Reference no: EM133524970
Case study - See you in court!
The Matsui Corporation of Kobe, Japan, manufactures shaft and gear for automobiles and motorcycles and has a network of exclusive agents and distributors in a few Asian countries since the 1990's. Their sole distributor in Indonesia is Nusa Auto which has represented them in Indonesia since they first started to market their products in there.
Over time, due to the growing potential of the Indonesian market, the Matsui Corporation executives decide to have more control of their own operations through directly owned subsidiary in Jakarta. They were of the opinion that by opening a subsidiary in Indonesia, they will be able to have the advantage of economies of scale and a bigger portion of the pie. In addition by having more control over the strategic operation of the company, they feel they will be able to bring them to the next level. This did not go down well with the management of Nusa Auto who feels that this decision is in breach of the original agreement they had with Matsui Corporation. Matsui, however, feels that even though they had been working with Nusa Auto for the last 15 years, their initial agreement under the Japanese law allows for either party to opt out of the contract if they so wish.
Nusa Auto main contention was that the Japanese company was able to penetrate the Indonesian market due to their diligence and their expert marketing effort. They have managed to capture the Indonesian market within 5 years of operation and today they are well established in the market. They feel that the original agreement has been superseded by the long-standing working relationship and that they have not only met the yearly sales target imposed on them but actually overshot them year in year out. Nusa Auto had threatened to take Matsui Corporation to court if they are going ahead with their plans.
(Case material developed by Cheah Sin Chye, INTI International University, Malaysia, 2011)
Question 1
As the consultant to Matsui Corporation, provide your views on the following queries by the management:
- Start with introduction and Is it advisable to go to court to sort out the disagreement?
- What is your recommended as a solution to the predicament faced by the company other than going to court? Provide rationales for your recommendation.