You are the CEO of an SME(small, medium sized enterprise), located in Mobile, AL, looking to go global with one of its after market performance automotive products. All of your companys high quality manufactured products are currently sold only in the US(Domestic) market and your core competency is in metal fabrication and casting. As such the majority of your products are steel and aluminum. You also specialize in warehouse efficiency and recently received approval for your warehouse as an FTZ (Free Trade Zone); where you lease storage space to other manufacturers in your area who benefit from FTZ on their exported products. Your current plant capacity is at 66% (1 – 8 hour 3rd shift not currently utilized).
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You are the CEO of an SME(small, medium sized enterprise), located in Mobile, AL,
looking to go global with one of its after market performance automotive products.
All of your companys high quality manufactured products are currently sold only in
the US(Domestic) market and your core competency is in metal fabrication and
casting. As such the majority of your products are steel and aluminum. You also
specialize in warehouse efficiency and recently received approval for your
warehouse as an FTZ (Free Trade Zone); where you lease storage space to other
manufacturers in your area who benefit from FTZ on their exported products. Your
current plant capacity is at 66% (1 – 8 hour 3rd shift not currently utilized).
50% of your sourced material, for all products, comes from US manufacturers
within a 100mile radius the other 50% is sourced from Mexico (15%) and Germany
All of your manufacturing materials arrive to your facility and are warehoused onsite before they enter into process.
The companys cash-cow product is its exhaust system that enhances the
performance of vehicles and has an adjustable fitment system that allows it to be
installed on any type of vehicle from any manufacturer and does not affect the
This exhaust system retails (price to Customer) for $1300.00 USD including
The distribution network in the US market is:
1.) Manufacturer ? Wholesaler ? On-line (e-tail) ? Customer
2.) Manufacturer ? Wholesaler ? Local Auto Shop/Installer ? Customer
The markup for each Intermediary is 25%.
Calculate the price your companys sale price to the first intermediary
After reviewing your past sales inquiries for the last 3 years, you find that there is
significant interest in your product coming from potential buyers (customers) in
Germany. You also came across several German distributors you made contact with
at your trade show booths. You have made the decision to begin selling your exhaust
product into this market.
Relevant German Market Information:
Tariff rate in Germany: 8%
%Performance market: 80% German manufactured autos / 10% US Man. Autos /
Competition for aftermarket exhaust products: moderate
Competitors price range: $1300.00-$2000.00 USD + Installation ~$500.00USD
Your task is to formulate a strategy for making this market entry as successful as
possible. There is no correct strategy and you will be graded on your ability to
capitalize on your companys core competencies and formulate a coherent
You will do so in the form of a Memorandum with specific instructions to your toplevel management team.
Your management team must include (at a minimum):
Legal Business Unit Manager (your attorneys)
You may address additional management as you see fit and can even instruct the
hiring of individuals if necessary.
You will also need to include 1 geopolitical event; we have covered in this class,
which relates to this scenario, and incorporate it into your instructions for your
management team. A good strategy might be to address this in your overall strategy
in the memo introduction ?
Your memo should begin with an introduction to your team that defines the overall
strategy and then is broken down into individual instructions for each department.
You should use specific instructions whenever possible, but also can instruct them
to look into multiple options (which you must list) if a specific course of action is not
apparent or provided in the scenario.
Example 1 having logistics manager do a cost analysis on multiple on carriage
options because you dont have numbers on cost of shipping
Example 2 If you choose to set up a manufacturing facility in another country, what
is the amount of originating regional content you would need to re-origin the product if you choose to do this you will need to explain the circumstances influencing this
decision and task the appropriate manager to do so
Purchase answer to see full
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