Case Study on "Kanzen Berhad"

Case Study 5 pages (1444 words) Sources: 1

[EXCERPT] . . . .

Kanzen Berhad Case Study

Its attractiveness, durability, and low maintenance have made stainless steel fittings in high demand throughout the developed world and especially in the United States and Japan. Kanzen Tetsu Sdn. Bhd. (KTSB) became a major player in the international welded stainless steel industry in the early 1990s. A Malaysian firm, KTSB has capitalized on the high demand for welded stainless steel piping by focusing almost exclusively on an export market: a full 80% of KTSB's sales derive from exports to the United States, Canada, and Japan ("Kanzen Berhad" 1996, p. 2).

The imposition of duties on the stainless steel industries in competitor neighboring nations like Taiwan and Korea proved to be one of the primary reasons KTSB was able to enter the lucrative American market. Because the United States did not impose the restrictive duties on Malaysian stainless steel imports, KTSB was able to thrive within just a few years after diversifying into welded stainless steel from its previous specialization in spring mattresses and bedding products.

The low cost of KTSB's welded stainless steel products on the United States market has caused great concern among American industry organizations and firms. In March of 1992, the Senior Manager and Managing Director of KTSB, En Hong Chew, received a memo from the firm's lawyers in Washington. The memo warned KTSB of a potential petition being filed, requesting that antidumping duties be leveraged on the Malaysian market. The antidumping duties had curtailed the Taiwanese and Korean welded stainless steel export markets several years earlier and if imposed on Malaysia too would certainly injure KTSB's standings and profits.

Antidumping duties are imposed precisely to prevent "unfair competition from dumped imports," that is, imports sold at a cost significantly lower than that would be possible from domestic manufacturers ("Kanzen Berhad," 1996, p. 21). The United States Department of Commerce (DOC) and the International Trade Commission (ITC) handle antidumping petitions, which are usually filed by American manufacturers, labor unions, or trade associations within a given industry. In March of 1993, one year after En Hong Chew received the first memo from KTSB's attorneys, a petition to impose antidumping duties on Malaysian welded stainless steel had been officially filed.

Filers of the petition, including Avesta Sheffield Inc., Bristol Metals, Damascus Tubular Products, Crucible Materials Corporation, and the United Steelworkers of America, alleged that Malaysian welded stainless steel products were being sold below cost, undercutting domestic producers. With about 6% of the total market share in the United States, welded stainless steel imports were severely impinging on domestic firms and domestic labor. The petition to the United States government requests that antidumping duties be leveraged on the Malaysian market on the grounds that the imported merchandise is sold at "less than fair value" and that the exports are "causing 'material injury'" or threatening to cause material injury, to the domestic market ("Kanzen Berhad," 1996, p. 21). The DOC and the ITC are the main bodies responsible for investigating the claims made in the petition and advising the government on a just course of action.

Critical Issues

The critical issues at hand include the following. First, KTSB has depended on relatively free and unrestricted trade to secure their current market share and robust sales. An antidumping duty leveraged on Malaysian welded stainless steel would adversely affect KTSB and its profits. However, the lack of antidumping duties appears to be the primary reason why the firm has been able to boost sales so rapidly and effectively in such short time, undercutting other ASEAN producers as well as producers in the domestic American market.

Second, KTSB's overwhelming presence in the U.S. welded stainless steel market hurts domestic business and labor. The domestic stainless steel industry cannot possibly match the "extremely low-priced imports" from Malaysia, especially because KTSB's products have a good reputation for quality workmanship and customer service ("Kanzen Berhad," 1996, p. 7).

The KTSB case reveals a central conflict within the global business environment between unrestricted free trade and protectionism. Thus, finding a solution to the issues raised through the KTSB case requires a thorough weighted analysis of the relative benefits and costs of impeding KTSB's exports. On the one hand, curtailing KTSB's exports to the United States may hamper domestic business that depends on low-cost, high quality welded stainless steel products. For example, areas with a booming housing… READ MORE

How to Reference "Kanzen Berhad" Case Study in a Bibliography

Related Papers:

Fact Pattern Case Study

Pattern

Case Study (Fact Pattern)

Criminal activities have been on the rise in many states of the United States. To control such criminals from going unpunished in the society, the… read more

Case Study 9 pages (2946 words) Sources: 9 Topic: Crime / Police / Criminal Justice

---

Macular Hole Case Study

Because of her age and the fact that the hole was in its early stages, only monitoring was first prescribed. A cautious approach was determined given surgery contains some risks,… read more

Case Study 3 pages (1035 words) Sources: 3 Topic: Nursing / Doctor / Physician

---

Southwest Airline Case Study

SW Airline Case Study

There are several Human Resources systems at place within Southwest Airlines that allow the company to maintain competitive advantage over its rivals. These systems work efficiently… read more

Case Study 4 pages (1319 words) Sources: 0 Topic: Career / Labor / Human Resources

---

Microbiology Case Study

E Coli Case Study

The increase of cases reported of E. coli, that was seen during the month of June 1997, may be attributed to several different factors. It is… read more

Case Study 3 pages (851 words) Sources: 5 Topic: Agriculture / Food / Culinary

---

Chest Pain the Presenting Patient Case Study

Chest Pain Case Study

The presenting patient in the present case scenario is Mr. Hay, an 82-year-old male with an existing diagnosis of Cardiac Obstructive Pulmonary Disease (COPD). This existing… read more

Case Study 4 pages (1112 words) Sources: 1 Style: Harvard Topic: Medicine / Pharmacy

---

View 100+ more related papers  >>