The International Joint Venture (IJV) between Jobek do Brasil, and Hatteras Hammocks aimed at profit maximization. The need to venture into international markets pushed Jobek to find an international partner in the United States to help in the distribution of its hammocks. This move should have been very profitable to Jobek because partnering with a global company means a broader market base; leading to more profits for both parties. However, Jobek did not critically analyze this partnership at the start. The two companies have conflicting ideas regarding environmental conservation. Jobek insists on using certified wood, whereas, Hatteras is more focused on profits and makes use of uncertified wood to make cheaper products. Jobek is also disadvantaged in the IJV since it can only sell its products in the US through Hatteras. On the other hand, Hatteras is free to buy hammocks from both Jobek and China.
What was the international market strategy of Jobek? And of Hatteras?
Jobek based its marketing strategy on the fact that they produce high-quality, FSC certified hammocks. These standards boost sales because some people want to buy from companies that foster sustainability. Jobek also takes advantage of the Latin-American culture associated with the hammocks and markets it to the people outside this region who want to explore the culture. Hatteras, on the other hand, uses DuraCord yarn to sell itself as a producer of high-quality hammocks that provide the perfect blend of art and comfort. This company also used cheaper raw materials to make products at competitively lower prices to boost its sales.
What are the differences between the concepts of corporate social responsibility used by Hatteras and Jobek?
Corporate social responsibility is a concept in business where companies are mindful of the society and the environment and consistently address their concerns as they operate their business (Crowther & Aras, 2008). Jobek is concerned about the well-being of the environment and therefore seeks environmental certification to show that it complies with all the required standards. The company also has the FSC Chain of Custody certificate which traces the wood used to make the hammocks back to the forest. It only uses certified wood that is legally obtained thus increasing the sustainability efforts. Hatteras, on the other hand, does not care for the environment. They use wood from uncertified sources because it is cheaper and will fetch them profits at the end of the day.
Based on your evaluation, what should Jobek do?
Jobek should terminate the joint venture because the expectations they had at the beginning remain unfulfilled. In fact, things have become worse for them. Hatteras is hijacking the progress of Jobek by failing to sell their products in the United States as per their agreement. They are also buying hammocks from China instead of buying from Jobek. Terminating the venture has been difficult so far because Jobek doesn’t have the working capital to buy Hatteras interest in the venture. This problem can be solved in two ways; seeking a new partner to buy them out or seeking a loan from a financial institution (Mata & Portugal, 2015). In both options, they will get the capital they need to pay off Hatteras so that they can gain back control of their company.
Describe Jobek’s current competitive environment. What changes do you foresee in the future? How do you think they will influence Jobek?
Jobek competes with companies that make hammocks out of uncertified wood. The wood is much cheaper and the final product appeals to the price-conscious demographic thus creating a cost leadership advantage. Jobek, on the other hand, uses certified wood which is expensive and the cost is passed on to the consumer. It becomes difficult to compete in such an environment because most people will always go for the cheaper product. As the world shifts focus towards environmental responsibility and sustainability, many people will become conscious of this and start demanding for products made with the environment in mind. Jobek will capitalize by simply making high quality, environment-conscious products thus creating a competitive advantage through quality (Meulenbroeks, 1998). Consumers will be willing to pay extra just to have products made according to environmental standards as opposed to those that degrade it.