Export Contract

Export contractDang Huyen-Anh

Illiano Sabine

Richard Kathleen

Snell Kimberley

TEAM 5

1. Summarize Major investor

Aim « to give ourselves completely to the customer

Want to be a leading global company

One of the words leading pure play wafer foundries, offering leading edge mainstream and specialized CMOS process technologies

Specialized in outsourcing of manufacturing of electronic devices

Plans to expand business into Europe

Committed to growth and customer satisfaction it has the flexibility to respond to different wafer processing requirements ( has first rate quality management system)

Mission provide superior quality product outstanding services at competitive price

2 manufacturing plants

120 million turnover in 2013

Capacity of factories : 4M devices per month

2. First conference What is your aim in entering Europe and now may we help?

What are the activities of your enterprise ?

What exactly is your product range?

Do you already have factories or suppliers in Europe?

Who are your target clientele in Europe?

Do you have competitors in Europe?

What is your comparative position among competitors?

Do you have suppliers in Europe already ?

What is your competitive comparison regarding price?

Are you changing strategy in Europe in comparison to Korea?

Do you plan to bring over a HR team, or employing new staff ?

3. Summarize of interview The market is divided in 3 parts: 1/3 of volume in Europe, 1/3 in Asia, 1/3 in America (16 mil/yr)

The company had developed business in Asia, in America, so now the global strategy is to sell in Europe

The prices are fixed by the Taiwanese as the dominate the market (demand is bigger than the supply)

Customers will not sign any contracts with Dongbu-HiTek until they have an office in Europe

There is little trust between the European customers and the Asian suppliers, to complete business there must be a subsidiary in Europe (so that if there is a problem, the case will be in European courts, not Korean courts)

The company want create a new team of 12 people in Europe for business

STMicro is too small in Europe for the demand

To analyse the European business, to propose the best place and to recruit in Europe in 6 months to start a new activity in Europe

In Europe the company want to create office and maybe engineering office close to be customer.

Engineers need to be able to quickly travel to the customers if there is an issue

The company have the capacity to produce enough devices for all new market

Sales office will only be profitable if it costs less than 3% of sales

4. Market Analysis5

Risks:- Don’t have enough customers

- The logistic cost are to high

- Payment by Dongbu

- There is a risk we will not meet sales objectives

- The quality of the product may not reach European standards

Starting Phase Starting/Stable Phase

Stable Phase

Sales (7X500X5)

17 500 000$

((80 000 000+ 17 500 000)/2)

48 750 000$

80 000 000$

IDRAC % 30X1500+500

45 500$

30X1500+500

45 500$

0.15%

120 000$

5. Non Disclosure Agreement6

ITEMS Acceptable Risky Unacceptable Incomprehensible

1 a,b,c

2 ✓

3 b,d,c a

4 ✓

5 ✓

6 ✓

7 ✓

8 ✓

9 ✓

10 ✓

11 ✓

12 ✓

13 ✓

14 ✓

6. Second conference7

- 2 planned functions

- Commercial function - for building a relationship between the business and the customers.

- Support activity - Pre-sales support (discuss and prepare business contact) and post sales support (quality control for the customers)

- Dongbu HiTek will pay according to the European rule (Within 30 days)

- Do not require the purchasing of a building but rather the renting of offices to house their employees.

- Do not want the costs to exceed 3% of annual turn over

- Willing to approximately follow european average salary

- 1x General manager - €200,000/ 2x Sales persons - €150,000/ 6x Engineers - €100,000/ 1x Admin - €80,000

7. Workload8

- Market analysis: find the best location, the best country and city, the cost of life, taxes and laws.(Country Analysis - 2M x D, analyzing taxes and laws - 2M x D, setting up and agreement - 5M x D, visits customers - 10M x D)

- Company creation: find the best building, the bank and sign the documents. (Legal form 5M x D, location, visits – 5M x D, registration – 5M x D, supplies – 10M x D, bank account – 2M x D, insurance – 1M x D, taxes – 1M x D)

- Recruitment process: find the 12 employees (Job description – 2M x D, announcement – 5M x D, CV’s screening – 20M x D, Dongbu interviews – 10M x D, labor contract – 5M x D)

8. Commercial Proposal9

Phase Delivery Cost

Market analysis Recommandation of the 3 best location

in Europe

19 K + 7 K (travel exchange)

Company creation

Office ready for use, registration and legal form in

the country

29 K

Recruitment process

Short list of 24 candidates, and labor contract

42 K

TOTAL 20% at order30% at market report50% at market delivery

97K

9. Ganttproject planning

10

10. Project Phases

11

March 1st 6 months August 31st

Market Analysis33 days

Company creation42 days

Recruitment process97 days

= 172 working days

11. Lettre of Intent12

Published: 26/02/15, 8h45

IDRAC Consulting signs letter of intent with Dongbu for expanding Dongbu’s business to European market.

Idrac consulting- Create subsidiary in Europe- Analyze Frankly speaking European Countries, their market and economic

state- Be in charge of European’s employees recruitment process

Dongbu:- External logistic - Sell their services from Korea to Europe- Don’t create warehouse in Europe

12. Memorandum

13

• IDRAC Consulting will set up a European Subsidiary on the behalf of Dongbu Korea

• Dongbu Korea will be the only shareholder in the European market

• IDRAC Consulting will conduct a recruitment process and proposal of the European staff to Dongbu

• Dongbu Europe will appoint IDRAC Consulting for the administrative support for the following 3 years$

• This agreement is valid until end of 2018