This summary deals with a German company planning to enter the US market. The company “Oettinger Brauerei GmbH” is engaged in the business of beer brewing. It is a well established brand on the German market with a rapidly growing market share. The company has discovered a competitive gap in brewing a brand beer and distributing it at a low price – they promote their products with the slogan “Germany’s price-worthiest brand beer”. The same strategy could be pursued on the US market, as there are already foreign beers (e.g. from Belgium, Netherlands, and from Germany), but those are relatively expensive. This is due to the fact that only upper scale brands from Europe have yet entered the American beer market. Furthermore, as the total percentage of beer brewed in Germany is declining, there is an upcoming need for German beer producers to search for new markets abroad.
To successfully transfer its strategy of cost leadership, Oettinger will have to produce its beer locally in the USA to save import fees and distribution costs. There are some issues that arise with this option concerning accounting, taxes, finance, and law – this summary will concentrate on certain aspects of law Oettinger will have to deal with.
Additionally, because the company is a rather small brewery considering its market capitalization, it has not the financial strength like for example the giant brewer Inbev. The legal side of entering this new market should include both economic and risk related aspects. This paper will therefore primarily deal with the concept of strict liability and organizational options. In general Oettinger can chose between setting up a new business in the USA, simply importing its products (which has already been excluded above), and producing in the US at another directly owned facility.
Table of Contents
1. Introduction
2. The Legal Perspective
2.1 The Concept of Strict Liability
2.2 The Organizational Form
3. Recommendation
Research Objective and Key Topics
This report evaluates the strategic and legal requirements for the German Oettinger Brewery to successfully enter the U.S. market, focusing specifically on risk mitigation through organizational structure and liability management.
- Strategic evaluation of cost leadership in the U.S. beer market.
- Analysis of the concept of strict liability in American tort law.
- Assessment of various U.S. business entity types for limited liability protection.
- Recommended organizational framework to safeguard the parent company's assets.
- Integration of quality management systems as a proactive risk defense.
Excerpt from the Book
2.1 The Concept of Strict Liability
Considering the behavior of the Americans as a target group for the new beer, the options for setting up a new production facility in the American domestic market as a German company are limited. This is rather related to customer preferences than to legal issues – Americans usually prefer products somehow related to their economy. In case of a simple production facility in the US, they might refuse Oettinger Beer as the profits obviously will be transferred to Germany. Nevertheless, there is one particular aspect of American law that should be considered if this kind of strategy is going to be pursued: the concept of strict liability. This concept belongs to tort law and applies no matter if injuries related to use of a product are caused by fault or not. In general, strict liability is defined as “Liability regardless of fault. In tort law, strict liability is imposed on a manufacturer or seller that introduces into commerce a good that is unreasonably dangerous when in a defective condition”.
In this specific situation of Oettinger, a defective condition could e.g. be a small piece of glass in a bottle, which accidentally got in it. This piece of glass may harm a consumer severely when he is drinking the beer, therefore the product would be unreasonably dangerous. The whole Oettinger Company in this case would be liable for the harm suffered, and if a resulting verdict against the company could not be paid, the company’s assets in the US maybe seized by the state and sold. The remainder of the fine, if there is one, would have to be paid by the German company, before it would be able to enter the US market again. In addition to losing the assets in this market, the whole investments upfront would have to be classified as sunk costs, which also could put the German brewery at risk. Therefore, these defects are a present threat for every company, especially because strict liability does not put the burden of proof on the plaintiff that negligence exists. It rather has to be obvious that the defective product has been the approximate cause for the harm suffered.
Summary of Chapters
1. Introduction: Outlines the motivation for Oettinger's U.S. market entry, specifically focusing on transferring its cost leadership strategy while managing the associated legal and economic challenges.
2. The Legal Perspective: Examines the risks of strict liability in U.S. tort law and evaluates appropriate organizational structures to protect the parent company from potential liabilities.
3. Recommendation: Proposes the establishment of a U.S. subsidiary as a Limited Liability Company (LLC) as the optimal path to ensure market entry while maintaining risk insulation and operational efficiency.
Keywords
Oettinger, U.S. Market Entry, Strict Liability, Tort Law, LLC, Limited Liability, Cost Leadership, Risk Management, Corporate Structure, German Brewery, Product Liability, Business Strategy, Quality Management, Market Expansion, Trademark Protection
Frequently Asked Questions
What is the core focus of this document?
The document serves as an executive summary investigating the legal and strategic prerequisites for the German Oettinger Brewery to establish a production presence in the United States.
What are the primary themes discussed?
The main themes include American tort law—specifically strict liability—and the selection of a U.S. business entity that offers the best balance of limited liability and tax efficiency.
What is the ultimate goal of the research?
The goal is to determine the most viable organizational structure that allows Oettinger to enter the U.S. market while protecting the parent company from excessive legal risks and financial exposure.
Which methodology is applied?
The report utilizes a legal-economic analysis, assessing business risks and comparing organizational forms under U.S. legal standards.
What is covered in the main body?
The body analyzes the risks of strict liability for defective products, potential legal defenses, and the comparative advantages of various business entities like C-Corporations, S-Corporations, and LLCs.
How are the key terms characterized?
The work is defined by terms focusing on corporate legal strategy, international market expansion, and specific U.S. tort law principles.
Why is a limited liability company (LLC) recommended for Oettinger?
An LLC is recommended because it provides liability protection to the parent company, accommodates a single-member ownership structure, and offers tax benefits as a pass-through entity.
How does the concept of strict liability influence Oettinger’s U.S. strategy?
Strict liability means Oettinger could be held liable for product defects regardless of fault, making it essential for the company to implement robust quality management and warning protocols to mitigate legal risks.
- Quote paper
- Erik Silge (Author), 2009, Legal Environment for businesses in the US market, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/129815
