Gino sa case study internship
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GINO is one of the largest burner manufacturers in the world with a 14% market share. It is considering an OEM proposal from Feima that could disrupt its relationship with its main Chinese distributor, Jinghua, which accounts for 40% of GINO's revenue in China. GINO aims to grow annual unit sales by 20% and industrial sales by 200 units by improving service standards and developing new distribution channels. It must choose whether to accept Feima as a customer through Jinghua, develop Feima as an OEM and risk upsetting Jinghua, or reject Feima and lose potential sales.
Gino sa case study internship
- 1. WHAT IS GINO? 1. One of the largest burner manufacturers in the world- 14% market share 2. Set-up in France
- 2. • Choosing between an OEM proposal from Feima and agitating its well- established distribution channel. THE PROBLEM
- 3. • Jinghua that constitute 40% of revenue in China- the distributor • FEIMA- Potential OEM. Also, major client of Jinghua- the buyer • GINO-the main producer WHO ARE INVOLVED
- 4. • grow its annual unit sales by 20%, industrial sales by 200 units. • build two OEM & end user channels by improving service standards. THE AIM
- 5. • Feima’s OEM businesses may lead to frayed relationship with existing distributor, Jinghua. THE RISK INVOLVED
- 6. • Choose between pleasing distributors or setting up OEM. • If OEM: create a pricing strategy for potential OEM’s including Feima. • To open two OEM accounts, develop more distributors and assist through marketing and technical support, increase annual industrial burner sales to 200 units, and over all sales to 15,000 units. OBJECTIVE
- 7. IMPORTANCE Low High URGENCY Low Increase Industrial Sales Increase overall unit Sales Improve service and spare supply High Develop OEM channel Optimize Distributor channel Build brand image Feima Proposal PRELIMINARY ANALYSIS
- 9. • global presence, well-established channel network and strong brand reputation. • price gap from competition of up to 30% • contribution margins (30% - Industrial, 25% - Commercial, less than 20% - Domestic). • 14% market share • reputable employee base STRENGTH(2/5)
- 10. • reliance on oligopolistic distribution channel for meeting the sales targets • Unable to take over industrial burner market • Unable to steal major market from competitors WEAKNESS(3/5)
- 11. • Increasing demand (20% higher in the next five years) in Industrial range. OPPORTUNITIES(4/5)
- 12. • Political influence of local manufacturers leading to increased output and selling power. • Declining growth in western markets. THREATS(5/5)
- 13. •WHAT CAN BE DONE? ALTERNATIVES
- 14. •Accept feima as jinghua’ customer ALTERNATIVES (1/3)
- 15. • Increase in unit sales • Relationship with distributors strengthened • Improved service standards • Industrial burners emphasized • New distribution channel established • Reduced cycle time • Decreasing power of distributors Advantages
- 16. • Loss of potential OEM • High investment Disadvantages
- 17. • Develop Feima as OEM ALTERNATIVES (2/3)
- 18. • Increased unit sales through Feima. • Brand image and potential end-user channels built. • New OEM channel developed. Decreasing distributor power Advantages
- 19. • Disappointed Jinghua. • Fear in distributor channel may lead to poaching and exits. • Industrial stocking remains a challenge. High marketing investment. • Longer cycle times. Disadvantages
- 21. • New OEM and end user accounts • Relationships with distributors remain undeterred • Industrial segment sales promoted • Shortened cycle time Advantages
- 22. • OEM account lost. • Guaranteed unit sales lost. • Distributor power remains. • High investment. Disadvantages
- 23. • These slides were created by Siddhant Ahuja, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com) Disclaimer