I.

Summary of the Problem

Erika Graeper, an employee of DGG received a letter from Cecil
Armstrong, the president of Queensland Office Supply Ltd., in Brisbane,
Australia and the letter was supposed to be addressed to Herr Heinrich
Dumart, the president of Luna, in Frankfurt Germany. In the letter, it was a
complaint made by Armstrong on the difficulty in obtaining the Luna Pens
for the retailers with whom he dealt. LUNA pens had been out of the
business for years now. Also, Armstrong had also written that Mr. Alven
Feng assures him that the manufacturing of the pens is being stepped up
to meet the increase of demands but the deliveries are often late and is
insufficient to satisfy the customers needs. Alven Feng is the Managing
Director of Global Services. The company distributes the LUNA pens. In
the letter that Cecil Armstrong sent, there was another letter attached to it
that came from Alven Feng. It stated that Alven Feng promised new pens
would be delivered shortly but also stated that while Luna was striving to
meet the increased demand, it did not want to compromise he quality.
DGG (Deutsche Grusskarte Gesellcraft) was a small greeting card
company but throughout a series of acquisitions and mergers they
become a stationery and then office products company. The company
expanded beyond Germany and because of its fat earning statements (net
earnings average 15% of revenue for the past five years.) the company
has become the golden goose. Luna was a small company owned and
operated by the Dumart family for almost 60 years. The annual revenues
between 1994-2004 were approximately 21 million. In 2005, when the

senior Dumart was approaching retirement age, he sold his firms stock to
a larger stationery company although he stayed to manage the pen
business. Three years later, DGG acquired that stationery company as a
vehicle for manufacturing and marketing copy and printer paper. Luna was
not actually central to the deal but DGG had made some effort to spin it
off. With the death of Herr Dumart and the continuously annual losses of
Luna, it became the least of their interest.
Erika Graeper was tempted to respond to Armstrong and simply tell
him that the Luna Pen has gone out of business for years now but still it
felt confusing because Armstrongs company is still receiving supplies
from Alven Feng of Global Feng. Instead of telling Armstrong that the pen
had gone out of business, she acknowledged his letter and apologized for
the delayed response. She also explained that the Luna had been
acquired by DGG and that she had only recently assumed dome
responsibilities. In Erikas trip to Malaysia, she saw a Luna Pen on a store
and in that moment she realized that she was buying a counterfeit pen.
Alven Feng or somebody behind him had used the name of Luna when
DGG tore down the Luna Factory.
When Erika returned from her trip, she immediately opened up the
topic to her boss Wilhelm Mann about the Luna Pens. They were able to
make two options in solving the case: 1. DGG could bring suit against
Feng and Global to recover damages for past trademark violations; 2. It
could negotiate some sort of settlement with Feng in respect to prior
royalties and the right of the future of Luna name, either through some sort

of on-going licensing arrangement or an outright sale; 3. DGG might find

some other enterprise that would be interested in buying Lunas goodwill.
The situation called for a serious negotiation with Alven Feng. Erika
got the authorization from Mann to investigate Alven Feng and Global
Service. She learned that Global Service is a legitimate company owned
by the Feng family. It is a private company therefore financial information
was not available but knowledgeable observers estimates that it trade
activities are in excess of 43.7 million annually. Even though the profit
figures were difficult to obtain, but the investigator suggested that the
usual return for this type of firm was between 8% and 13% of revenues.
The company acted as the middleman, distributing other companies
products. One of its more lucrative activities was said to be the Asian
distributorship of Luna pens, which it both manufactured and distributed,
the investigator estimated that Luna pens and other Luna brand products
accounted for approximately of Global sales. Erika Graeper will have to
negotiate to Alven Feng on whether DGG will push through a lawsuit or
suggest a joint venture since DGG is growing in Asia.

II.

Problem Statement
DUE TO THE DIFFERENCE IN CULTURES OF ALVEN FENG OF GLOBAL
SERVICES AND ERIKA GRAEPER OF DGG, HOW AND WHAT WILL ERIKA
GRAEPER NEGOTIATE TO ALVEN FENG ON THE ISSUE OF THE
COUNTERFEITING OF LUNA PENS?

III.

Objectives
a. To give justice to the Luna Company that was indirectly acquired by DGG.
b. To find a way to negotiate to Alven Feng on the issue of the counterfeiting
of Luna pens
c. To expand DGGs horizons in the Asian market.

IV. Risk Analysis

A. Identification of the Risks present on the case.
a. Market Risk
Fountain pens are already out of the market because of ballpoint
pens and there is no assurance that if Luna pens will out in the market
again they will be saleable to everyone. If DGG will have a joint venture
with Global Service in the selling of Luna pens, DGG must know first who
to sell these pens.
b. Strategic Risk
Since Luna pens are out of the business plan of DGG, it would
affect their business practice if they will insert the Luna pens in their
business. Demands for fountains are not yet determined and there is no
assurance that it would be a big boost to their companys revenues just
like what it did to Global Service.
c. Compliance Risk
There is a violation that was made by Global Service, which is a
Trademark Violation. Even though DGG has indirectly shut down the Luna
industry but still it didnt totally erase the name of Luna. The Luna
company is still part of DGG although it is not part of the companys
interest. Global Service didnt notify DGG that they will use the name of
Luna as a trademark to their pens.
B. Control/ Measure of Risk
a. In controlling Market Risk and Strategic Risk

Since these risks involves the demands of current and future

customers, DGG must first survey to people and ask if they are willing to
buy fountain pens. The company must be able to determine their market if
they will insert Luna pens on their business ventures.
It is very risky to have a joint venture with Global Service for the
Luna pen because it is just a memory to some people and trying to make it
saleable again might be difficult because new types of pens such as
ballpoint pens are already in the market and it is more convenient that
those fountain pens. Fountain pens might only be saleable to artists,
stenographers or people who would want a souvenir from the past.
b. In controlling Compliance Risk
Since the Global Service had a Trademark Violation, they might
experience law suit against DGG because Luna is still indirectly part of
DGG although they have already shutdown the factory but the company is
still on DGGs ownership. To control this risk, the legal adviser of the
company must meet up with Alven Feng and tell him about the violation
and the possible consequence that they might face. It is important to notify
Alven Feng of this matter because they need to be aware about the
ownership of the name of the pen. Even though the Luna pen is the least
of the interest of DGG, it is still part of the companys acquisition of the
stationery company.
V.

S.W.O.T ANALYSIS
a. STRENGHTS
i. DGG has a good reputation in the industry. With the revenue of the
company being impressive, they are one of the top industries for
office supplies.

ii. Erika Graepers knowledge on the non-European cultures. With her

knowledge on other cultures, she can adapt to the environment that
she will face when meeting with Alven Feng. Her communication
skills will help her in the negotiation with Alven Feng.
iii. Global Service has also a good reputation in the Asian industry. The
Luna pens compose a big portion of their revenues.
b. WEAKNESSES
i. Undetermined Demand for the pens in the non-Asian countries.
Since in Asian countries there are already some damns of the Luna
pens because of its presence due to Global Service, if DGG will
have a joint venture there is no assurance that it will be a trend to
non-Asian countries as well. Also Luna pens are the least of DGGs
main interest since they already voluntarily left the market.
ii. Erika Graepers lack of experience. She is still new to the company
and if she is going to negotiate with Alven Feng there is no 100%
assurance that it would be a success.
iii. Global Services trademark violation. They might be sued for the
violation and might cause them to shut down if they will lose the
case.
c. Opportunities
i. Possible partnership with Global Services. If Erika Graeper will
negotiate with Alven Feng by hinting a joint venture with then DGG
will have a possible higher revenues because of the addition of
investments.
ii. DGG expands it horizons to Asian countries. DGG will have the
opportunity to explore other countries and their interests and with
this DGG can also find ways to innovate its products.

iii. Both companies, Global Service and DGG, will be able to expand
their interests on different countries.
d. THREATS
i. Because of the trademark violation, Alven Feng and Global Sevice
might experience law suit against DGG. DGG still owns Luna
indirectly because of its acquisition of the stationery company that
acquired Luna and they didnt formally dissolve the Luna firm, the
VI.

reality was it has been out of business for years.

S.W.O.T Grid Analysis and Possible Alternatives

SWOT Grid Analysis

Possible Alternatives
The company can have a joint venture

S.1+W.1+O.1

with Global Service for increase in

revenues.
Through Erika Graeper, there will be a
negotiation on the possible future of Luna

S.2+W.2+O.2

future expanisions of Global Service as

well as DGG. It is just the same as the
first alternative.
DGG will file a law suit against Alven

S.3+W.3+T.1

Feng and Global Service because of

Trademark Violation.

VII.

Recommendations
a. Erika Graeper will negotiate with Alven Feng about a possible joint
venture with DGG.
i. Pros
1. DGG will expand its horizons and they will be able to earn
more because of the addition of possible market.

2. A partnership with Global Service. In the negotiation process

that will be held by Erika Graeper, it is a good opportunity to
open up on a possible partnership so that both companies
will help each other in attaining a good reputation not only in
one country but possibly worldwide.
3. New possible market for both companies. If DGG will
approve of a joint venture, Luna pens might be on trend
again since people will be curious on such product.
ii. Cons
1. Luna pens is the least of DGGs interest. They main focus is
on office supplies.
2. Erika Graeper might not pull off a successful negotiation. It
will also depend on how she will address the negotiation; if
its aggressive or conciliatory.
b. File a lawsuit against Global Service because of Trademark Violation.
i. Pros
1. Luna Company is still part of DGG and this means that DGG
still owns the company even if it has been out of business.
They never have formally dissolved the company.
2. Possible punitive damages that might be won.
ii. Cons
1. In a typical trademark violation, the complaining party
measure its damages in terms of lost market share and
tarnished reputation. DGG had voluntarily left the market,
therefore there wasnt any loss.
2. Prosecuting a suit would be very expensive.
3. And should DGG not prevail in court the company might be
liable to pay legal costs of the winning parties. Threat of

litigation might be the only way possible to bringing Feng in

VIII.

the bargaining table.

Best Alternative/ Recommendation
The best alternative is to NEGOTIATE WITH ALVEN FENG IN A
CONCILIATORY MANNER ON POSSIBLE JOINT VENTURE. But before Erika
Graeper will open up the topic on joint venture, she should notify Alven Feng on
the Luna Company that is still in the ownership of DGG. After notifying Alven
Feng she can give him a hint about a possible joint venture. With this
recommendation, DGG might be able to expand its horizons and its interests.
Although Luna Pens are the least of their concern but it might help them in

IX.

having a higher percentage of returns and revenue.

Action Plan
Since Erika Graeper already have a scheduled one week trip to Taipei, she can
already have a meeting within that week with Alven Feng regarding the issue of
the Luna. If this case will be seal the deal then Erika Graper will be making a
good impression to her boss.