunace programs.
Competitor: spend money on lavish entertainment, payment to purchasing and site managers to ensure that his product were used with few questions asked
Personal relationship is vital for business success
Kick-backs to agents and decision makers were common in this industry and were done by mot local companies to secure business. Weinhardt determined it.
He knew he had better products, better documentations, and better people than his competitors. He felt business was rightfully his.
Company actions
Full-time salesperson responsible for developing relationship with all parties from workers to mangers to site engineers
Sales engineers: purchasing department at Chun-Ha Construction’s headquarters to stay in touch and build relationship with the key purchasing officials.
Weihardt: entertaining Lee and