Page 281 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes still considered a hard side market. In the 1980s, Samsonite opened a new plant in France
to manufacture the Prestige Attache and other key products.
With the fall of the Iron Curtain in the early 1990s, Samsonite purchased a Hungarian
luggage manu facturer and began to expand throughout Eastern Europe. During the same
time period, Samsonite estab lished several joint-venture companies throughout Asia,
including China, to extend its reach there. To produce high quality products, Samsonite
embarked on two different programmes. The first was an internal program in which
Samsonite conducted a drop test, a tumble test, a wheel test, and a handle test to determine
if its products were strong enough and of sufficient quality for customers. The second
programme consisted of two different, independent quality-assurance tests:
1. The European-based ‘ISO 9002’ certification

2. The GS Mark
The GS Mark, Gepruefte Sicherheit (translated “Tested for Safety”), is designed to help
companies comply with European product liability laws as well as other areas of quality and
safety. To enhance quality, Samsonite introduced state-of-the-art CAD-CAM machinery in
its plants. Samsonite also introduced a manufacturing tech nique in which autonomous
cells of about a dozen employees assembled a product from start to finish.
Samsonite had six company-owned production facilities and one joint-venture production
facility in Europe in 2002. In addition, it has subsidiaries, joint ventures, retail franchises,
dis tributors, and agents set up to service the European market. Although, Samsonite initially
serviced the European markets through exports, the transportation costs were high, and
the demand for luggage soared in Europe, so Samsonite decided to begin production in
Belgium in 1965. In the early years, Samsonite had a decentralized supply chain, whereby
it operated through different wholesale layers before it finally got the product to the
retailers.
As Samsonite’s business grew, management decided to centralize its supply chain so that
products were manufactured and shipped to a central European warehouse, which then
directly supplied retailers upon request. This centralized structure was put into place to
eliminate the need to rely on whole salers. Samsonite had to worry about transporting
manufactured products to the warehouse, storing them, and transporting them to the
retailers in the different European markets. Samsonite invested heavily in infor mation
technology to link the retailers to the warehouse and thereby manage its European
distribution system more effectively. Retailers would place an order with a salesperson or
the local Samsonite office in their area, and the order would be transmitted to the warehouse
and shipping company by modem. The retail market in Europe began shifting at the turn
of the new century, so Samsonite responded by opening franchised retail outlets in October
2002, beginning in Antwerp and spreading to other areas. As the vice president of market-
ing and sales put it, “We are anticipating a shift in the market, in which the traditional
luggage channel will no longer be at the forefront and a wide new retail opportunity will
emerge.”
As noted earlier, Samsonite sold two basic types of suitcases: hardside and softside. Most
of the R&D was initially done in the United States, but the need to develop products for
the European market led the company to establish R&D facilities in Europe. Samsonite
invested heavily in R&D and in the manufacture of specialized machinery to help keep a
competitive edge. To facilitate the transportation and storage of suitcases, Samsonite located
its production facilities close to the centralized warehouse. Softside luggage is less complex
techno logically, and Samsonite purchased Oda, the Belgium softside luggage company,
to enter that market. Then, it licensed its technology to other European companies. By the
mid-1990s, 48 percent of Samsonite’s sales came from hardside luggage, 22 percent from
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