The difficulties that have evolved in the relationship between SDC Corporation and Hangsu Manufacturing in Japan derive in large measure from the fact that SDC chose to use MTC, a Japanese trading company to negotiate the initial agreement with Hangsu. What needs to occur immediately is a meeting between SDC and Hangsu to address the technical and production problems related to Hangsu's components and to consider how to avoid communication problems and technical problems in the future. As noted by Stahl (2000), dealing with overseas suppliers can be extremely difficult due to communication issues and while it can be useful to involve a third party intermediary or negotiator, this extra layer between the two actual partners may complicate the problem or obfuscate important issues.
The problem seems to have derived from a failure on the part of one of the players (i.e., SDC, Hangsu, or even MTC) to ensure that Hangsu's response to the SDC performance specifications followed those specifications precisely. In this case, SDC has dealt directly with Hangsu only in the aftermath of problems regarding the performance of the components ordered from Hangsu. MTC's responsibility was focused on financial and contractual decisions and MTC clearly has operated more on behalf of Hangsu in these areas than SDC. Determining what can be done to retool the original 2,700 units and eliminate the quality and performance specifications issues is vital at this juncture. Hangsu and SDC must interact directly and the idea of withholding $1 million from MTC/Hangsu in order to position SDC more appropriately should not be pursued.
Strategic alliances as described by Wheelen and Hunger (2000) function best when there is ongoing, direct contact between the partners in the alliance. MTC functions in this instance as a third party that is not a direct participant in either selling or manufacturing the tracking devices. It would appear that Hang...