Assignment Task:
Sand by Saya is a New York-based women's luxury sandal brand that sells flip-flops with glamorous embellishment sewn on the top and receives rave reviews.(1) It maintains two full-time and two part-time employees in a location of approximately 2,200 square feet.(2) Sand by Saya is sold in nine countries, as well as online. The main market of Sand by Saya is the Asia region, especially Japan and China, where Sand by Saya has contracts with major wholesalers and department stores. In the United States, the market channels are mainly their online website and consignment retailers, such as Bluefly, Shoptique, and Farfetch.(3)
The CEO of Sand by Saya is a native Japanese entrepreneur named Ms. Sayaka Fukuda. She directs every part of business from product design to sales. Her main employees (both Japanese citizens) are Tsugumi, the office manager and accountant, and Asuka, who is in charge of design and production. Eugene, a college intern from Canada, was the assistant to Asuka dealing with design and production, while Karolina, a French intern, was the assistant to Ms. Fukuda working on marketing and sales part-time. Sand by Saya used to import sandals and embellishments from factories in China and assembled them in its New York office. As Sand by Saya grew, manufacturing was offshored to a Chinese factory owned by a Japanese importer, Mr. Nozawa.
The designs for the 2016 Charm Collection had been finalized in October when in early November, Sayaka told Asuka and Eugene that Mr. Nozawa thought having a cheaper line/collection with a more simple design, possibly using a metal stud technique, would increase sandal sales and the brand's visibility. Sayaka agreed that she needed to boost sales, and if Mr. Nozawa thought lower-priced sandals would increase business, it was good enough for her. Sayaka asked her staff to develop a new inexpensive product line using modified images from the internet to create a virtual line of sandals that would be marketed to potential buyers. Eugene took issue with this approach, saying you should not try to sell what you do not have. Regardless, Sayaka was the boss, and Asuka insisted that she and Eugene create a new, less expensive sandal line. Asuka and Eugene did remind Sayaka that all production needed to be finished by February. They already had a tight schedule with Mr. Nozawa given the logistics of sending packages back and forth with his Chinese factory, and therefore, an additional product line seemed nearly impossible to get out in time.
Mr. Nozawa was right! Orders were now pouring in for the new lines of sandals, including a huge order from Mr. Saito. This was Sayaka's main buyer, her "Walmart," and she had to keep him happy. He thought a lower-priced line with similar quality standards would be a huge hit with his retail buyers, and he had received several pre-orders for the sandals just based upon the product descriptions he forwarded from Sayaka to his clients. She did not want to disappoint Mr. Saito and thought Mr. Nozawa could figure out a way to get her order in and make her deadlines.
Mr. Nozawa was very apologetic but also very clear-there was no way that he could, without having already run preproduction and testing, meet her deadlines, especially for the sandals that required studs. He did not carry this type of equipment in his factory, and he would have to order it and then train his employees on its usage. This would also negatively affect his manufacturing costs and therefore his price for making these sandals. Even without his factory being closed for three weeks for the New Year, he could not fulfill her needs. Mr. Nowaza did have an idea, though. He had several contacts in Bangladesh, and perhaps they could produce these sandals for her. He provided her with several e-mail addresses, names, and phone numbers and wished her the best.
Several days later, after numerous e-mails and phone calls by Karolina to manufacturers of sandals in Bangladesh both on Mr. Nowaza's list as well as through her own research, a manufacturer was located. This firm already had stud technology on the premises, had access capacity to meet Sayaka's production needs, and seem priced well within Sayaka's per unit cost. Eugene sent, after a nondisclosure and noncompete agreement were signed by the manufacturer, samples of their current sandal line so they would get an idea as to the quality of the sandal, as well as the unique embellishments. Preproduction samples arrived back in New York at Sayaka's a week later (early February) with a deadline for producing the units requested-Sayaka could meet Mr. Saito's needs if she signed now!
Everyone in the shop examined the preproduction sandals, and they seemed fine. The workmanship was not as good as Mr. Nowaza's, but the sandals seemed good enough given the lower price point for this product line. Sayaka quickly signed the papers and e-mailed them back to their new manufacturer, and everyone breathed a major sigh of relief-but not for long.
It was early May, and Sayaka was on the phone with Mr. Saito, and her voice was serious, and so was the speech coming out of the receiver. Even though Sayaka was speaking softly and deferentially in Japanese, everyone in the room noticed that something was wrong, regardless of seeming pleasantries. Their discourse continued for almost an hour. Sayaka finally hung up the phone with a polite voice yet with trembling hands. With a very calm demeanor, Sayaka talked with her two full-time employees, Tsugumi and Asuka, very fast in Japanese. Then, she turned to Karolina and Eugene, her part-time employees, and broke the news in English. "Saito will not order with us this year. He is very disappointed in the quality of our new product line. He has decided to discontinue our contract and seek other, more quality-conscious suppliers."
How did this happen? Sayaka and her staff were caught completely off guard because all of the sandals were drop shipped to the buyers. She and her staff never saw what the sandals actually looked like as they arrived at the buyers, and therefore, they had no idea what their buyers and the buyers' customers were receiving. Saito's returned sandals arrived a few days later, and Sayaka's worst fears came to fruition. The sandals were very different from the preproduction sandals they had received from their new manufacturer in Bangladesh. The returned sandals were in very poor shape, used very cheap materials, and just did not fit the Sand by Saya quality brand image. They certainly could not be sold (and now resold) under her company's name, and she immediately called her Bangladesh manufacturer to find out why these sandals were substandard.
Speaking in very slow English, Sayaka explained the situation to the head of manufacturing at the Bangladesh plant. His response was curt and to the point. This was the level of quality that every sandal designer firm received from him given the price she had bargained for. His plant had met the prescribed specifications in the contract, and that was that. When Sayaka brought up the issue of the preproduction samples, the head of manufacturing reminded her that these samples had been developed before a price was agreed upon. If she had wanted that quality of sandal, then she should have agreed to the quoted price rather than bargain for a much lower price. From the manufacturer's perspective, the quality of product fit that price point.
Sayaka then called her lawyer, who talked about such issues as misrepresentation and breach of contract. The bottom line was that Sayaka probably had a winning case, yet Sayaka was not hopeful, given her up-front out-of-pocket legal fees, that she would have to sue in a Bangladesh court, and that it might take anywhere from six months to a year to settle the case. More importantly, even winning a court settlement would not get her reputation back. She sat in her office wondering what she had done to get herself into this mess and how she was now going to get out of it.
Questions:
Q1. Sand by Saya is a small, five-person, New York-based business, yet it has gone global. Describe its global operation and the underlying reasoning behind going global.
Q2. What is the current stage of corporate globalization of Sand by Saya?
Q3. How might international ethics apply in this case between Sayaka and her employees? Between Sayaka and her Bangladesh supplier?
Q4. How might cultural differences apply in this case between the Sayaka and her employees? Between Sayaka and her Bangladesh supplier?
Q5. Explain Sayaka's choice of staff using home-, host-, or third-country employees. Does her choice seem to be polycentric, geocentric, or ethnocentric?
Q6. Sand by Saya used to import sandals and embellishments from factories in China and assembled them in its New York office, yet it later offshored manufacturing first to China and later to Bangladesh. What are the pros and cons of offshoring this type of work?
Q7. What type of training might you recommend for Sayaka and her staff, and why?
Q8. What are some global trends that may impact Sand by Saya's human resources policies and operations?