Revision Project 4 Step 8

TO: Belinda Lee, CEO FROM: Group 1 DATE: September 9, 2017 SUBJECT: Culture Clash

Executive Summary

A chinese supplier was asked to deliver 300,000 faux leather phone cases to Phone and Build. The Chinese supplier however shipped more than 300,000 phone cases made of real leather at no extra cost. The supplier did not call the relevant VPs to communicate his intention to supply real leather phone cases instead of the faux leather cases that had been ordered. It was not ethical of the supplier to supply goods that were not as per the specifications. Furthermore, it was unethical of the suplier to supply the wrongful goods without first contacting Phone and Build to let them know of his intention to supply other goods. This document explores the resolev the issue of miscomunication bwteen the supplier and the manufacturing VP as well as the manfacturing VP and the Marketing and Product Design VP’s.

The situation presented in the case is an outcome of lack of timely communication between the Vice Presidents for Marketing, Manufacturing, and Design departments. I believe the Chinese supplier was unethical in shipping over 300,000 cases made of real leather as opposed to shipping cases made of the requested faux leather material. The root cause of the fallout presented in the case is as a result of unethical conduct of the supplier through shipment of the product that were not as per the specification. The supplier should have provided a timely communication of their intention to ship cases made of real leather and only shipped the product upon approval by the organization.

Background

There is a cultural difference between customer expectations and business transactions in the West and in Asia. According to Czinkota, cultural factors have an important impact on the flow of business. Consumers in Asia are keener on quality as compared to price. Given the increasing number of manufacturing companies in Asia and specifically China, it is easy for a supplier to offer a counterfeit item of lower quality than the original item. However, consumers from the West do not face the risk of high counterfeiting and they therefore consider the functionality and pricing of a commodity. This explains why a company in the West describes the functionality and description of an item in the product design, as they know that there is a specific market that has been target based on a product design. The Chinese supplier did not see any reason why they would seek approval from the manufacturing VP at Phone and Build because they were offering a product of better quality at no extra cost. However, Phone and Build had already released product inserts and literature claiming that the cases were made of faux leather. According to Root (1994) , “The global economy has formed business environments that require companies to look past the traditional thinking of the home market, and start instead looking at business from an international global perspective”. The Chinese government therefore ought not to have viewed the business from a home-market perspective.

It is a significant lapse in judgement from the manufacturing vice president to accept the material that was not adhering to the stipulated specification. Quality checks provided a clear indication that the material was not as per the stipulated specifications, so the manufacturing vice president should not have received the material and should have rejected the unspecified material instead. In addition, the lack of communication between the manufacturing vice president and the marketing vice president as well as their resort to make decisions without consulting the design vice president was another significant unethical conduct.

Legalities

Once the marketing VP received the memo regarding the receipt and acceptance of cases made of real leather instead of synthetic faux, he should have communicated to the design vice president for conformance as well as evaluation of its impact on the product. A change in material could have long-lasting negative effects on the product due to cultural differences. The marketing vice president should have been aware of the cultural considerations and beliefs prior to making the decisions regarding shipment of the leather cases to Africa and Asia. The decision could harm the reputation of Phone and Build for going against the religious beliefs of the target market, considering the market was comprised of Muslims and Hindus, and could lead to huge losses as a result of loss of reputation and business.

In case we was the marketing Vice president and issued with the same memo, we would have done things differently. Consultation with the design vice president was not made in the entire process, and the design vice president was not even informed about changes in the specification. As a marketing vice president, we would have communicated with the design and manufacturing vice presidents about the change in specification and the possible impact that the change would have resulted in for the organization. The change in specification would have resulted in other effects such as overheating, in addition to adversely impacting the performance. Therefore, we would have recommended a recall of all the products that are made of leather cases and replaced them with synthetic cases. Even though the process would result in significant overhead costs but is necessary for fulfilling customer expectations and providing a product that does not result in a culture clash.

Recommendation and Conclusion

The senior personnel at Phone and Build made strategic errors by not performing a comprehensive analysis of their market. Through a comprehensive market analysis, the senior personnel would have understood the cultural dynamics of their market, particular the composition of the market considering that the population was comprised majorly of Muslims and Hindus. Considering that a significant proportion of African and Asian customers were sensitive about using products made of pig leather, the senior personnel would have revisited their decision to manufacture and distribute phone cases made of real pig leather. Also, the design, manufacturing, and marketing vice presidents made another strategic error by failing to effectively communicate about the in material and evaluation of the possible moves that would have been made to address the situation.

Therefore, Phone and Build needs to arrange for a press release for recalling the product and state the reason(s) for the recall, in addition to giving the consumers an assurance that the organization care about their religious practices and beliefs and is willing to go an extra mile to ensure they are fully satisfied. The organization should also organize training for its senior management on the significance of ethical conduct and ethics in organizational practices. Additionally, such training should be compulsory for senior management. It is also recommended to take appropriate action against the supplier for shipping leather cases that did not meet the needed specification.

Reference

Czinkota, M. (2010). International Business. Retrieved from website:

http://www.kvimis.co.in/sites/kvimis.co.in/files/ebook_attachments/Michael%20R.Czinkota%20International%20Business.pdf