jaudel France is one of the fastest-growing companies in the French cosmetics industry. It has built a reputation on a complete range of skin care products, toiletries and beauty aids. Major subsidiaries are located in Germany, the UK, Japan and Argentina. The group sells its skin care products in the USA through an exclusive distributor, Virtue Rubens Inc.
But there are some problems in Virtue Rubens Inc. Almost immediately the company’s share price fell sharply on the stock market. The new marketing strategy was repackage certain lines and take them down-market, using mass merchandising channels. Sales at the top end of the market fell off in reaction to the change. A major promotional campaign was required and heavy discounts were offered to mass distributors, resulting in lower earnings for Virtue Rubens.
jaudel France doesn`t want to jeopardizes its business interests in North America. It is an opinion, that unless jaudel and Virtue Rubens can resolve their differences in the near future, jaudel France will be forced to cancel our agreement with Virtue Rubens.
II. The Problem.
The problem is to define future development policy of two companies: jaudel France and its exclusive distributor, Virtue Rubens.
III. The Cast of Characters.
jaudel France – French company, one of the successful manufacturers in the French cosmetics industry.
President and CEO of jaudel France - Thomas Lang
Vice- President (Corporate Finance) of jaudel France - Royal Smalley Vice- President (Marketing) of jaudel France - Keith Cooper
General Manager of jaudel France - Victor Lang
Virtue Rubens Inc. - an exclusive distributor, and markets toiletries and beauty aids in the United States.
President and CEO of Virtue Rubens - Thomas Lang
Vice- President (Corporate Finance) of Virtue Rubens - Royal Smalley Vice- President (Marketing) of Virtue Rubens - Keith Cooper
General Manager of Virtue Rubens - Victor Lang
IV. The Chronology.
9 may 2000 - General Manager of jaudel france sent a memo to International Business Officer about future of US operations. In this document it is considered two possible ways: an acquisition and negotiating a joint venture.
9 may 2000 - Vice- President Corporate Finance of of Virtue Rubens sent a memo to CEO of of Virtue Rubens about financial implications of Jaudel proposals. In this document it is said about Virtue Rubens’ current financial position and financial consequences of Jaudel ending agreement or accepting a takeover bid.
28 April 2000 - Michele Jeannot (International Business Director of jaudel france) sent to Mr. Thomas Lang (President & CEO of Virtue Rubens Inc.) about their willingness to further expansion and total disagreement to jeopardize its business interests in North America. jaudel france asked Virtue Rubens to resolve their differences in the near future and make some comments and proposals.
July 1999 - Virtue Rubens announced a drop in second quarter profits of 22 per cent against the previous year, the company’s share price fell sharply on the stock market. Also the company introduced a major change in its marketing strategy.
V. The Issues.
|Virtue Rubens’ financial position has been weakened by extensive |Vs. |New sales strategy of Virtue Rubens has led to situation when | |borrowing to expand production capacity and purchase. | |direct costs of sales are much more than income. | |jaudel France is strongly committed to the North American market,| |jaudel France doesn`t want to risk its business interests in North | |and specifically to the development of new business in the United| |America. | |States. | | | |Virtue Rubens and jaudel France have enjoyed many...