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Problems with the IJV

Advice Interactive Group 7850 Collin McKinney Parkway #300 McKinney, TX 75070 (214) 310-1356 | http://www.adviceinteractivegroup.com/
by

Michelle Do

on 24 April 2014

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Transcript of Problems with the IJV

JOBEK DO BRASIL:
Differences in Corporate Social Responsibility
QUESTIONS FOR THE CLASS
We have already discussed what we thought Jobek should do. But what do you think Jobek de Brasil should have done?

What do you think is the biggest challenge to overcome in an international joint venture?

Under such terms and conditions as present in this case study, would you accept this IJV deal if you were Jobek de Brasil?

EVALUATING THE INTERNATIONAL JOINT VENTURE BETWEEN JOBEK AND HATTERAS
Initially the IJV was an attractive idea for these reasons:
Cost effective
LOSS OF BRAND IDENTITY
Hatteras chose to use cheaper quality alternatives
JOBEK WENT FROM A NICHE PRODUCT TO A "REGULAR PRODUCT"
Use of uncertified wood
Ruined the previous position: "Made from all natural materials"
Increase sales
Cut material costs
JOBEK
HATTERAS
Competitive advantage:
Duracord
INTERNATIONAL MARKET STRATEGIES
JOBEK
Environmental protection is key
Emphasis on economic development
Purchase materials exclusively from certified sources
Invested in the FSC certification
Ensured the best quality of materials
High quality = high price tag
HATTERAS
A HAMMOCK & LEISURE FURNITURE IJV
JOBEK'S COMPETITIVE ENVIRONMENT
RISING BARGAINING POWER OF SUPPLIERS
HIGH INTENSITY OF COMPETITION
DECREASING POWER OF BUYERS
THE GLOBAL ECONOMIC CRISIS INCREASES THE CONSUMERS' INCLINATION TO SEARCH FOR CHEAPER ALTERNATIVES
PAST STRATEGY PUT THEM IN GOOD STANDING WITH A "NICHE", FOCUSED MARKET
WHAT SHOULD JOBEK DO?
JOBEK MUST FIND A WAY TO SEVER TIES WITH HATTERAS IF IT WANTS TO STAY AFLOAT IN THE LONG TERM.
WHY?
The opposing strategies will almost always end in disagreements.
History shows that Jobek is heavily undervalued by Hatteras.
Hatteras chose only to exploit the IJV for its own advantages.
IN THE FUTURE, JOBEK SHOULD...
Buy their shares back
Attempt to enter the USA market again as a luxurious and environmentally-friendly producer of hammocks
Stay up to date with market research on countries with increasing disposable income.
Misaligned company cultures led to their downfall.
Success can be attributed to the FSC certificate
Helped promote hammocks abroad when consumers saw the company's sustainability & environmental efforts
Marketing was tied to the "coffee" and "hammock" culture of Brazil & Latin America
The exclusive product design and renewable materials separated Jobek from competition.
However, having only ONE supplier created problems & imbalance.
Jobek was able to obtain an 80% market share in Europe.
Because they were losing customers to Jobek, they decided to create a joint venture instead of competing with them.
Focused on lowering production costs
Use of "uncertified" wood products
More affordable
Brazil based multinational manufacturer of hammocks and leisure furniture
Key markets are in Europe: mainly Germany & France
Focus on environmental protection & quality
Acquired Pawleys Island and became the world's largest hammock producer
Clients were large chains such as Wal-Mart
Low price focus
Use of DuraCord: a synthetic yarn that is more resistant and durable while maintaining cotton's soft texture

"Quality without compromise."
JOINT VENTURE CHALLENGES
Full transcript