Leclerc machines de cuisine - case study

LeClerc Machines de cuisine

Louise Liebmann Sophie Marseille

• Overview

• Existing situation

• Statement of problems

• Options

Table of contents

Overview :

Location : !• LeClerc Machines de

Cuisines —>Paris, France !• Creative Cuisines —>Atlanta, Georgia, USA !• Reliable Restaurant and

home kitchen supplies —>New Jersey, USA !!

Leclerc Machines de

Cuisine

Reliable Restaurant and Home Kitchen Supplies

Mr. François Jost (Overseas Sales

Managers)

Owens, Garfield and Sueton, Inc.

Feingold Advertising

Ms. Marie Dominic (Attorney

representing Creative Cuisines)

Ms. Sandra Jordan (Account Executive)

Creative Cuisines , Inc.

Mr. Bill Lewis (President)

Ms. Jane Watson (Sales manager)

Mr. Albert Rose (President)

Overview : Names and Positions

Overview : Dates

January

July

5th of August

31st of July

4th of August

Launch of LeClerc (exclusive) products on the American market

We discovered that Reliable is selling LeClerc products, which results to a conflict in our contract of exclusivity with LeClerc

Letter from our Attorney to Reliable’s President, where we ask them to stop selling LeClerc’s products

The analysis of Reliable merchandises came back positive, so it’s certified that they are selling genuine LeClerc products

Response of Creative Cuisines : price reduction of 30% ( during 2 months) and agressive advertising

Overview : Documents

• Dialogue : Between Mr.Bill Lewis, President, Creative Cuisines, Inc and Ms. Marie Dominic, attorney representing Creative Cuisines

!• Exhibit 1: English Version of a Letter Sent by LeClerc to All Distributors

!• Exhibit 2: Letter from Dominic to Albert Rose, President, Reliable Restaurant and

Home Kitchen Supplies

!• Exhibit 3: Memo from Jane Watson, Sales Manager, Creative Cuisines, to Bill Lewis

!• Exhibit 4: Memo to Creative Cuisines Sales Department from Jane Watson

!• Exhibit 5: Reliable's Ad in a Number of Consumer Food Magazines and

Professional Journals

!• Exhibit 6: Letter to Bill Lewis from Sandra Jordan, Account Executive at Feingold

Advertising, Creative Cuisine's Advertising Agency

• Dialogue : Between Mr.Bill Lewis, President, Creative Cuisines, Inc and Ms. Marie Dominic, attorney representing Creative Cuisines

• Exhibit 1: English Version of a Letter Sent by LeClerc to All Distributors

• Exhibit 2: Letter from Dominic to Albert Rose, President, Reliable Restaurant and Home Kitchen Supplies

• Exhibit 3: Memo from Jane Watson, Sales Manager, Creative Cuisines, to Bill Lewis

• Exhibit 4: Memo to Creative Cuisines Sales Department from Jane Watson

• Exhibit 5: Reliable's Ad in a Number of Consumer Food Magazines and Professional Journals

• Exhibit 6: Letter to Bill Lewis from Sandra Jordan, Account Executive at Feingold Advertising, Creative Cuisine's Advertising Agency

Overview

• Problems :

-Violation of exclusive distribution agreement

-Loss of sales revenue

-Unfair Competition (Illegal competition)

- Leclerc Machine de Cuisine, a French manufacturer of food processors, signed an exclusive distribution agreement with Creative Cuisines, an American distributor, to give them the exclusivity of selling its product in the United States.

!!!- However, 6 months later, Creative Cuisines found out that despite their agreement,

another company, Reliable restaurant and Home Kitchen Supplies, was also selling LeClerc products.

Overview

• Business Overview :

Communication

Strenghts Weaknesses

-Good communication between Creative Cuisines and LeClerc’s headquarters !-Fast communication and reactions (less than a week) inside Creative Cuisines (with the attorney representing, the sales manager) and outside (with the Advertising Agency and Reliable) (Dialogue, Exhibit 2, 3, 4 & 6)

-Lecler’s lack of knowledge inside the company -No response from Reliable !-No response from LeClerc’s distributors !-No direct and detailed communication between LeClerc Machine and Creative Cuisines (Just a message from LeClerc to its distributors in Exhibit 1)

Existing situation :Strenghts and weaknesses

Ethics


-LeClerc’s headquarter seems trustable and involved

-Reliable may have known about the contract, knowingly doing an illegal action


Management


- Creative Cuisines succeeded an exclusive distribution agreement with LeClerc whereas it was at first reluctant (Background)

!- Creative Cuisines leads very quick

investigations (Genuine products, legal rules) and competitive actions (Legal and Marketing actions) (Dialogue, Exhibit 2, 3, 4, 6)

!- Good teamwork and involvement within

Creative Cuisines (Dialogue, Exhibit 6 “We will them at their own game”)

- LeClerc Machines de Cuisine may have some management problems with its distributors (no answer from them in Exhibit 1)

!- LeClerc Machines de Cuisine could have break

his exclusive agreement with Creative Cuisines (Dialogue)

!- LeClerc Machines de Cuisines doesn’t know if

his distributors have contracts with Reliable (Exhibit 1)


Legal


- Exclusive distribution agreement in the US between LeClerc and Creative Cuisines (Background)

- Non-respect of this agreement, on purpose or not (Background)

!- Reliable offers the same warranty as Creative

Cuisines (Exhibit 3)


Financial


- Low of Creative Cuisines prices: from $399 to $310 for the professional model and from $279 to $189 for the standard one Better prices than Reliable (Exhibit 4)

!- Reliable add $18 for postage and handing

(Exhibit 5) Manipulation of the customer

- Reliable prices : $337 (319+18) for the professional model (ATI) and $207 (189+18) for the standard one (ATI) (30% off the list price) (Exhibit 5)

!- Sales revenues of Creative Cuisines are off

about 30% in July (which is unusual for this month in general) (Dialogue)


Marketing


- Fast and competitive reaction of Creative Cuisines (less than a week) : Launch of an aggressive ad campaign with information about Reliable pirate actions, bad warranty (Exhibit 6)

- Reliable already launched add with competitive prices (Exhibit 5)


Statement of problems :

Should Creative Cuisines still trust and continue to distribute Leclerc products despite the possible violation of

the agreement and therefore the presence of a major competitor ?

Option 1 —> Nothing changes

• It’s LeClerc responsibility to find who’s fault it is

• Consumers will be aware that Reliable are « pirates », thus making us regain market shares

• Maintain our presence in the market and in the competition

!

• Legal expensive costs • It may attracts other competitors

• Possible loss of market shares and revenue in favor of Reliable Restaurant

• Loss of revenue due to the reduction of our prices (reduction of our margins)

Option 2 —> Complain to Reliable Restaurant for illegal distribution

!—> In case of illegality • Regain the exclusivity of the market

and set the prices we want • Earn money in compensation!

• Long and expensive legal proceedings !

—> In case of legality • Bad image for the company • Loss of money in the trial • Don’t solve the problem of a new

distributor in the market

Option 3 —> Complain to LeClerc

• Possibility to earn financial or material compensation

!• It can lead to a deterioration of our

business relationship with LeClerc • Possibility to loose our contract with

LeClerc

Option 4 —> Radical Change: Stop the agreement with Leclerc and therefore stop distributing their products.

• No legal issues with Leclerc and reliable restaurant anymore

• Stop an agreement with a company that doesn’t respect its deals

• Loss of a huge part of the market and of revenue by stopping the agreement

• Need to find another manufacturer quickly if we want to keep making profits

Option 5 —> Radical Change: Merge/Buy with Reliable

• No legal issues with Leclerc and Reliable restaurant anymore

• Leadership

• Huge costs ( inc. legal) • Not sure that Reliable is ok with it • Many infraestructuras to handle

Recommendations :!

-Option 1 —> continue the investigation to find out if Reliable is guilty

-Option 2 —> to regain the market shares

-Option 3 —> claim financial compensation to make up for the loss of market shares

Leclerc machines de cuisine - case study

Small Business & Entrepreneurship

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