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MGT 216

BUILDING YOUR BUSINESS SKILLS FINDING YOUR PLACE Goal To encourage you to apply global business strategies to a small-business situation. Background Information Some people might say that Yolanda Lang is a bit too confident. Others might say that she needs confidence—and more—to succeed in the business she’s chosen. But one thing is certain: Lang is determined to grow INDE, her handbag design company, into a global enterprise. At only 28 years of age, she has time on her side—if she makes the right business moves now. These days, Lang spends most of her time in Milan, Italy. Backed by $50,000 of her parents’ personal savings, she is trying to compete with Gucci, Fendi, and other high-end handbag makers. Her target market is American women willing to spend $200 on a purse. Ironically, Lang was forced to set up shop in Italy because of the snobbishness of these customers, who buy high- end bags only if they’re European-made. “Strangely enough,” she muses, “I need to be in Europe to sell in America.” To succeed, she must first find ways to keep production costs down—a tough task for a woman in a male-dominated business culture. Her fluent Italian is an advantage, but she’s often forced to turn down inappropriate dinner invitations. She also has to figure out how to get her 22- bag collection into stores worldwide. Retailers are showing her bags in Italy and Japan, but she’s had little luck in the United States. “I intend to be a global company,” says Lang. The question is how to succeed first as a small business. Method Step 1 Join together with three or four other students to discuss the steps that Lang has taken so far to break into the U.S. retail market. These steps include:  Buying a mailing list of 5,000 shoppers from high-end department store Neiman Marcus and selling directly to these customers.  Linking with a manufacturer’s representative to sell her line in major U.S. cities while she herself concentrates on Europe. Step 2 Based on what you learned in this chapter, suggest other strategies that might help Lang grow her business. Working with group members, consider whether the following options would help or hurt Lang’s business. Explain why a strategy is likely to work or likely to fail.  Lang could relocate to the United States and sell abroad through an independent agent.  Lang could relocate to the United States and set up a branch office in Italy.  Lang could find a partner in Italy and form a strategic alliance that would allow her to build her business on both continents. FOLLOW-UP QUESTIONS 1 What are the most promising steps that Lang can take to grow her business? What are the least promising? 2 Lang thinks that her trouble breaking into the U.S. retail market stems from the fact that her company is unknown. How would this circumstance affect the strategies suggested in Steps 1 and 2? 3 When Lang deals with Italian manufacturers, she is a young woman in a man’s world. Often she must convince men that her purpose is business and nothing else. How should Lang handle personal invitations that get in the way of business? How can she say no while still maintaining business relationships? Why is it often difficult for American women to do business in male-dominated cultures? 4 The American consulate has given Lang little business help because her products are made in Italy. Do you think the consulate’s treatment of an American businessperson is fair or unfair? Explain your answer. 5 Do you think Lang’s relocation to Italy will pay off? Why or why not? 6 With Lang’s goals of creating a global company, can INDE continue to be a one-person operation? EXERCISING YOUR ETHICS: INDIVIDUAL EXERCISE PAYING HEED TO FOREIGN PRACTICES The Situation Assume that you’re an up-and-coming manager in a regional U.S. distribution company. Firms in your industry are just beginning to enter foreign markets, and you’ve been assigned to head up your company’s new operations in a Latin American country. Because at least two of your competitors are also trying to enter this same market, your boss wants you to move as quickly as possible. You also sense that your success in this assignment will likely determine your future with the company. You have just completed meetings with local government officials, and you’re pessimistic about your ability to get things moving quickly. You’ve learned, for example, that it will take 10 months to get a building permit for a needed facility. Moreover, once the building’s up, it will take another 6 months to get utilities. Finally, the phone company says that it may take up to two years to install the phone lines that you need for high-speed Internet access. The Dilemma Various officials have indicated that time frames could be considerably shortened if you were willing to pay special “fees.” You realize that these “fees” are bribes, and you’re well aware that the practice of paying such “fees” is both unethical and illegal in the United States. In this foreign country, however, it’s not illegal and not even considered unethical. Moreover, if you don’t pay and one of your competitors does, you’ll be at a major competitive disadvantage. In any case, your boss isn’t likely to understand the long lead times necessary to get the operation running. Fortunately, you have access to a source of funds that you could spend without the knowledge of anyone in the home office. QUESTIONS TO ADDRESS 1 What are the key ethical issues in this situation? 2 What do you think most managers would do in this situation? 3 What would you do? EXERCISING YOUR ETHICS: TEAM EXERCISE EIGHING THE TRADEOFFS The Situation A medium-size regional banking corporation has its headquarters in a small city in the Midwestern United States. The firm is privately owned; all managers own stock in the bank corporation. The company’s senior managers (and majority owners) have decided to sell the bank to a major international banking company within the next two to three years. First, though, the bank corporation needs to trim its expenses in order to make it more attractive to a potential buyer. The Dilemma Because the bank corporation has been a locally owned and operated enterprise, it has maintained a full slate of operations within the local market. For instance, its corporate offices, many banking outlets, and all of its support activities are housed locally. The latter category includes a large call center—a staff of 300 people who handle most customer calls with questions about their accounts. There has been a growing trend in banking, though, to outsource call centers to foreign countries, most notably India. Such markets have an abundance of potential English-speaking employees, excellent technology, and low wages. One senior manager has argued that the bank corporation should outsource its call center immediately. This would enable the firm to lower its costs, thus making it even more attractive to a potential buyer. When confronted with the prospect of cutting 300 jobs, the manager acknowledges that that will be tough but is certain that any buyer will eventually do the same anyway. Another vocal senior manager, though, is opposed to this idea. This person argues that because the bank corporation was started locally and has longstanding ties throughout the local community, it should maintain its current operations until the bank is sold. Then, this manager argues, if a new owner decides to cut jobs, “it will be on their conscience, not ours.” Team Activity Assemble a group of four students and assign each group member to one of the following roles:  Senior manager (majority owner) of the bank  Call center employee  Bank customer  Bank corporation investor ACTION STEPS 1 Before hearing any of your group’s comments on this situation, and from the perspective of your assigned role, do you think that the call center should be outsourced immediately? Write down the reasons for your position. 2 Before hearing any of your group’s comments on this situation, and from the perspective of your assigned role, what are the underlying ethical issues, if any, in this situation? Write down the issues. 3 Gather your group together and reveal, in turn, each member’s comments on whether the call center should be outsourced immediately. Next, reveal the ethical issues listed by each member. 4 Appoint someone to record main points of agreement and disagreement within the group. How do you explain the results? What accounts for any disagreement? 5 From an ethical standpoint, what does your group conclude is the most appropriate action for the bank to take in this situation? 6 Develop a group response to the following question: Can your team identify other solutions that might help satisfy both senior managers’ views? CRAFTING A BUSINESS PLAN PART 1: THE CONTEMPORARY BUSINESS ENVIRONMENT Goal of the Exercise In Chapter 3 we discussed how the starting point for virtually every new business is a business plan. Business plans desc
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