case on Business Expansion
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Nakamura Lacquer Company (henceforth referred to as NLC) over the last decade has grown from a small handicraft shop making lacquer ware to a substantial business, manufacturing 500,000 sets of lacquer table ware for Japanese mass market. NLC operates in a highly labour intensive industry and employs thousands of workers. It was Mr. Nakamura's ingenuity in mechanizing the processes of coating, polishing and inspection that enabled NLC and its "Chrysanthemum" brand to take advantage of the available opportunity and become a market leader. Japanese government's barrier to the investment abroad by businessmen and the fact that lacquer is a traditional Japanese art are the reasons which prevented NLC from exploring the business opportunities outside of Japan. However recent developments have increased US interest in Japanese products and opened new avenues for NLC.
NLC has been presented with proposals from two different companies to sell lacquer ware in US market. The first proposal is from National China Company (henceforth referred to as NCC), the owners of "Rose and Crown"- a premier brand in dinnerware in US. Under this offer NLC will get a firm order of 400,000 sets per annum and make a flat 5% higher margin over what NLC is earning today. However, NCC will be selling under brand name "Rose and Crown" and will have exclusive rights to sell NLC's products in US...