Music Explosion – Creating a “Sound” Global Transport Plan
Music Explosion (ME) produces those annoying car speakers that rattle your windows. A typical set ME speakers’ retails for $350 and weighs 10 pounds. However, they are a bit bulky at 6 cubic feet per set (1.5 x 1.5 x 1). The speakers are not overly susceptible to damage, though moisture can be a problem.
The company manufactures “Blasters” speakers in San Diego for U.S distribution. The company’s growth is waning, so ME has decided to export product for the first time to Japan, Taiwan, and Australia. Nick Jagr, company president, has negotiated deals with automotive aftermarket retailers to sell the speakers. You have been hired to handle MEs transportation planning for this export initiative.
During your first day, Jagr holds a fast placed meeting that bounces across multiple topics. He occasionally mentions the global export project, making offhand comments that are relevant to your role. Since you want to be successful, you have written down some of Jagr’s quotes. They read:
“The local market for our product is sad, sad, sad. We need to join the global marketplace but don’t want to play with fire. Let’s make take measured approach.
“The retailers want to nail down trade terms with those three letter acronyms before signing on the dotted line. I tried to tell them that you can’t always get what you want, but they were pretty insistent on establishing trade terms.”
“We have little experience with global freight. Still, we want to play some role in the transportation process or the retailers will ask for huge discounts. One buyer mentioned “Incoterms “and taking on responsibilities. We better get up to speed on that or they’ll put us between a rock and a hard place.”
“Let’s use those Incoterms to manage the transportation process up to a point and then let the retailers do the dirty work.”
“We have to tumble the dice and pick a mode of transport that balances service and cost. I like the idea of air freight.”
“Is it just my imagination, or are we still overlooking some transportation issues? One of the carriers mentioned documentation as being critical.”
After a few more comments, Jagr began to walk out of the meeting. Before leaving, he turned to you and said, “Welcome to the show. Get your initial thoughts for our global transportation strategy worked out and email it to me. Be quick, time is not on our side.”
- Given the information in the case, which Incoterms group (E, F, C, or D) should ME pursue as the exporter? Why?
- Based on your response to Question 1, what responsibilities and risks will ME assume?
- Which mode of transportation should ME use to move Blasters to their new markets? What benefits does it bring?
- Why should ME worry about something as mundane as paperwork? What documents must they prepare?
- Identify and describe other global transportation issues that Jagr may be overlooking.