1. Should Gino proceed with the Feima project or not?
Yes, Gino should proceed with Feima project.
The direct benefits of doing Feima project are larger market share and better profit margin. Besides that, there are many other benefits: (1) having only distributors is very risky. It results lower bargaining power for Gino. Developing OEM accounts will help solving this problem; (2) increase industrial burner sales, which is Gino’s weakest area but most profitable segment;
Of course, this decision will hurt Jinghua’s interest. However, there are several actions Gino can do to keep Jinghua from leaving Gino and ease the other two distributors’ worries: (1) setup a Gino warehouse and support distributors with sufficient stock of both burners and spares; (2) provide more marketing and technical support to distributors and help them develop new customers; (3) treat “stolen sales” issue seriously by establishing more control and monitoring mechanism. Violator will be punished immediately.
2. Will Gino achieve its strategic goal in China? Does it have the right strategy or not? Why?
Gino China was assigned very high goals. From my understanding on the case, it will be very difficult for Gino China to achieve these goals if Gino doesn’t make some positive changes.
Gino doesn’t seem to have a clear, right strategy.
There are several evidences to support this argument: (1) as a principle, Gino is losing control over its distributors and it doesn't know what to do with it; (2) stolen sales is a serious issue in channel distribution management and it must be handled timely and effectively. Gino doesn’t have a clear solution to it; (3) because of the distributors’ reluctance to stock spares and industrial burners, it is a good idea to build a Gino warehouse if the cost-benefit analysis shows a positive result. However, Gino stopped at a simple estimation and didn’t go for detailed analysis.
3. Is direct sale the best