SewTex Case: Managerial Implications in International Business Law

This case study provides a comprehensive analysis of SewTex, an organization facing challenges in the US textile industry and seeking international expansion opportunities. It explores various managerial implications, including market entry strategies, competitive analysis, and risk assessment in different regions like Europe and Latin America. The study also delves into the legal aspects of international sales contracts, emphasizing the importance of understanding cultural nuances, quality control, and dispute resolution mechanisms when dealing with clients from countries like Japan and China. The analysis covers key legal considerations such as the CISG (United Nations Convention on Contracts for the International Sale of Goods) and the inclusion of force majeure clauses to protect against unforeseen circumstances. The document highlights the importance of protecting intellectual property rights and choosing appropriate market entry strategies to ensure long-term sustainability and success in the global market. Desklib provides a platform for students to access similar case studies and solved assignments.

Managerial Implications

Chapter 1: Introduction to international Business: SewTex Case Study
1. The very first issue that could be highlighted in this case by president of the organisation is
SewTex is the declining market of the textile industry in the US. The decreasing demand of the
national textile and increasing interest of imported textile has affected the US textile market and
hence it is important to look for alternative growth opportunities of the organisation. It is
important for the organisation to make commitments towards the growth and development and
for that it is important that the organisation is able to look for better areas of business and hence
it is important for the directors to understand the importance of going overseas as it helps to get
better exposure which is likely to generate more revenue for the organisation. Getting overseas
will also increase the customer base of the company. Presently the organisation is selling to
different countries in smaller percentage but going overseas will help to implement a thorough
research which would help to improve the access to different prospect market improving the
overall global hold of the business (Folsom et al., 2012 pg 141).
2. One of the major problems that the organisation can face is the aspect of competition. It is
important to make sure that the organisation is able to analyse the market properly before
expanding because the existing organisations would be tough to crack. Europe is the best market
for the organisation to expand. One of the major advantages that the organisation would have is
the expanding market in the European Union. The developing trend in fashion and emergence of
fast fashion has led to fashion revolution and the organisation would be able to reach
organisations looking for updated product which would help them to bring something new to the
organisation. A disadvantage that is related to exporting in Europe is the price deflation that
might reduce the initial revenue of the organisation. It will be effective if the organisation sets up
indirect export for the time being which would help to plan repair having a joint venture
(Cavusgil et al., 2014 pg 51).
3. One of the major advantages of licensing as a market entry is the increased stream of royalty
for the products being designed. The licensing model helps to emphasise on innovation which is
important in the global market. The signature style on the product helps to effectively promote
the brand in the market. It has low risk and capital investment which is effective for new
organisations. The main disadvantage of licensing as a market entry is it allows significant loss

of control over the concept and the licensee organisation is likely to become a competitor which
no organisation would want. Hence given the above information it could be said that SewTex
should focus on some other entry strategy because licensing is not good for long term sustenance
of an organisation (Johnson, 2016 pg 251-253).
4. The organisation could focus on direct exporting and this would be an effective investment
option. This would be effective to provide direct after sale service to the consumers. Investing on
direct export is mainly suitable for initially limited growth strategies like differentiation strategy
and later with joint ventures and strategic partnership (Dunning, 2013 pg 199).
5. The organisation SewTex could focus on going to the EU portal to look for options on
investment in Czech Republic. On the other getting direct fact sheets on investment opportunity
and climate on the country is effective as well. The main risk that is attached is the constant
possibility of political turmoil and financial instability which could lead to complete downfall of
the company. Risk of not understanding consumer interest here is also another issue. One of the
main advantages would be to exploit the region as it is not competitive and hence the
organisation will be able to promote the business properly (Wild, Wild & Han, 2014 pg 651-
654).
6. The Latin American market is highly competitive and hence the penetration strategy should be
to focus on cost and product differentiation. Implementing the differentiation strategy would
force the organisation to focus on getting the entire operations in a much cheaper rate and
innovate affordably and hence the assembly of the system will change to a much flatter and
smaller system reducing errors (Ball et al., 2012 pg 31).
7. Most of the countries prioritise copyrights, patents and other intellectual property protection
tools and hence it is important for SewTex to focus on implementing them effectively. The
organisation should focus on making the patented designs of the products it makes in the
international market so that no company is able to copy them in any other name (Dunning, 2013
pg 409).

Chapter 4: Sales Contracts and Excuses for Nonperformance
While doing business with the Japanese clients it is important to understand their business
culture and way they want to do business with the foreign business owners. The Japanese
business clients largely believe in harmony and relationship and contribution to the society and
hence while going for orders with the Japanese organisations it is important to get to know these
aspects. The Japanese believe in trust and strong relationships and hence if a firm is willing to
buy large quantities it would be effective visiting Tokyo office but alone without an attorney. It
is important to note that since the Japanese are highly influenced by the society they do not like
lawyers accompanying either of the clients because they feel that lawyers influence negotiations
and hence lawyers cannot be taken to the negotiation process (Bridge, 2017 pg, 234).
If the buyer is willing to strike a contract and emphasises upon quality and quantity then in the
sales contract conditions could be inserted that mainly hold the contract valid especially in
relation to getting the right quality and quantity of goods. There are various elements which
would influence the development of the contracts (Schwenzer, Fountoulakis & Dimsey, 2012 pg,
453). For instance receiving quality raw material is an important aspect in providing the best
quality products. It is also important to note that since the Japanese business owners are largely
professional and focus on getting the best out of the contract all the possible manmade and
natural calamities under consideration. The Lawyers would definitely include the force majeure
clause. This will be helpful as it will help the seller organisation to eliminate their liabilities from
any kind damage done to the goods due to natural calamities which is completely unintentional
from the side of the seller (DiMatteo, 2014 pg, 213).
In order to ensure that the quality of the goods received from china remains consistent it is
important to insert a clause about the quality which would hold both the firms in the contract and
any deviation in the expected quality will be considered as a breach in the sales contract. The
purchase order form should hold clauses about payment and quality of the down and it should
also be stated that any communication through facsimile under the letterhead of the organisation
is considered official and hence can be considered as a legal paper (Ayres & Ayres, 2012 pg,
564).

In the case of a conflict over the shipment of the goods it is important to note that the place
where contract was established will prevail. Hence it could be said that it completely depends on
the parties and where the acceptance came that establishes the contract. Hence if it comes in US
the US law prevails and if it comes in Germany the German law prevails. On the other hand
under CISG the mill would be prosecuted for failing to deliver the goods at the right time and
hence will be contacted to perform remedial actions to cover up for the loss of the buyer
organisation. In this scenario the court might offer specific performance against the seller
organisation which would lead to financial remedy (Knapp, Crystal & Prince, 2016 pg, 123-125).

References
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(2014). International business. Pearson Australia.
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