WHAT IS GINO?

1. One of the largest burner manufacturers in the world- 14% market share

2. Set-up in France

• Choosing between an OEM proposal from Feima and agitating its well-established distribution channel.

THE PROBLEM

• 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

• grow its annual unit sales by 20%, industrial sales by 200 units.• build two OEM & end user channels

by improving service standards.

THE AIM

• Feima’s OEM businesses may lead to frayed relationship with existing distributor, Jinghua.

THE RISK INVOLVED

• 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

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

Sales

SWOT ANALYSIS(1/5)

STRENGTH WEAKNESS

OPPORTUNITIES THREATS

• 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)

• 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)

• Increasing demand (20% higher in the next five years) in Industrial range.

OPPORTUNITIES(4/5)

• Political influence of local manufacturers leading to increased output and selling power.• Declining growth in western markets.

THREATS(5/5)

•WHAT CAN BE DONE?

ALTERNATIVES

•Accept feima as jinghua’ customer

ALTERNATIVES (1/3)

• 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

• Loss of potential OEM• High investment

Disadvantages

• Develop Feima as OEM

ALTERNATIVES (2/3)

• Increased unit sales through Feima.• Brand image and potential end-user channels built.• New OEM channel developed. Decreasing

distributor power

Advantages

• Disappointed Jinghua.• Fear in distributor channel may lead to poaching

and exits. • Industrial stocking remains a challenge. High

marketing investment.• Longer cycle times.

Disadvantages

•Reject Feima

ALTERNATIVES (3/3)

• New OEM and end user accounts• Relationships with distributors remain undeterred• Industrial segment sales promoted• Shortened cycle time

Advantages

• OEM account lost. • Guaranteed unit sales lost.• Distributor power remains. • High investment.

Disadvantages

• These slides were created by Siddhant Ahuja, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)

Disclaimer