Gino SA, Gino, Jinghua, Feima, Case study, Analysis,

1. Gino Sa(Gino):
Distribution Channel
Management
Harvard Case Study Analysis

2. Quiz: Gino Sa, Distribution Channel
Management Case
What was the market size of the burners in Asia in 1999(in
thousands of units)?
How many burners did the company produce in 1999?
What was the average price of domestic boilers in 1999?
How many units of industrial burners did the company sold in
1999 in China?
In converting Transfer Price to Base Price, what was the
conversion factor?
What was the annual goal of Gino towards industrial burner
after 1999?
How to make the distributors happy and do business with
Feima simultaneously?
How to achieve companies annual goal?

3. Quiz: Gino Sa, Distribution Channel
Management Case
What was the market size of the burners in Asia in 1999(in
thousands of units)?291
How many burners did the company produce in 1999?381,000
What was the average price of domestic boilers in
1999?RMB2,500
How many units of industrial burners did the company sold in
1999 in China?137
In converting Transfer Price to Base Price, what was the
conversion factor?12.32
What was the annual goal of Gino towards industrial burner
after 1999?200
How to make the distributors happy and do business with
Feima simultaneously?

4. What is Gino SA?
Who is David Zhou?

5. Who are the characters?
David Zhou
China Marketing Manager of Gino SA
Jean-Michel Pierre
Asia Pacific Area Manager of Gino SA
Henry Gong
General Manager of Jinghua (a distributor of
Gino SA)

6. What is the present situation?

7. Situation Analysis
Feima, an OEM, is asking Gino directly supply
boilers at 10% more discount than what is being
provided by the distributor.
 Jinghua is warning Gino SA of directly
engaging with Feima.
Gino SA, a leading burner manufacturer and
exporter in the world, is expanding its business in
China.

8. Why study this case?

9. Objectives of this case:
Devise a strategy to do business with Feima.
Solve the problems faced by Distributors.
Evaluate a plan to expand Gino’s market in
China.

10. We will focus on three
inter-related issues.

11. Three issues.
Arriving at one solution for doing
business with Feima.
Maintaining good relations with
distributors.
Considering the option of a warehouse.

12. Arriving at one solution for doing
business with Feima.

13. Feima, a leading boiler factory in
Northern China makes a proposal
Feima’s boiler production in 1999(in number of
sets)
In 1999, Feima purchased 350 sets of domestic
burners, 50 sets of commercial burner and 3 sets
of industrial burner from Jinghua at 25 %
discount.

14. Now it wants to directly purchase the
products from Gino SA and asks for 35%
discount.
In return, it promised to purchase at least
50 % of its commercial and industrial
burners and all of its domestic burners
from Gino.
Proposal

15. So whats the problem?

16. But the distributor Jinghua says that
Gino should not develop its existing
customers as OEM accounts.

17. Insights from the data available
with David Zhou

18. Analysis of data when Jinghua was
doing business with Feima

19. Analysis of data if Gino directly
supplies products to Feima

20. So, with this deal Gino is going to get a
lot:
Company will reach towards its goal of
developing two OEM accounts.
Developing OEM business was one
way to combat the increasing power of
the distributors.
It was a very good opportunity to
break into Weishaupt’s customers.

21. Jinghua was not likely to increase its
sales to Feima under the current
status quo, but because of the deal
company’s profit rose.
Success with Feima would make it
easier for Gino to develop OEM
business in other distributors’
territories.
So, with this deal Gino is going to get a
lot:

22. Now, how to convince Jhingau?
Show them the distribution contract
where it is written that the principal
can develop OEM business in
distributors’ categories.
Tell them the need to enter industrial
burner market.
It was not possible for Jinghua to
increase sales with Feima on its own.

23. Hope that the distributor will be
convinced…
If not, then what?

24. Give them other lucrative offers to
remain in association with Gino.

25. Maintaining good relations with
distributors.

26. Evaluation of Distributors’ profits at
current prices

27. Solution to the problem
It is better to raise the profit
margins of before they lose
confidence with Gino SA.

28. The contract price is increased by 5% to
help the distributors in running service
appointments and marketing

29. So now the distributors are getting more
profits and will be satisfied.
If Jinghua was not satisfied at
company’s first step, now he’ll
be satisfied.

30. Considering the option of a warehouse.

31. The company has following goals to
meet in next three years:
Achieve annual combined sales
volume of 15000 units.
Achieve annual sales of industrial
burners of over 200 units.
Improve service and spare supply.

32. Develop a minimum of two OEM
accounts and two end user key
accounts within two years.
Maintain a supply of industrial burners
as the distributors are finding it hard to
keep their stocks.
The company has following goals to
meet in next three years:

33. Keeping all things in mind, it is
essential for the company to
open a warehouse.

34. Warehouse expenses
Cost
Setup cost $200,000
Operation $360,000
Capacity $5,000,000
Total Cost $5,560,000

35. With the establishment of
warehouse, following problems will
be solved:
The company can now maintain a
good stock of industrial boilers, so that
the loss like 50 boiler deals would not
happen in future.
The company will move a step
towards its annual goal.

36. Having all the issues solved,
company can move towards a bright
future.