Red star China (A) decision criteria for joint ventures Harvard Case Solution & Analysis

Red Star China is the largest shipment company among the Asian Countries. They import and export many products of different countries, but the specialty of their cargoes was to ship the “Liquid Chemical Product”. The headquarter is located in Singapore. Basically, the main operation of the company is related to the brokerage nature because they book containers for companies and ship them to other countries. Their major services belong to petroleum, chemicals, vegetable oils and dry cargo. They have strong business relationships between different companies. The liquid chemical product is more popular in China and it has more benefits for the Chinese economy.

The Red Star China (RSC) is considering a joint venture with Nanjing ZP, Chemical Company (NCC). The reason is simple, which is that NCC is very famous for their product in China, which is named as liquid chemical product. If the RSC would consider this then it would boost their revenues and their profit. Furthermore, Howard Zhao is the Senior Vice President who thought that Guanix is the best method for attracting the NCC’s director of logistics, Pan Weidong. The “Guanix” is the technique of network relationships which is based on mutual trust and benefits. This technique is very much common in China. Moreover, Howard adopts these types of techniques for gaining Pan’s attention and apart from this Howard has completed this approach nearly to ninety percent. This approach is merely related to the bribery concerned. But, the main problem was created when Pan was reassigned from the operation of the NCC. The NCC wants to train its other employees who are located in small factories. Howard will have to bear the impact of the investment done on the Pan. This investment shows the downside level. Now for Howard, there are three decisions; one is to resolve the reassigning issues of Pan, second is to deal with the same technique with the new director and the third is to provide other decisions for gaining the contract from the NCC. Their criteria will be resolved in the eye of strategic decision making, which Howard has to deal with his technical minds.

2       Issues

The decision for the Red Star China is divided into two parts. One part belongs to the short term issues and Second part belongs to the long term issues. These issues are highlighted from the case material, where RSC had faced the problem with NCC of the reassigned issues. This issue arises when the director of the logistics is located in small factories and the position is filled by another person. Further, issues arise from the ethics part which is the morality of the organization. The issues are discussed in the next headings.

2.1      Short term issues

The short term issues are extracted on the understanding of the course materials and their respective decision criteria. The following issues are given below:

• Howard should suggest Pan to not be re-assigned to smaller factories.
• The gift will be considered as bribery and it would affect the morality of the company.
• Howard focuses on the new Director for the techniques of Guanix.
• Howard had made the proposal, which is negotiable for both ends, which is NCC and RSC
• The investment will either result in gain or loss.
• SSK competitor will gain the competitive advantage from RSC

2.2      Long term issues

The Long-term issues are developed on the basis of long term relation by the Red Star China with Nanjing ZP Chemical Company. The reasons for these issues are maintaining symbolic need of the business. These issues are given below

• Losing  the business from the china which is the major portion with respect to future
• Maintain the economic criteria by RSC
• The competitor will further ruin the brand of the RSC
• The Guanix relationship technique would affect negatively on the ethical standards of the company.
• The RSC will not believe in the tactics of the Howard in the future.

3       Analysis

The analysis of the decision criteria which is based on such questions, will be answered through the understanding of Howard activities. Howards has investigated the logistics of the NCC through their values and their beliefs of their relationship between the Chinese customer, and their profit level. The purpose of Howard for this analysis is to lead their shipping company among the competitors. Furthermore, this analysis is discussed as follows

1. What are the problems faced by RSC?

The problem is to gain the NCC contract for the shipment of Liquid Chemical Product

1. What is the Guanix term under the Chinese Understandings?

Guanix means that a relationship built on the basis of mutual trust and their beliefs

1. Why Pan has re-assigned to smaller factories?

For the training of the new employees....................

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