WHAT IS GINO?

1. One of the largest burner

manufacturers in the world- 14%
market share
2. Set-up in France
 THE PROBLEM
• Choosing between an OEM proposal
from Feima and agitating its well-
established distribution channel.
WHO ARE INVOLVED
• Jinghua that constitute 40% of
revenue in China- the distributor
• FEIMA- Potential OEM. Also, major
client of Jinghua- the buyer
• GINO-the main producer
 THE AIM
• grow its annual unit sales by 20%,
industrial sales by 200 units.
• build two OEM & end user channels
by improving service standards.
 THE RISK INVOLVED
• Feima’s OEM businesses may lead to
frayed relationship with existing
distributor, Jinghua.
 OBJECTIVE
• 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.
PRELIMINARY ANALYSIS
  IMPORTANCE

  Low High

 Increase Industrial Sales

Low

   Increase overall unit Sales

 Improve service and spare supply
URGENCY

 Develop OEM channel

 Feima Proposal
High

 Optimize Distributor channel

 
 Build brand image
SWOT ANALYSIS(1/5)
Sales

STRENGTH WEAKNESS

OPPORTUNITIES THREATS
STRENGTH(2/5)
• 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
WEAKNESS(3/5)
• reliance on oligopolistic distribution
channel for meeting the sales targets
• Unable to take over industrial burner
market
• Unable to steal major market from
competitors
OPPORTUNITIES(4/5)
• Increasing demand (20% higher in the next
five years) in Industrial range.
THREATS(5/5)
• Political influence of local manufacturers
leading to increased output and selling
power.
• Declining growth in western markets.
 ALTERNATIVES

• WHAT CAN BE DONE?

 ALTERNATIVES (1/3)

• Accept feima as jinghua’

customer
 Advantages
• 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
 Disadvantages
• Loss of potential OEM
• High investment
 ALTERNATIVES (2/3)

• Develop Feima as OEM

 Advantages
• Increased unit sales through Feima.
• Brand image and potential end-user channels built.
• New OEM channel developed. Decreasing
distributor power
 Disadvantages
• Disappointed Jinghua.
• Fear in distributor channel may lead to poaching
and exits.
• Industrial stocking remains a challenge. High
marketing investment.
• Longer cycle times.
ALTERNATIVES (3/3)

• Reject Feima
 Advantages
• New OEM and end user accounts
• Relationships with distributors remain undeterred
• Industrial segment sales promoted
• Shortened cycle time
 Disadvantages
• OEM account lost.
• Guaranteed unit sales lost.
• Distributor power remains.
• High investment.
 Disclaimer
• These slides were created by Siddhant Ahuja,
as part of an internship done under the
guidance of Prof. Sameer Mathur
(www.IIMInternship.com)