Odysseus Case Study from Global Marketing Management by Keegen

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Odysseus is a medium sized firm, relatively new to international business in terms of how to operate outside of its local market where it has been successful by being able to build a niche with its coupling and clutch products. Key Facts:

• 8 products with 600 sizes and types – small batches of orders (not mass production) • Patents across the globe
• Odysseus Flexible coupling product - 33% of sales revenue, total from $83.8 M in 1990 • Largest customer only less than 4% of revenue – sales is highly spread out • Export Sales @ $1.3M at a profit of 12% (0.61 M)

International expansion
• Siren in UK
o 15 year license
o 1.5% royalty – $ 0.12 M and rise to $0.61 M in 1991
o Broad geographic coverage rights plus non-exclusive outside UK • Scylla, S.A. in France
o 10 year license
o 1.5% royalty - $ 0.03 M and $ 0.06 M in 1991
o Exclusive in France and non-exclusive in Belgium
• JV with Scylla, S.A
o Name change to SOSA
o 60/40 equity split with Odysseus funding the startup costs at $0.64 M o Market opportunity in France of $8.7 M for L type coupling alone – capture of 14 % MS of $ 1.2M • German Acquisition
o Halted due to existing long-term license with Siren for the geography o Market opportunity in Germany of $ 14.5M   for L type coupling alone o Access to largest marketing Europe
• Local production challenge – competitiveness in local market and internationally o Need to diversify into low cost centers
o US production – avg cost of a manufacturing worker per hour = 100 index point, was too high, need to review Mexico at only 16 index point (almost 6.25 times cheaper) • Licensing
o Siren’s sales tripled in 5yrs to $ 35.5M – huge growth! o Period of 15years is too long
o 1.5% royalty is very low
• Exporting
o High tariffs 10% ++
o Hard to compete and transportation is a challenge
o Only be able to supply to spare parts market (considerably smaller) • Pricing
o Same pricing model applied to all markets!
o Challenge...
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