Nontariff Barriers to High-Technology Trade by unknow

Author:unknow
Language: eng
Format: epub
Tags: Economics, Business & Economics, General
ISBN: 9780813370750
Google: kDesAAAAIAAJ
Goodreads: 3767677
Publisher: Westview Press
Published: 1985-09-20T00:00:00+00:00

Case No. 8

The firm is a twenty-year-old publicly traded company specializing in the manufacture of linear integrated circuits (analog ICs). In the field of data acquisition, the company is one of the largest suppliers, with relative competitive strength built on technical innovation and support, quality and reliability, worldwide manufacturing strength, and a broad range of products. The company’s overall strategy to consistently focus on the development, manufacture, and marketing of precision ICs used to process real-world signals has proved highly successful; real-world connections play an increasingly important role in the expanding market for microprocessor-based high-technology tools to boost productivity and competitiveness. In 1984, the company generated approximately $300 million in sales worldwide. Today, roughly 40–45 percent of the company’s sales are generated overseas.

The company first became involved in international markets in 1966 when it opened direct, wholly owned operations in the United Kingdom. At this time, the company was only about a $1-million-a-year business. It then followed this same formula in West Germany in 1968, France in 1969, and Japan in 1970. Every year or so after that, the company has added another direct, wholly owned operation overseas. The company now has nine of these operations in Europe, which include: Belgium, Denmark, England, France, West Germany, Holland, Switzerland, Italy, and Sweden. With the recent addition of Israel, the company has eleven overseas sales subsidiaries in total. The company has set up each sales subsidiary by copying the pattern of the local distributor; it builds organizations of local nationals who distribute to their own markets. As a matter of corporate policy, the company did not believe in the viability of the joint-venture arrangement. The company had a strong commitment to “making it on its own” and it did not want to lose control of its overseas markets to a greedy partner. Company executives adopted a long-term approach to the market. If a country showed promise of evolving into a significant market for the company’s products, the company targeted that country for a wholly owned subsidiary. The company would then wait, sometimes for several years, until it found the right individual to run the organization. The company believes that with the right leader, it is easy to attract other talented people to the firm.

The European market is, by far, the company’s largest overseas market. Roughly 30 percent of the company’s current sales are generated in the European marketplace. The company’s list of European customers is impressive and includes Siemens, Philips, Marconi, Olivetti, ITT Belgium, Aerospatiale, Thomson-CSF, and Smith Industries. These European sales subsidiaries are all self-supporting and doing respectably well within their own marketplaces. The subsidiaries function as local distributors, buying the product from the company and selling it at arms length. The company has encountered no discrimination in Europe. It attributes this to the fact that it has a unique product line that does not have strong direct local competitors.

In 1971, the company decided to establish a manufacturing facility in England. This facility manufactures a hybrid product line including mechanical linear and rotation converters.

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