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Posted on April 21st, 2014, by

You just got a job at Good Manufacturing Corp, which makes bikes for children. Congrats! They are considering buying up packaging business. From a corporate strategy perspective, what might be two reasons to buy this business? (10 points)

Good Manufacturing Corp might buy the packaging business because the company attempts to expand its business. The acquisition of the packaging business can be a step toward the diversification of business activities of the company. On the other hand, Good Manufacturing Corp may consider the purchase of the packaging business as the purchase of a supplier to pack bikes for children using its own production facilities. In such a way, the company attempts to obtain benefit from buying up the packaging business.

2. Good Corp is considering selling their amazing product in Japan. What are some of the pros and cons of entering Japan by exporting, alliances, or foreign direct investment (Greenfield, Acquisition, International Joint Venture)? (15 points)

Entering Japan by exporting is costly, while outcomes of such mode of entry are uncertain. The company will spend substantial costs on transportation, promotion and distribution of its bikes, while the main advantage of such mode of entry is the opening of the new market for the company and rise of its sale rates and revenues.

The use of alliance seems to be the best choice since alliance can help the company to enter the market fast with minimal costs. Business partners can provide their manufacturing facilities to manufacture bikes and their distribution chain to sell them in Japan. However, the company will share control its business in Japan with its business partners as well as profits.

3. Good Corp is considering forming an alliance with supplier. What are five things that you can tell them that will increase the chance of alliance success (brief explanation of each)? (25 points)

The alliance with the supplier will decrease costs of production since the company will not pay the price set by the supplier. Instead, the company will just include the costs of supplied products as a part of the overall production costs.

The alliance can enhance the competitive position of the company since the alliance with supplier will allow Good Corp to conduct homogeneous policy with its supplier.

The company should consider possible alternatives to the chosen supplier, in case of the failure of the alliance to make sure the company can find the substitute to the supplier fast without causing damages to the manufacturing process.

The alliance may improve the company-customer relationships as the company may provide the supplier with exact information on qualities of products its customers want to buy.

Finally, the company should consider the costs of alliance and the price the company pays to the supplier at the moment. On comparing the price and costs of the alliance, the company will reveal the costs which Good Corp may save due to the alliance and higher benefits the company can gain since, if the company saves costs but does not change its price, the company will gain higher profit.

4. Good Corp is now considering expanding into Canada. Good Corp’s leadership is surprised to learn that the Canadian government wants Good Corp to partner with a Canadian manufacturer to form a joint venture. Currently, the negotiations between Good Corp, the Canadian manufacturer, and the Canadian government are stalled because the Canadian government seems unhappy with the way things are going. What do you think the Canadian government wants from the potential joint venture? (25 points)

The government is looking for jobs and business activities in Canada. New jobs will help the government to tackle socioeconomic problems, such as unemployment, while business activities will stimulate the growth of Canadian economy.

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