Case Study on Can Knockoffs Knock Out Your Business?

Question 1

Any successful business or firm must consider certain indirect and direct costs when it comes to protecting brand names, copyrighted material, and intellectual. Some of these costs include legal costs, anti-counterfeit measuring costs, as well as reputations costs. Legal costs or charges are put into use to aid in the investigation process. The finalization of the investigation process then paves the way for possible pressing of charges. This type of costs is prepared by lawyers who are experts in the legal profession thereby laying a foundation for accurate guidance. It is important to note that the legal channels are to be pursued right from the investigation period to the court hearings (Nunes et al., 43). Legal costs are the most significant type of cost used in preventing counterfeit since the entire process should be argued from a legal perspective. This type of cost could be equally described as the cost used in detecting the infringement that might have occurred to the company.

Anti-counterfeit measuring costs are applied in the initial process of manufacturing the products. Any organization should ensure that it sets up a budget that would be used in branding the products or placing some tags as a sign of ownership. Based on the article, Ruffin has managed to use this type of cost to apply the micro-tags that would help to identify their products. Reputation Costs, on the other hand, are indirect costs applied to affirm the reputation of the company. For instance, Bronson’s firm initially was seen to be an “American Bully” (Nunes et al., 44). This means that the company would not only risk losing some of its clients but the government’s support too. For this reason, any company would consider reputation costs such as bribery and kickbacks to protect their brand names.

Question 2

Firms or companies should team up and battle out the firms continuously use counterfeit products as a way of sustaining their businesses and gaining competitive advantage. The war on counterfeit goods should be embraced by all firms and should warn firms or individuals involved in the sale of counterfeit products. Of course, a reason why firms should wage the battle against firms involved in the same is consumers may have bought the products unknowingly or may have misguided when it comes to purchasing. This is one of the greatest challenges faced by both firms and consumers with the latter finding it difficult to distinguish between original and counterfeit products. Second, battling against such firms is crucial since the number of consumers purchasing such products could be significantly high considering Ruffin’s annual sale report (Nunes et al., 42).

In the case of Ruffin, the continued sale of counterfeit products by its competitors could cap on its advantage of attracting more consumers and increasing its profitability as it currently enjoys bigger market opportunities than its competitors. Moreover, battling against companies or firms that manufacture counterfeit products could lay the stage for favorable competition. This could be achieved through prosecution of firms involved in the same or some of the customers who knowingly or unknowingly purchase such goods. There is no doubt that such an intervention would have positive impacts on firms when it comes to competitiveness, performance, and profitability.

Question 3

Current Ruffin CEO, Bill Bronson, views the sale of counterfeit products as an insult to firms that sell genuine and original products and as a sale that is lost. On the other hand, the director of East Asian sales and operations, Lily Wang, has different view in that she considers the sale of counterfeit goods as an avenue of marketing products. Wang has a positive view of the idea of counterfeits stating that the strategy is the actual way of doing business in the Chinese market. As a company director, one should take a similar stand to that of Bill Bronson as the sale of counterfeits paves the way for unfavorable competition in the market. Company directors should instead focus on the achievement of common organizational goals and abide by globally set business standards, of which the sale of counterfeits does not appear (Nunes et al., 43). Another approach to Ruffin’s current situation would be focusing on organizational goals while determining how they vary from one organization to another from a geographic perspective. For instance, it would be important to consider the fact that goals set by Chinese firms on the sale of counterfeit goods are different from those set by firms in the United States on the same.

Question 4

Ruffin Company should consider putting in place external investigators tasked with investigating activities revolving around the sale or purchase of counterfeit products. Equally, the company should consider allowing customs officials and border patrol officers to play their roles in arresting and prosecuting firms and individuals involved in the sale of counterfeit goods. Moreover, Ruffin should ensure that it focuses on internal control by training the public and its workforce about ways of dealing with counterfeits. Through these initiatives, the company is likely to make strides when it comes to reducing or lessening financial costs associated with mitigation efforts.

 

 

Work Cited

Nunes, Paul F., et al. “Can knockoffs knock out your business? (practical limits to efforts expended to prevent product counterfeiting).” Harvard Business Review 86.10 (2008): 41-48. https://hbr.org/2008/09/can-knockoffs-knock-out-your-b.html