‘The structure of a Business Decision’
SITUATION ANALYSIS
The Nakamura Lacquer Company of Kyoto, Japan, was a family business, taken over by
Mr. Nakamura in 1948. The Company operated in a competitive market. When American
GI’s were buying lacquer, being a far-sighted businessman, he saw the potential of the
market. But his company followed traditional methods which were too slow and expensive
and unsuitable to supply higher demand. Being a progressive and an innovative risk taker, he
introduced technological methods and helped build a successful business, employing a large
number of workers.
The company’s brand, ‘Chrysanthemum’ had become the best-selling brand and had captured
a large market share, but the market was restricted only to Japan. In 1960, 12 years after
taking over the company with improving US-Japan trade relations he received two offers
from US companies. The first offer was from Mr. Phil Rose, V.P. Marketing of National
China Company, leading manufacturer of dinner-ware in the U.S. Their brand- ‘Rose &
Crown’ accounted for 30% of total sales. He offered him a firm order for 3 years with an
annual purchase of 400000 sets at 5% higher rate, equivalent to a sale of 420000 sets
annually. It was to be delivered in Japan, lowering his transportation costs, but under the
trade mark of ‘Rose & Crown’, resulting in the loss of brand recognition of ‘Chrysanthemum’
in the new market. He also wanted an undertaking that they would not sell to anyone else in