2. OVERVIEW
LeClerc Machines de Cuisine
• Paris manufacturer for food
processors, blenders, grinders and
other chefs supplies
• Overseas Sales Manager: François Jost
Creative Cuisines
• US ditritributor located in Atlanta, Georgia
• CEO: Bill Lewis
• Firm’s Attoney: Marie Dominic
Context:
• Leclerc wants to export its products to the US through a sole distributor
• Both companies signed an exlusive distribution agreement
• Creative Cuisines is now in charge of :
- marketing and sales promotion costs for the Leclerc line
- marketing and diffusing the products progressively in the US
3. OVERVIEW
Problem: Creative Cuisines discovered someone else in the US is selling products of the Leclerc line
• A mail order firm, « Reliable Restaurant and Home Kitchen Supplies »
• Placed ads in consumer and trade magazines
• Propose 2 lead products: LeClerc LMC Professional and LeClerc LMC Standard
• Prices are considerably lower than those offered by Creative Cuisines
Phone Call between LeClerc and Creative Cuisines:
• LeClerc did not authorized a sale to Reliable
• Nobody can understand how Reliable managed to receive shipments from LeClerc
Investigation of Reliable by Mr Lewis, CEO of Creative Cuisines:
• Reliable is a New Jersey company specialized in mail order discount kitchen supplies
Next Step: consult his firm’s lawyer to undertake a legal action
5. DIALOGUE
Mr. Bill Lewis, President of Creative Cuisine
Ms. Marie Dominic, attorney representing Creative Cuisine
• Does Reliable act in legality according to the law
• Genuine Leclerc products?
« If Reliable has a warranty, Leclerc has to honor it »
•Who are the clients of Creative Cuisine ?
•Who is the supplier of Reliable ? Does he was aware of the exclusivity?
6. EXHIBIT 1
English version of a letter sent by Leclerc to all distributors
Action of Leclerc :
Explain the current situation to its distribution
network
Ask his network not to supply Reliable Restaurant &
Kitchen Supplies
7. EXHIBIT 2
Letter from Dominic to Albert Rose,President, Reliable Restaurant and Home Kitchen Supplies
Mrs Dominic informs Reliable
they are violating an agreement
of Leclerc & Creative Cuisine
8. EXHIBIT 3
Memo from Jane Watson, sales manager , Creative Cuisines, to Bill Lewis
Genuine Leclerc LMC Standard
Genuine warranty of Leclerc
France
Names Reliable on the return
9. EXHIBIT 4
Memo to Creative Cuisines sales department from Jane Watson
Action of Creative Cuisines :
Quick reaction
Lowering the prices during 2 monthes on :
- LMC Professional Food Processor from $399
to $310
- LMC Standard Food Processor from $279 to
$189
10. EXHIBIT 5
Reliable’s Ad in a Number of Consumer Food Magazines and Professional Journals
Prices Reliable current
price
Creative
Cuisines with its
promotion in
september
Model Standard $189 $279 $189
Model
Professional
$319 $399 $310
11. EXHIBIT 6
Letter to Bill Lewis from Sandra Jordan, account executive at feingold advertising, Creative
Cuisine’s advertising agency
Action of Creative Cuisines :
Quick reaction
Agressive Marketing / advertising through Food Magazines
Make the customers aware of the illegal actions of Reliable
Publication : 15th and 20th ofAugust 1994
13. COMMUNICATION
Strenghts Weaknesses
- Good communication of Creative Cuisines
- Good communication of Leclerc inside their
distribution network
-Mrs. Dominic, attorney of Creative Cuisine is
active and involved
-Quick communication : action taken in less
than one month
-No answer from Reliable
-Leclerc don’t say what they will do to help
Creative Cuisines
14. ETHICS
Strenghts Weaknesses
• Lawyer consulted
• Diplomatic letter to keep good relationships
- LeClerc doesn’t help Creative Cuisines in its
investigation
- Tested products are genuine : LeClerc may
have lied
- LeClerc refuses to recognize the truth
15. MANAGEMENT
Strenghts Weaknesses
-Good teamwork and internal communication
in Creative Cuisine
-Take initiative quickly with their partner to
create a strategy and counter Reliable
-Leclerc is not aware about the contracts
signed by their distributors
-Creative Cuisines don’t know who their
clients are
16. TAKING INITIATIVE : MARKETING
Strenghts Weaknesses
-Agressive marketing to charge Reliable and
cut cost
-Quick in the implementation (july
september)
-Cut in cost could led to increase the number of
sell and clients.
-Marketing cost : publications
-Dangerous as they start a prices war
-Fallout of price reduction could be negative
-The publication could be published too early :
no answer from Reliable for the moment.
(They maybe didn’t know they were violating
the law.)
18. PROBLEM STATEMENT
The company with the arrival of a new distributor which have a legal licencee to sell
the same Leclerc product at a lower price face financial and juridicial issue.
What initiative should solve the litigation between Creative Cuisine & Reliable
Cuisine?
20. OPTION 1 : LEAVE THE CASE TO LECLERC
Strenghts Weaknesses
-No cost from Creative Cuisines
-Better prices, no more cut in costs
-Leclerc’s responsability if it is the mistake of a
distributor
-Drop in the sales for Creative Cuisines if they do
nothing
-Take times
-Bad relation with Leclerc
21. OPTION 2 : COMPLAIN AGAINST RELIABLE
RESTAURANTS
Strenghts Weaknesses
- Indemnisation
- Recognition of Creative Cuisines as the sole
legal distributor
- Too radical solution
- Bad image for Creative Cuisines
22. OPTION 3 : COMPLAIN AGAINST LECLERC
Strenghts Weaknesses
-Indemnisation
-Recognition of Creative Cuisines as the sole legal
distributor
-Stop the sole distribution contract : loss a
supplier
-Bad relation
-Earn nothing if not Leclerc’s fault
23. OPTION 4 : KEEP AN AGRESSIVE STRATEGY AGAINST
RELIABLE
Strenghts Weaknesses
- To show to customers and LeClerc Creative
Cuisines’ reactivity
- Re-increase the sales of LeClerc products
- To be too focused on defense strategy
- High costs
24. OPTION 5 : SEARCHING PRODUCTS FROM NEW
SUPPLIERS
Strenghts Weaknesses
-New sources of earnings
-Diversification in their offers
- AddedValue for Creative Cuisines
-Bad relation with Leclerc
-Could end the contract with Leclerc
-Not the goal of Creative Cuisines at the
beginning of the case
-Bad image?
If Leclerc didn’t respect its contract, Creatives Cuisines could do the same after several months
if no change happens
25. OPTIONS 6 : SECRET ASSOCIATION WITH RELIABLE TO
HAVE THE MONOPOLY ON THE MARKET
Strenghts Weaknesses
- Increase the prices for the whole LeClerc line
products
- Take advantage of the excellence of Reliable’s
marketing and communication methods
- No more stress about competition
- The alliance must be kept secret
- This situation is illegal
- Bad for the brand image
27. DEBATE
1- Which option do you find the best?
2- Would you be willing to complain against another company if you just have set up your
company?
3- Do you think that a company like Leclerc can let this kind of situation on going and do nothing
when it doesn’t affect its profitability?
