Bright Engg Company

8/13/2019 Bright Engg Company

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Bright Engineering Compa

Group-5

VINAY G.K(12058)

VINCENT BOSCO

ABHISHEK GARG(

ANKITA DHANDHA

BHIMAJI C AGNIH


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Case facts

Bright Engineering Company, established in 1957, with proprietorship of Mr. Xavier

Company manufactures textile machinery parts- prima

Competition rose from an established company along medium sized companies

Which induced the company to reduce the price 50%,production capacity is not met

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Continued.

Quality conscious firm... Special care and additional operations for spindle to a

smooth surface

All types of Quality tests especially elongation test

High inspection standards added more to inspection credoing

the companys quality standards are high in comparispeers

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Continued.

The market potential for the company was huge

The company was only capturing 13% of the total mark

The customers for the company were textile mills

It had different sales practices for different mills

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Continued.

7 Stockists were given geographical exclusivity with a mvolume of Rs.50,000 per year

Each stockist kept a contactman for going around andbusiness for stockists.

These stockists used to fix the price high. Ranged from 2more

45 to 90 days of credit has been given by the companystockists

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List of stockists

Location/city Area/state Sales volumein 1963

Sales volumein 1962

Sin

Bombay Maharashtra 87,000 150,000 6

Bombay Maharashtra - - 5

Bombay Maharashtra - 17,000 5

Ahmedabad Gujarat 233,000 323,000 1

Delhi Delhi 25,500 18,000 -

Calcutta West Bengal& Bihar

17,000 10,000 -

Kanpur U.P 18,000 56,000 4

Indore M.P 10,000 18,000 1

Coimbatore South India 11,500 26,000 1

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Company

Stockist

Textile Mills

Replacement Demand Channel

Company

MachineryManufactures

One Time Demand Chann

Present distribution system7


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Core Issues

No substantial increase in the sales volume

The company was loosing ground in some of the textile

A fierce competition

Dissatisfaction with the present system of distribution of

The stockists - not technically qualified to convince cus

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Proposed Distribution Channel

Company

CompanySales person

Textile Mills

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Proposed Distribution System

Sudden switching of the systems would result in a large quanbeing returned to the company

The outstandings amounted to Rs1,50,000

Mr.Khanna hence felt that, it would be better to phase the cyears

He suggested that the company should reduce the supplies

with immediate effect

Mr.Khanna felt that the company should try to sell more of its directly

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Continued

He felt that all the new products that the company entered isold directly

The new system would have 10 salesman and 2-3 service eng

Each salesman would be operating from the main centre of and travel to places where customers were located

To assist and coordinate the activities of salesman, two assista

be hired

A minimum of two months turnover as inventory had to be mthe company

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Comparison between the existinthe new proposed distribution sys

Existing Distribution System Proposed New Distribu

Ineffective sales by existing distributionsystem had led to only 30-40% ofproductivity of the plant

New system proposdouble the sales of

Stockists marked up their prices in therange of 20% to 300%, popular mark-upwas 2050%, this led to downfall ofsales

The new system womark ups as the saledirectly by the comsalesman

The stockists bore the costs oftransportation and the various taxes inexisting distribution system

Freight charges, LocInterstate taxes if anby the company itse

Stockists were unable to explain thehigher cost of the companys productsas they didnt have the expertise

The sales force alonengineers would betackle any question

or technology

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Continued

Company had credit period of 45-90

days, however, stockists had tosometimes wait around 6 -8 monthsto get their money

With the new syste

had to negotiate and arrive at a mcredit period

The stockists sold the products atdifferent prices to different textilemills, based on their payment period,this could have led to decrease in

sales

The company wostandardise the pprices and try to sprices at all the p

Stockists were failing to regularlyprovide the company with marketinformation

The sales force waon the market infocompany, using wcould plan their paccurately

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3Es for Channel Evaluation

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Stockist Sales F

Efficiency

Different credit periodsare given

The company is usingonly 30% to 40% of its

manufacturing capacity

Company ohence the cdecides onsystem

Same crediall the custo

Will have tohigher credcustomers, months

Not sure if tmanufacturcapacity wwith the new

Effectiveness

Unable to convince thecustomers of buying ahigh priced product

The new sysable to provpriced prod

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Stockist Sales Fo

Effectiveness

The sales people do nothave good knowledgeabout the companysproducts

Lack of interest in thedistribution channel

Major power lies withthem

Appoint salewith sufficienknowledge company aproducts

Major powethe compan

Improved rebetween theand their cu

Equity

Maintain non-competing lines

Can serve the demandof widely spread area

Sales force ithe compan

Cannot servdemand of area as effepossible

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Importance of Products-17


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Mathematical Calculation in two appro

Financial comparison.xlsx

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http://localhost/var/www/apps/conversion/tmp/scratch_7/Financial%20comparison.xlsxhttp://localhost/var/www/apps/conversion/tmp/scratch_7/Financial%20comparison.xlsx


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Assumption by Mr Khanna-

Sales will double if sales force is used. Cost of Incentives given to mills is not included Cost of Credit period given to mills 6-8 months are not inc

Inventory carrying cost of 2-3 months not included. Loss of sales due to unavailability of goods not taken into

Freight and handling cost can't be same as previous as c

deliver items at company doorstep. Sales which are coming only because of relation/ contac

be lost, not taken into consideration Production loss of not producing, spare replacement part

consideration, as even now company is using only 30-35%

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Quantitative strategic Planning m

Key InternalFactors Weight Old channel

New

Score Total ScoreCoverage area 0.15 4 0.6 3Selling capabilty 0.2 3 0.6 5

Profitability 0.2 3 0.6 4Growth

opportunity 0.2 3 0.6 4Inventory 0.15 4 0.6 2

Credit facility 0.1 4 0.4 21 3.4

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Suggestion and conclusion

Training sales employee of stockist or replacing with technical per

Making a brand in market by conducting studies on Quality and d

of product.

In low sales area, adopting sales force channel model and lookin

Company can go for dual strategy of keeping stockist and sales f

slowly moving to one giving results to company.

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Thank you

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Documents

Bright Engg Company