Tietgen Business College mm 206

Marketing, Business Law, Economics, COM

May 2011

Kopenhagen Fur
By Group 3

Katrine Andreasen, Jurgis Muskats, Inna Mollova, Ritvars Reimanis, Nelia Figueiredo, Livija Ausmane Group 3

Key Strokes: 37,567 Teachers: Lene Hauge Jeppensen, Meg Snderlund, Torben Pedersen, Torben Stig Pedersen,Kristine Telford

Contents

1.Introduction ........................................................................................... 3 1.1 Problem Statement ............................................................................ 3 1.2 Delimitation ...................................................................................... 3 1.3 Report structure ................................................................................ 3 2. Methodology Section............................................................................... 4 3. Future growth strategies for Kopenhagen Fur ............................................. 4 3.1 Proposal for solutions of challenges ....................................................... 6 3.2 Market Research ................................................................................. 7 3.3 Segmentation.................................................................................... 8 4. The concept of Innovation ........................................................................ 9 4.1 Drivers of innovation in Kopenhagens Fur ........................................... 10 4.2 How to secure best conditions for innovation ........................................ 11 5. Organizational Culture ........................................................................... 11 5.1 Geerts Hofstedes Cultural Dimensions in Asia ............................... 11 5.2 Edward T. Halls concepts of context and time ................................ 12 6. Descriptive Economics ........................................................................... 14 7.Finance and Innvestments ....................................................................... 15 7.1 Internal rate of return ....................................................................... 15 7.2 Investment life time .......................................................................... 15 7.3 Loans .............................................................................................. 16 7.4 Liquidity ............................................. Error! Bookmark not defined.16 8.Business Law ......................................................................................... 17 9.Bibliography .......................................................................................... 20 10.Apendix ............................................................................................... 21 Social Contract ...................................................................................... 21 Log book ............................................................................................... 22

1. Introduction
Kopenhagen Fur is in the center of the international fur trade, it is an established luxury brand and the largest fur auction house in the world. The company has been in the business for more than 75 years and has a continuing aim for innovation. Kopenhagen Fur is a great supporter of animal welfare and strives to ensure the health and wellbeing of the animals.

1.1 Problem Statement

In order to find out the external factors which could influence the companys market potential and future activities, we will make a formal strategic analysis. We will base our analysis of the following questions: 1. What proposal could be made for the challenges Kopenhagen Fur is facing and for future growth strategies? 2. What are the main drivers of innovation in Kopenhagen Fur and what factors should they meet to best secure conditions for innovation? 3. What potential legal problems can Kopenhagen Fur face in the future? 4. What economical factors could influence the opportunities for Kopenhagen Fur in Hong Kong and China? 5. What organizational culture factors and national culture differences could influence Kopenhagen Fur?

1.2 Delimitation
Our analysis is delimited to the proposals for challenges which Kopenhagen Fur is facing right now. In marketing part market research proposals are made for market development strategy. Deeper analysis is made only for qualitative research proposal, because it is more relevant when company is entering new market. Further we will focus on the possible cultural, legal, and economical problems that Kopenhagen Fur can face in future.

1.3. Report structure

After introductory paragraphs follows the methodology section, which briefly describes all theories used in this report. Next come proposals for best growth strategies

and market research as well as analysis of challenges which influence Kopenhagen Fur activities. Latter is followed by assessment of drivers of innovation in Kopenhagen Fur. Afterwards possible legal problems which could occur when company operates in international level are assessed. In next section are analyzed economic opportunities and threats which company can face in future. Then implications from organizational and national culture point of view are analyzed and described. Finally, the report ends with a summary conclusion.

2. Methodology section

In this report have been applied several theories and models: Ansoff Matrix, which consists of four growth strategies: - Marrket penetration or expansion - staying in existing market with existing product; - Product development staying in existing market with new product; - Market development entering new market with existing product; - Diversification entering new market with new product; PEEST analysis, which shows five factors (political, economical, environmental, sociocultural and technological), which influence company in macro economical level; The Goffee and Jones Contingency Framework, which classifies four different organizational cultures by level of solidarity and sociability; Geert Hofstedes 5 cultural dimensions Edward T. Hall concept of context and time Danish marketing practices act Convention International Sales of Goods (CISG) Private international law and Procedural law Competition law

3. Future growth strategies for Kopenhagen Fur

Kopenhagen Fur is the center of international fur trade; they are exporting different kinds of fur to China, Greece, Russia, England, Germany, Korea and Japan. Now when company has entered Asia market they should think about best future growth strategies.

As Kopenhagen Fur has already introduced their products in Russia (as an example) and they want to expand more in Asia. According to Ansoff Matrix best possible growth strategy in this case would be market expansion.1 In order to do it, they should promote their company, so more designers and consumers of this country would be aware of companys existence. It could be done by opening a Kopenhagen Studio in a city in Russia. In this way they could educate new Russian designers about right fur treatment as well as develop collaboration with them, because in the future they could be potential customers of the company. They could show to local people how useful and good fur is as a material and in how many ways its natural functionality can be used. They could show their position towards animal welfare as well. By educating people in the Kopenhagen Studio they could convert non users into fur users. In previous experience in China, where the company opened Kopenhagen Studio in 2007, shows that this kind of promotion really work. Other way how to convert non-users into product users is through the innovation or product development strategy (according to Ansoff Matrix). 2 At the moment there are lots of people who dont use fur in their daily life. But as this company is adapting fur for new products in different industries (accessories, furniture, clothes, shoes), more people are getting attracted to this product. For example, many people dont want to wear coats made from animal fur, but they wear shoes with accessories which are made from fur. And now there is the possibility to buy furniture with different elements made from fur. Basically, Kopenhagen Fur eases the innovation process for different industries by differentiating use of its core product. In the business to business level a lot of companies would like to have suppliers, who would make this kind of favor. So Kopenhagen Fur can use this factor as their competitive advantage, which is the main factor of success. So in the future they should continue to use this growth strategy. To expand in Asia, Kopenhagen Fur, according to the Ansoff Matrix should use a market development growth strategy - entering new country-market with an existing product.3 In order to do it, they should make quantitative market research in order to find the most appropriate country which they could enter. Then a qualitative market research should be made, in order to find out the customer preferences, requirements towards fur, customer and end user buying behavior and competitiveness in a market and its size. Afterwards market segmentation should be made in order to find the right target groups. Then Kopenhagen Fur could position themselves according to the companys core
1 2

Jobber: 372 Ibid 3 Jobber: 372

values - innovation. Of course, afterwards the company would have to put an effort to promote their products by presenting them in exhibitions and making brochures with samples of their products. In order to implement previously mentioned growth strategies, they should solve challenges which the company and the whole industry are facing.

3.1 Proposal for solutions of challenges

Nowadays the fast changing business world even companies as successful as Kopenhagen Fur are experiencing different challenges which should be solved. To identify these challenges some elements of the PEEST analysis (political-legal, economical and socio-cultural) should be taken into consideration.4 Economical challenges there is only a small part of the whole population which is able to afford products made from animal fur, meaning the economically wealthy part of the world limiting the segment size. For example, coats made from this material. The company has already found solutions (mentioned in section above) for this problem - differentiation of usage of their core product - animal fur. Socio-cultural challenges In the last years in the mass media there have been lot of scandals about cruelty towards animals. Of course, Kopenhagen Fur is closely linked with this subject, so they have developed animal welfare programs. But anyway people are still concerned about these prejudices. A solution in this case can be business differentiation. They can start to supply meat to the food industry and explain that fur has become their production by-product. In this way they could distract negative attention from using animals for fur purposes. Another possibility how to inform people about positive sides of material is through social sites, like facebook, twitter, etc. It would be cheapest way of communication with people. Political-legal challenges In order to get more supporters politicians (green thinking) show negative attitudes towards the fur industry, so it is some sort of negative advertisement. This challenge can be solved by the previous solution or Kopenhagen Fur could explain that fur is an ecological product which is decomposing if it has been thrown away, whereas fashion products made from artificial materials do not. So basically by using fur in different areas pollution of nature can be decreased.
4

Jobber: 73

3.2 Market research

As mentioned before, Kopenhagen Fur wants to expand their market in Asia. But firstly they should find new way of using fur, which would be profitable. In order to do it, market research is needed. Afterwards in order to decide in which country to offer this new use of fur to, the company should make quantitative research by using secondary data, which are established before actual need for the data that has arisen. This type of data can be gathered from data bases, for example Euromonitor. genders, etc. After choosing a country they should contact potential partners and show the new concept. If potential partners would agree to use fur as a material for their product, Kopenhagen Fur should offer to invest money (half of whole amount needed) in qualitative market research in order to find out if the customers (end users) in this industry would by this product, for example, teddy bears, carpets, made from animal fur. 6 So they would get deeper insight in aspects, which drive the industry consumption (end-user level). In this way they could prevent dissatisfaction of end-customer. So respondents should be chosen deliberately, based on quota sampling.
7 5

There they could find out if market is going to be

profitable according to income level, if the population there is increasing, division of

Respondents are divided into groups by criteria which are important to Kopenhagen Fur. In

this case important criteria is followed by: social class (upper), level of education and income level, since it is a luxury product, respondents must be able to afford the product. The main theme around which Kopenhagen Fur should conduct the interview with the respondents should be their buying behaviour - how and when do they buy; the reasons for specific attitudes towards the purchase of products made from fur (why do they buy in that specific way, what kind of fur do they prefer, etc.). The interview should be semi-structured, so the interviewer would have a general guidance plan of the interview, so questions would not be asked in a straight order from a list. It means that the respondent would feel more relaxed and there would be less validity threats.

Faarup: 22 Faarup: 157 7 Faarup: 72

5 6

3.3 Segmentation
After market research is made, Kopenhagen Fur should segment the market of B2B partners and afterwards they could choose their target market and position themselves in the new market. Firstly, the market should be segmented by macro segmentation criteria 8: Organizational size - important because Kopenhagen Fur must know if they are able to fulfill demand of companies in a particular segment, for example, if the customers in it are huge organizations; Industry they should analyze industry in order to find out if there are some unique requirements from their products, for example special type of fur; Geographic location it is important because company must be able to reach their next target market. And sometimes distance can be too big and then it is not profitable to serve that particular market. Secondly, market should be segmented by micro segmentation criteria, which requires more detailed level of market knowledge9: Choice criteria - what criteria is determining potential customers choice? For example, price, productivity, level of received service, etc. In this industry probably the most important criteria is quality, because it is luxury product and Kopenhagen Fur clients expect products to be highly qualitative; Decision making they need to find out how big is the decision making unit (DMU) in each organization, because the size of it can vary not only in industries, but in particular organizations as well; Decision making process - this choice criterion is closely linked with previously mentioned criteria, because if the DMU is big, decisions in the organization are made slowly, because it takes longer time to more people to agree upon something. And this is a very important criteria in the industry where Kopenhagen Fur is working. Because if their new partners will not be able to

8 9

Jobber: 275 Ibid

decide on time whether to take part in auction, whether to buy something or not, it is not profitable for Kopenhagen Fur to serve this segment. Buy class - how companies in a particular segment buy products after the first few purchases straight re-buy, modified re-buy or new task; Organizational innovativeness if Kopenhagen Fur will develop new ways of using fur, or will establish different kinds of fur, its potential customer organization is going to use or buy it straight after the new way of using fur or new the type of fur has been launched. After segmenting the market they should choose their main target group, which can be done by evaluating attractiveness of segments by different factors 10. Market factors: Segment size - large sized segments are more attractive, because they can bring more profit to the company, but Kopenhagen Fur must be aware that if the segment is huge, they should get more suppliers of animal fur; Segment profitability is it profitable to serve this segment, is there more money earned than spent. For example, if they have to supply fur to other part of world and they have to pay high taxes, they would earn less than if they would sell they fur to country which is located closer; Price sensitivity - for Kopenhagen Fur this is a very important criteria, because their product is a luxury good, so the segment must be almost price insensitive; Barriers to market segment entry maybe to compete with competitors in new segment cost too much. Competitive factors: Nature of competition aggressive competition is less attractive, because as mentioned above it takes a lot of money to compete in that kind of segment; Competitive differentiation as Kopenhagen Fur likes to differentiate use of their product, it is important that the specific segment customers highly evaluate differentiated offer.

4. The concept of Innovation

At first sight innovation and inventions look pretty similar, but there is a big difference between these words. Innovation modernizes something that already existed,

10

Jobber: 278

invention its all about creating new things, inventing something new. There are four different degrees of innovation - Incremental, Modular, Architectural and Radical. We find Modular to be the most appropriate to define Kobenhagen Fur, because in Kopenhagen Studio they are finding out and offering new ways of use of fur. Kobenhagen Fur has been in the market for over 75 years sustaining its leadership in producing top quality skins. Over decades they have supplied fur to the worlds most famous designers and their auctions dictate Furs actual market price. This wouldnt be possible without innovation techniques that will over time still respond to their costumers needs and it can be found in different areas of Kobenhagens Fur organization. Among different types of innovation the most relevant found in this company are Production innovations, process innovations and Commercial/Marketing innovations. They developed the technology in farming and manufacturing processes which allows this massive production of Fur to be later commercialized around the globe. Through process Innovation they have improved the chain of processes of feeding animals, keeping them clean, providing a healthy environment. In the end this innovation has increased the quality of the skins. In 2005 with the establishment of Kopenhagen Studio as Kopenhagen Fur's center for creativity, innovation and craftsmanship they begun inviting representatives from some of the world's most prestigious fashion houses as well as other creative industries to come and develop new ideas and techniques for using fur. Kopenhagen Studio is commercial/marketing innovation, which helps to promote fur as a natural fabric among the end users. This will attract more buyers in the future, extending Kobenhagens Fur product life cycle.

4.1 Drivers of innovation in Kopenhagens Fur

There are six different types of drivers of innovations - Science driven, Technology driven, Price driven, User driven, Employee driven and Welfare driven. In Kobenhagen Fur they focus on User driven innovation by developing new ideas and manufacturing processes that expand possibilities of the final product. Since establishing Kobehagen Studio, they allowed designers, students and other representatives from the fashion industry to collaborate on developing new techniques to produce fur. When these guests realize what is possible to create with the skins its likely that they will become Kobenhagens Fur customers, so focusing on User driver will result in higher profit fo r this company.

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As for Employee driven innovation it should be considered by Kobenhagen Fur in the future because their employees are the people who create the most important innovations. If they can innovate on technological resources it would ease the procedure of feeding the animals or ease transportation methods, and this way reduce costs.

4.2 How to secure best conditions for innovation

Kobenhagen Furs management should focus upon Kobenhagens Studio to ensure best conditions for innovation. By providing a space specifically for creativity they encourage interaction among designers and other creative artists and expand endless possibilities for fur craftsmanship. Kopehagen Fur should also focus on new areas to continuously reinvent ways of using fur. Artists will give fur a different twist so investing in this type of partnerships will definitely benefit Kobehagen Fur. In order to constantly renew the fur industry and attract more customers in the future, Kopenhagen Fur should invest time and resources on design schools and schools that offer furrier education. Passing down the knowledge to the next generations, granting students and artist the possibility of career will ensure the expansion of this industry and give new professionals a reliable source of income for many years.

5. Organizational Culture
When Kopenhagen Fur is going to expand in Asia the cultural side of these countries should be taken into consideration. To find out all possible cultural problems, the theory of two functionalists - Geert Hofstede and Edward T. Hall would be useful.

5.1 Geerts Hofstedes Cultural Dimensions in Asia

Power distance According to this theory, power distance in Asia is quite high, which means that the difference between the upper and lower class is quite big because of high level of inequality of power and wealthiness between the people. People in Asian countries expect appreciation of status and achievements to be shown. Another difference

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could be that in high power distance cultures a motivation for the employees is needed and also face-to-face negotiations and conversations are preferred. Whereas Denmark according to culture is totally opposite, so when they will try to develop business relationship with new partners in different Asian countries they should be aware of these differences, otherwise collaboration would just collapse.

Long/short term orientation Most of Asian countries are long term oriented cultures. It means that people living there prefer to have strong and long relationships between sellers and buyers and employer and employees. Although Russia is exception because it is short term oriented country. So when Kopenhagen Fur is going to start business in Asia they should be aware that they will have to spend longer time to make a deal. Because people from Asian companies will like to get to know at least leaders of Kopenhagen Fur in order to create long lasting collaboration. Individualism Unlike in Denmark where the individualism level is quite high and individual work is more in use, in Asian countries it is the opposite. They prefer to work in groups however they are trying to work individually. It means that people there make decisions slower than in Europe because more people have to agree upon something, and Kopenhagen Fur should take it into consideration when it comes to signing contracts. Masculinity Masculinity level in Asia is relatively high so it means that culture is driven by money, power and success. So when Kopenhagen Fur is going to try to make deal in Asian countries they should make excellent presentation of themselves by showing how fast potential partners would gain profit and how big they would be.

5.2 Edward T. Halls concepts of context and time

If Kopenhagen Fur decided to enter new markets and make contracts with other companies in different countries Edward T. Hall's concepts should be taken into consideration.

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If they enter low-context countries like most Scandinavian countries the company should be aware that these countries use direct speech and more verbal communication than body language. Their time is important so they prefer straight and explicit answers and actions. The tasks and goals are on first place and they are important to be done instead of friendly relationships. The good part of low-context countries is that the information and goods are easy to obtain. But if they enter high-context cultures (Asia) they should be aware that these countries are more likely to use indirect speech and read between the lines. The relationship is stable and depends on trust but they prefer talking and working by using phone and non-verbal communication. The high-context is used among people who know each other for a long time. If Kopenhagen Fur decides to enter country with monochronic culture, company should be aware that they are working one-thing-at-a-time. It means that people in monochromic countries are concentrating on the job that they are doing at the moment. These are countries like Germany and Japan, they follow rules of privacy and consideration. They have not used to borrow and lend things, but they are very well organized and respect the private property of the people. But if company decides to enter polychronic cultures they should be ready to face to quite different behavior. These cultures like doing many-things-at-once this could lead to being late for meetings because people in these countries do not prefer making fixed plans for daily work. Kopenhagen Fur should take into consideration that their organizational culture should be changed if they are going to expand their business area. To determine new organizational culture in the Kopenhagen Fur The Gofee and Jones Contingency Framework is used. As company is working in the fashion industry this means that they are in fast-changing business environment and the level of competition is high. The mercenary culture would be good because they are focusing on the group work and team goals but the bad part of this culture would be that they might not pay enough attention to individual feelings and close relationship between the employees. Another culture that they could fit to Kopenhagen Fur business area would be communal culture. It could evolve the sociability level which is better for team work and would create better environment for creativity and innovation which are two important elements for this company.

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6. Descriptive Economics
When Kopenhagen Fur will enter China and Hong Kongs market they will have to face many challenges. One of the challenges is the economical prospect of their products. The economical factor is influenced by many things. The demographic situation in China is very good at the moment as the birth rate is 13.71 births/ 1000 and the death rate is 7.03 deaths/ 1000 11. According to that we can assume that the Chinese population is growing. The potential customers from 15-63 are 71.9% of the whole Chinese population, and the group starting from 65 + are 8% which gives at total of almost 80% as their potential customers. Since China has the largest population in the world, the 80% are more than 1billion of potential customers. Of course not all 80% are situated enough to afford the products, so the target group would be the upper class citizens, which means the total would be quite high comparing to other countries worldwide. Starting from 2005 the birth rate in Hong Kong has grown significantly in 2011. It was 0.54% more than previous years (2008 0.41%, 2009 - 0.68%, 2010 0.40%)12. The birth rate is 7.49/ 1000 and the death rate is less than 6/ 1000. The difference isnt as big as in China, but it has a tendency to increase. The potential customer age from 15- 64 is 74.9%, so we could say that it is quite high. With the worlds largest population China has the biggest consumer market. The GDP in China has increased by 10.3% in 2010, and it has been growing from 2005. So we can assume that the rate will continue to grow in the future as well. The target group for Kopenhagen Fur would be people from 35 45 who have the highest average income in whole China13. Both men and womens outwear in China and Hong Kong is increasing every year. In China the sales have almost doubled since 2005 for the last 5 years 14. And the curve for the sales has a potential tendency to grow. To have a bigger potential group of

11 12

stats.gov.cn indexmundi.com 13 portal.euromonitor.com 14 portal.euromonitor.com

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customer Kopenhagen Fur may have to become innovative with new never before seen products to attract customers attention. Both in China and Hong Kong there are a total of 427 fur suppliers/producers(377 in China and 50 in Hong Kong)15 who not only produce fur as a raw material, but makes products ready for use of end customer. So the challenge for Kopenhagen Fur in this market is tough competition.

7. Finance and Investments

It was asked to make specific calculations according to figure out the profitability of investment in the production facility in India. According to the given scenario investment is not profitable, because the internal rate of return is only 3,46%, but the cost of capital is 10% and it makes loss of 393 977 EUR. The critical value of investment the amount of money to invest with current scenario to not lose from the investment is 1 106 022 EUR. In this case the internal rate of return is equal to the cost of capital, so that means if the forecast is right the investment will not bring any loss after year 10.

7.1 Internal rate of return

The difference between NPV and IRR is that the NPV shows what the result will be of investment after the investment life time, but the IRR shows what is the return of investment in % per year. If the % of IRR is higher than cost of capital, than investment is profitable.

7.2 Investment life time

I assume that investment life time is also a very important measure of evaluating investment. If the investment life time is very long it can cause high additional costs like to finance the research process (Non Relevant Cash Flows) (ref. Page 120, accounting book Vol.2).Moreover, this cost is not shown in investment analysis calculations, and however, it makes a cost for the company. In addition, the long term investments are more risky because there is a need to rely on the forecast more.

15

www.alibaba.com

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7.3 Loans
Total loan cost The most expensive one is standing loan, because in this type of loan the pay back payment is only in the last year, so it means that every year the interest is calculated from the whole amount of the loan. Serial loan is cheaper than the standing loan, however, more expensive than the annuity loan. Its total cost is 308 859 EUR and the effective rate of interest is 9,5%.The nominal interest was 9%. So the cheapest loan offer in this case is annuity loan that has a nominal interest rate of 8% and the effective rate of interest 8,62%.

7.4 Liquidity
This factor is important because the company can accept a loan only if they know that it will be possible to make all the payments on time, otherwise it will be an extra cost to the company. Annuity loan looks like the best option for Kopenhagen fur if we consider the total cost of loan. However, in this case the company has to be able to pay after first half year of loans life time 114 938 EUR. And the payments has to be made every half year. Serie loan first payment is very large and can cause problem for Kopenhagen fur, however, this option from the point of liquidity is better than the annuity loan as the payments are just once per year. The last option is standing loan. In this case the yearly payment is the smallest, as there is need to pay only the interest and only in the last year of loan life time it is needed to pay back the whole amount of loan. In conclusion, the option is to take the annuity loan as it is the cheapest. However, if the company has runned out of cash it is needed to consder the standing loan. Leasing will cause higher fixed costs in profit and lost statement as it is a rent they have to pay about the assets leased from the other company. But if it would be as Kopenhagens fur own investment, it would increase fixed assets in the balance sheet.

8. Business Law
Kopenhagen fur is market leader in the fur industry; they are the leading providers and have the largest fur auction house in the world. However with their strong position in the market they can still face legal problems. Kopenhagen fur is a Danish company which operates under Danish law, this means the company is acquiescent to strict

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laws and regulations under human rights, labor, environment, and anti-corruption. Since the company has decided to go far beyond the requirements of these laws it is unlikely for problems to occur within these fields, however, Kopenhagen fur could foresee problems within the Danish marketing practices act, Convention International Sales of Goods (CISG), Private international law and Procedural law, and Competition law due to their dominant position. The Danish marketing practices act sec. 1 general clause states that a good marketing practice must protect the interest of consumers, other traders, and general interest in society. As the sale and production of fur is quite controversial marketing the product can be difficult as activists have been known to throw paint, acid, etc. at those wearing or producing fur products. In marketing their fur products Kopenhagen fur must be aware of what their consumers could be met with by opposing parties. To market their products they need to share their beliefs of animal welfare with the public, the consumers, and the animal rights activists. Doing so will not completely silence activists but it will better educate them and hopefully result in less extreme methods in trying to be heard. Kopenhagen fur could also be met with legal issues with employees who work with trade secrets or who try to get a hold of trade secrets as they are the only auction house in the world which can make the fine grading and labeling systems to ensure the ultimate in high quality. Sec. 19 of the Danish marketing practices act guarantees the safety of trade secrets and a violation can result in fines or time in prison. Even after termination an employee must wait 3 years before being able to share any information with other companies. However, Kopenhagen fur should be secure when it comes to labor laws, as they are strictly followed. Kopenhagen fur works a lot with foreign markets which is why it is important that they familiarize themselves with CISG. CISG focuses on the equality and mutual benefit of sales of goods and uniform rules which will govern rules of sales of goods and consider different social, economic and legal systems and contribute to the elimination of legal barriers and encourage development in international trade. Seeing as Kopenhagen fur works closely with many different countries it is important to abide by CISG as to defer conflict across borders and avoid confusion. The Nordic countries have ratified CISG by excluding Part II which deals with entering into contracts, which means that a contract dispute between two Scandinavian countries will be decided by the law in the lex fori, the lex fori law is the law of jurisdiction where an action is pending. Though, a Danish buyer can be judged in accordance with CISGs contractual rules if for example a German seller brings an action in Germany. Germany has ratified Part II of

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CISG, and this means that the conventions contractual rules apply even though Denmark has made reservations16 However, CISG will only work with countries who have accepted it so for the countries who are not a part of CISG it is important for the company to construct a contract in that the Danish Sales of Goods Act should be used as Kopenhagen fur is a Danish company and follows Danish law. Following the Sales of Goods Act both the seller and buyer have duties. According to Sales of Goods sec. 1, sub. 1 all rules on commercial sales and civil sales and non-mandatory and can be over ruled by agreement or traditional practice by the parties. Kopenhagen fur works with commercial sales of generic products, which means that a buyer cannot chose specific pieces of fur or skin. This means that the main responsibility lies with the company. It will be the sellers obligation to deliver the goods to the buyer at the right time, place, and with the right products of agreed quality or else goods of fair average quality. It is the buyers obligations to pay the purchase price at the accurate time, and the accurate place of payment, with the appropriate method or means of payment. The main questions used when it comes to Private international law and Procedural law are: where is the court case to be filled and which countries legislation should be used to solve the conflict?? If both of the countries are EU/EFTA countries then EU-Convention on Judgments is used. If only one or none of the countries is an EU/EFTA country then national rules are used (in Denmark the Administration of Justice act is used.) A case can be filed in Denmark if the defendant lives or stays in Denmark, Legal persons head quarters are in Denmark, if cases are regarding real property rights, if it is the place and performance of contractual obligations, if it is the place of damage inflicting conduct, and/or venue agreement. Kopenhagen fur works closely with many different countries exporting their goods so knowing these laws would be greatly beneficial to the company. For example if Kopenhagen fur sells one of their products to an Italian buyer who files a case that the product was defective the case will be filed in the defendants country (EU -convention of judgements art. 2) and will follow Danish Legislation. Since Kopenhagen fur is market leader it is important for them not to abuse their dominant positioning. The competition act promotes efficient resource allocation in society through practical competition for the advantage of endeavors and consumers. Any abuse of a dominant position is prohibited. The following are considered abuse of dominant positioning: Predatory pricing, loyalty discounts, directly or indirectly imposing unfair purchase or sales prices or other unfair trading conditions.
16

Gleerup:130

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Making contracts, which force the other parties into obligations, which have no connection to the nature of the contracts Limiting production, market or technical development to the prejudice of consumers Applying dissimilar conditions to equivalent transactions with trading partners, giving them a competitive disadvantage

An example of abuse of dominant positioning is perfectly displayed by Arla Foods who in 2006 were fined 5 million DKK. Arla paid 200.000 DKK in marketing expenses for the whole sales chain Metro with the stipulation that they discontinue sales with Hirtshals Andelsmejeri. If Kopenhagen fur decides to buy up another company or create a merger to keep their dominant position or for other beneficial reasons they should know Sec 12 of Competition law which states that mergers between two large companies must be notified to or approved by the Competition Agency. The reason companies create mergers is to be in control of structural changes on the relevant market. Sec. 17 and 18 state that the Competition Council may request any information and have access to the companies (and all company properties) to ensure that there are no violations of provisions regarding Anticompetitive agreements, abuse of dominant power, merger, wrong or untrue information. Fines may be given under circumstances of violations. Kopenhagen fur has high legal standards and morals. It is a company that adheres to Danish law and strictly follows laws and regulations under human rights, labor, environment, and anti-corruption. If they begin to follow the Danish marketing practices act, Convention International Sales of Goods (CISG), Private international law and Procedural law, and Competition law as strictly as they are known to with the other laws and regulations they will be an unstoppable force in the industry.

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Bibliography
Books and articles: 1. Faarup, Poul K Market research and statistics 1st edition, Acedemica 2. Gleerup Anne L., Ulla Rosenkjaer, Leif Rorbaek An Introduction to Danish Law, Chapter 5, Contract law, pg 130 3. Gleerup Anne L., Ulla Rosenkjaer, Leif Rorbaek An Introduction to Danish Law, Chapter 9, International relations, pg 260 -261 4. Jobber, David Principles and Practice of Marketing 6th edition, McGraw Hill 5. Nielsen, Suna Lwe, Kim Klyver, Majbritt Evald and Torben Bager. Entreprenuership in theory and practice Idea. 1st Edition. 2009. 6. Penille Ryden, Meg Sonderlund Global Communication Cultural Studies pg 14-16 7. Rollinson, Derek (2008) Organisational behavior and analysis 4th edition, Prentice Hall, chapter 20, pg 606- 609

Internet sources: 1. stats.gov.cn: http://www.stats.gov.cn/english/newsandcomingevents/t20110428_402722244.htm 2. indexmundi.com: http://www.indexmundi.com/hong_kong/birth_rate.html 3. portal.euromonitor.com: http://portal.euromonitor.com/Portal/Pages/Statistics/Statistics.aspx 4. portal.euromonitor.com: http://portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.asp 5. alibaba.com: http://www.alibaba.com/trade/search/2i1ptyfchms/fur_production.html 6. lingvo-guide.de: http://lingvo-guide.de/intercultural-highp.html 7. cyborlink.com: http://www.cyborlink.com/besite/india.htm

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Social contract
Everyone in Group 3 should: 1. Attend meetings; 2. be prepared to work; 3. be on time for appointment; 4. let your group mates know if you cannot attend a meeting; 5. respect the opinion of all group members; 6. communicate ONLY in English; 7. be responsible for your part of work; 8. do not use physical force if someone disagrees with you

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Log book
Name/Date Livija Nelia Inna Katrine Jurgis Ritvars May 17th X X X X X X May20th X O X X O X May 24th X X X X X X May 30th O O X X X X

Explanation: X Attended O Didnt attended 17/05/2011 We made social contract, agreed to find all possible information about Kopenhagen Fur on internet and made a plan how to work. 20/05/2011 Making introduction, problem statement and dividing tasks for the next time 24/05/2011 Working at school, looking for information, making suggestions for improvements to each other 30/05/2011 We put together the final draft of the Exam Project.

Nelia

Jurgis

Ritvars Reimanis

Livija Ausmane

Inna Mollova

Katrine Andreasen

Figueiredo Muskats

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