This case analysis explores the possibility of Breezy, a leading supplier of carburators and air filters in North America, the possibility of developing offshore busines in countries where car manufacturing is growing. The report is structured as follows: First, there are five important questions that Breezy must consider and ask itself before developing a relationship with a new customer. After Breezy decides to go offshore, it will have to go through the negotiating process, which involves five steps. Breezy then, must have capabilities of how an offshore business is organized, consider the many different costs and risks involved in the implementation and decide how it will finance the project. The report also talks about how Breezy will have to modify its corporate strategy. Finally, the report concludes with the best reccomendation for Breezy to maintain its competitive advantage.
1. In exploring the possibility of developing a relationship with offshore car manufacturers, what questions should Breezy be asking? a) Who are the suppliers of carburators and air filters that Breezy will be competing against? This is an important question when conducting an external analysis of the players in the Industry because Breezy will be able to design a strategy that will make their products different from competitors. b) What are the car manufacturers human, financial, physical and organizational resources and capabilities? Breezy should be asking and investigating the firms that it plans on partnering abroad because they would not want to d business with car manufacturers that are not financially stable or have a bad organizational culture. c) How is the business done in the country (Brazil or India)? Breezy must consider the different business styles deriving from different countries in order to succeed in the global market. d) Does the car manufacturer have a good credit? Breezy must make sure its customers can pay for the products in order to avoid having to write off uncollectible accounts. e) Will Breezy be able to gain competitive advantage over local suppliers? Breezy could choose between cost leadership strategy or product differentiation strategy.
2. How should it approach the issue of negotiating with them? The negotiation process involves 5 steps:
1. Define objectives for the partnership: Breezy should have benchmarks in which to compare their objectives with the manufacturer's objectives. These will define whether they can meet common grounds when doing business together. Examples of benchmarks include nature of agreement, duration of alliance, expectations, key aspects to protect, etc 2. Assemble a negotiating team: Breezy will have a team that represents all areas of the company affected by this relationship. In addition, the team will be composed of a chief negotiator, an experienced interpreter, and senior management personnel and personnel with knowledge of technical, operational, and legal details. The roles of the team will be to choose a negotiating technique and conduct due dilligence on the parties involved, understand the business and social customs of the country. 3. Establish trust: Breezy's negotiating team should first build rapport with the manufacturers before presenting their proposals. 4. Establish the business framework: After rapport has been established, the team should be able to draw an agreement where all parties reach consensus, then outline the alliance in general terms, define objectives, consider how internal politics will affect the deal and define respective contributions of both sides. This should be done in a Letter of Intent. 5. Establish a legal framework: This will allow establishment of structure, definition of rights and obligations and scope of cooperation. (FITT, 6th ed). In the end, set the negotiations with a Memorandum of Understanding.
3. How should any offshore operation be organized? What are the key location considerations? Every...
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FITT. International Markey Entry Strategies 6th Ed.
FITT. International Trade Management 6th Ed.
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