Session No. 15CASE ANALYSIS BY GROUP L

Contents Case No. 1: Vivek Marketing

Vivek Marketing

Case Facts Vivek Marketing Pvt. Ltd was selected by Western Forge India for its distribution in the Faridabad area

The company neither had the expertise in making the machine – leading to a poor product nor its distributors equipped with the marketing knowhow leading to company selecting a new distributor

Two major customer segments: Indexable and solid carbide end mills

Indexable: Can meet the product requirements

Solid carbide: price seekers and hence, western forge cannot meet their requirements

Vivek Marketing Believed that customers look for one stop solution and it would not be a good strategy to offer only one offering (Indexable or solid carbide end mills)

Consequently, it started procuring Indexable from Western Forge and solid carbide end mills from Chinese suppliers

Western Forge initially didn’t complained because it also understood the strategy of Vivek marketing and it does not had any product to fill the gap

Consequently, Western Forge acquired solid carbide specialist end mills manufacturing company as well as Hanita after which it pressurized Vivek Marketing to jettison the Chinese brand or alternatively give up the western Forge distributionship

Case Analysis Lets analyze the case from legal perspective:

In the case it is given that the industry norm is: dedicated distribution of brand but legally this is not a necessary clause – (Most of the industrial selling in India is done by dedicated distributors of a brand who are not allowed to represent any competitor brand. This is an unwritten understanding between supplier firms and distributors, since the Indian regulation in this regard does not permit the supplier to explicitly put this clause in its contract with its distributors. )

Analyze the BATNA for Western Forge:◦ Cannot leave Vivek Marketing from main segment – this will not be in WF favor as Vivek Marketing has

helped them establish at the first place◦ Cannot force Vivek marketing to leave Chinese suppliers legally!◦ Have to create a different positioning of how the quality value of Western Forge is being transformed

into its products

Case Analysis Analyze BATNA for Vivek Marketing:

◦ Should not leave the Chinese suppliers till they are not providing inferior quality products – against the general ethical standards of doing business

◦ Can quote for the business of galaxy but the industry standard may not allow meaning limited business from Western Forge

◦ Can show value using the complementary and share benefit with the Western Forge by providing consultative services through a subsidiary firm which can be done legally

Regency Sign Corporation

Source from Distributor or Manufacturer?

Direct addition subtraction problem

45000 + 5000+ 2500 =52500

Bachan Distilleries

Case Facts: Gautham Beverage Wholesalers Ltd. Sole distributor of 30 top selling lines in New Delhi Metropolitan Area

Carry 7000+ brands of liquor from 75 domestic and international suppliers

Sale of Bachan by Gautham is 1% of Gautham’s sale but for Bachan its 10% of annual sales

Most competitive wholesaler in the area

Terms asked for by Gautham:◦ 50% trade discount (Regular is 45%)◦ 5000 counter & 5000 floor stand display◦ Delivery terms modified – small delivery packs – to minimize inventory for themselves◦ Promotional posters and Goodies asked for to be given away to institutional customers

Case Facts: Eastern Beverage Wholesalers Ltd. Small company relative to others in the industry

Carry over 1000 lines representing 25 suppliers

Sales of BD products ~ 70% of Eastern’s revenue

5 other wholesalers if Eastern cannot continue

Terms by Eastern:

Usual 45% trade discount

Promotional support from BDI welcomed if any

Volunteered to pay for displays

Eastern vs. Gautham There we see a significant difference in the bargaining position of the two companies because of the following reasons:

◦ Gautham handles a large portion of BDI’s total business as compared to Eastern (10% 1%)◦ For Gautham there are large no. of other alternatives available (in terms of no. of brands, players etc.)

and hence he has a higher BATNA which is not the case for BDI in Delhi where it has literally no substitute distribution channels

◦ For Eastern, BDI accounts for a major sales but Eastern for BDI is not a very big distributor, moreover as we can see there are 5 other substitute distributors available to BDI for Eastern

◦ For coming up with a negotiation strategy with Eastern as well as Gautham we need to work on the following:

◦ Most likely◦ Stretch Goal◦ Reservation Price

Decided based on the buyers and sellers BATNA!

Negotiation Strategy: Example

ReservationPrice: 150

Most Likely: 160

Stretch Goal: 190

Stretch Goal: 180

Most Likely: 200

Reservation Price: 250

Lets assume that the entire terms negotiated is being converted to a price for each of the players and hence for the seller (BDI) it would be something like (and can be different for Eastern and Gautham):

Seller Buyer

ZOPA: Zone of Potential Agreement

THANK YOU