GINO SA:

Distribution Channel
Management
Ankit
Apoorva
Goyam
Heena
Ishaan
Kishore

Problem Statement
Goal: Gino China wanted to develop OEM accounts and
increase share of Industrial segment
Opportunity: Fiema Boiler, which was being catered by
Ginos distributor, approached Gino for OEM status &
increase in their purchase from Gino
Issue: Conflict with its critical channel partners and
possibility of loss of business
Thus, Gino China had to manage conflict with channel
partners, keeping in view the strategy they were
following

Context
Source of
conflict
Type of
conflict
Intensity
Importance

Domain Dissensus
Jinghua stated loss of confidence as Gino
developing distributors existing customers as
OEM accounts
Overt
Confrontations b/w Gong and Zhou
Increasing demands of distributors & lesser
control
Medium
Situation not out of control but needs action
High
Directly impacts business

Alternative 1: Feima as Ginos OEM

account
Upfront investment in warehouse: Cost for one year= 0.56
million RMB
Handling increased volumes
Inventory capacity beneficial for future OEM accounts

Increase in revenue will be of 7 million RMB from OEM

account, 60 million RMB in total revenue (after 35% discount
to Feima)
20% increase in industrial segment
Have edge of abundant resources & technical expertise

Alternative 1: Feima as Ginos OEM

account
Pros
Increase in sales
24% increase in Industrial segment sales
6% increase in overall sales volume

Positive impact on 3 year goal plan

Closer to target sales of 15000, addition of at least 760 units
Gap of only 30 from target sales volume of 200 in Industrial segment

Strategically beneficial
Critical reference account for development of more OEM accounts
Stock availability for additional Industrial demand
Alignment with strategical focus on increasing Industrial market share

Controlling the increasing bargaining power of distributors

Alternative 1: Feima as Ginos OEM

account
Cons
Possibility of retaliation
Additional investments in warehouse & inventory
Loss of 40% sales volume
Loss of confidence from FUNGs and Wayip

Managing services and spare parts for OEMs

Alternative 2: FEIMA continues to be

Jinghua's Customer
PROS
Reinforce distributor
confidence in Gino
Avert possible
repercussions

CONS
Corporate goals are not
met - significant loss in
business (50 units)
Industrial segment
would remain underdeveloped
Further inclination of
power towards
distributors

Recommendation: Alternative 1
Addressing possible conflicts & implications
Context

Power

Recommendat Implications
ions

Among the
global leaders

FUNGs is
increasing
emphasis on
boiler market &
might not
retaliate

High focus of
corporate
strategy on
China

Referent Power
with Gino

Contract wise,
Gino is not
getting
indulged in
illegal business

Although
theoretical,
Gino can
Legitimate
communicate
Power with Gino
to distributors
to honour
contract

Have highly
competent

Expert Power
not being

Should provide
assistance in

Managing conflict with Jinghua

Reduction in revenue for Jinghua of about 17%
Jinghua should continue to serve spares to Feima
Due to increased sales, revenue from spares will increase
Projected reduction in revenue to be 10%

Further, allocation of more territory to Jinghua as they are best

performing distributor
Jinghua can not move to Weishaupt, as with Weishaupt demand is
greater than production

Thank You

Range

If FEIMA continues to be Jinghua's Customer

Volu Transfe
Margin
In dollar Base
Public
Contract
me
r
%

Profit
Margin

Domesti
350
c

2500

301

3711

5937

3859

20%

259759

Commer
cial

50

9000

1084

13359

21374

13893

25%

166987

Industria
l

65000

7831

96482

154371

100341

30%

86833

Total Profits

513580

If FEIMA is made an OEM

Range

Volu Transfe
In dollar
me
r

Domesti
1055 2500
c

Base

Public

Contract

Margin
%

Profit
Margin

301

3711

5937

3859

20%

814307

Commer
cial

82

9000

1084

13359

21374

13893

25%

284814

Industria
l

35

65000

7831

96482

154371

100341

30%

1053582

Total Profits

2152704

Investment for Warehouse and Inventory for the 1st

560000
Year
Profit Increased
210%