Case Study

EXECUTIVE SUMMARY

After completing the questions regarding the case-study, it was discovered that not only are the small business and entrepreneurship theories involved in answering such questions, but strategic management and international marketing theories also played a big part in identifying such areas as the regionalization activities (Question 1) and growth strategies (Question 2). The student answered the first question as if James were considering to regionalize to Burma through JM Marketing for easier understanding.

This case-study had to be read at least 5 times before a student can fully understand the story behind it. The questions at first seemed to require answers which the student had not learnt of yet and only later discovered that the answer is actually quite simple. It only came down to the fact that the answer had to combine the theories of other subjects learned in the final year of BBDUH.

INTRODUCTION

We were given a case-study entitled “Case 6B вЂ" CE Timber Suppliers Pte. Ltd.” and were required to answer two questions related to the case. Each question carried a weightage of 25 marks and the student was roughly expected to type at least 5 pages for each answer to the question. The first question required the student to identify the key challenges James has to address or be alert in his regionalization activities through JM Marketing. The second question required the student to discuss about his growth strategy and any whether there are any changes the student can recommend.

Q1 What are the key challenges James has to address or be alert in his regionalization activities through JM Marketing?

The explanation below takes the assumption that James plans to do regionalization activites to one of the South East Asian countries, Burma.

External Challenges

Political Issues

Assuming James is to regionalize JM Marketing activities to Burma, he should not ignore the fact that Burma is an underdeveloped country ruled by an authoritarian military regime since 1962 and has not had a constitution since the last one was scrapped in 1988. (Anonymous, 2008) Although the joint venture with Myn should lower the risk of the Burmese government exercising their tax control power on JM Marketing, James should be aware of the fact that an underdeveloped country “where the economy is constantly threatened with a shortage of funds, unreasonable taxation of successful foreign investments appeals to some governments as the quickest means of finding operating funds.” (Cateora, 1996)

Although James is confident with Myn’s good relations with the Burmese government bodies, and the fact that there is low risk in the circumstance of a major change in the government, which could want to acquire the land for other uses, James should not ignore the fact that governments may change or new political parties may be elected. According to Cateora (1996), it is important that the marketer has knowledge of the philosophies of all major political parties within the country, since any one of them might come into power and alter prevailing attitudes. If such a scenario were to occur, Myn may find it hard to reestablish political ties with the new government officials and the risk of the latter suddenly wanting to use the land for other purposes other than JM Marketing’s proposed hotel business, will be much higher.

James should also be alert in the exchange controls of the Burmese government, which stems from shortages of foreign exchange held by a country. When a nation faces shortages of foreign exchange controls may be levied over all movements of capital to conserve the supply of foreign exchange for the most essential uses. (Cateora, 1996) James should take into account that in the future, when there is a shortage of timber trees, the government may ban or limit the amount of timber logging. If this were to occur, the timber products of JM Marketing would be classified as luxury products. This means that if the Burmese government ever “extends the exchange control to products by applying a system of multiple exchange rates to regulate trade in specific commodities classified as necessities or luxuries” (Cateora,1996), there is a high chance that the timber products will be heavily penalized with foreign-exchange rates.

Economic Issues

James will also need to address the effect of inflation in Burma and how it will affect the cost for JM Marketing in terms of their timber products, reconditioned heavy machinery for building and construction use, and even for the proposed hotel plans in their prime land. Due to the fact that inflation and price controls imposed by country are beyond the control of companies (Cateora, 1996), James and Myn should be prepared to utilize techniques to inflate the selling price to compensate for inflation pressure and price controls. They may need to charge for extra services, inflate costs in transfer pricing, break up products into components and price each component separately and etc. (Cateora, 1996)

James will also need to consider the exchange-rate fluctuations of Burma. He should be aware of the fact that currently major currencies are floating freely relative to another, which means no one is quite sure of the value of any currency in the future. According to Cateora (1996), companies are insisting that transactions be written in terms of the vendor company’s national currency, and forward hedging is becoming more common. Therefore, before signing any long-term contracts on his timber or reconditioned heavy machinery, he should include a “terms and conditions” regarding exchange rates, otherwise he may find that JM Marketing is unknowingly giving 10 to 20 percent discounts to the other party.

Cultural Issues

If James has not already mastered the Burmese language or dialects, he should do so to understand Burma’s culture better. As a partner of JM Marketing, James should not have to always rely on a translator or Myn to communicate with the Burmese citizens, especially with the clients.