Pankaj Gaur
Prateek Shah Prateek Jain Nipun Gupta Rajesh Dutta Nishant Maheswari
10IB-045
10FN-133 10FN-132 10IB-043 10DM-119 10FN-072
Established in Taiwan in 1983 started producing PVC bathtub covers 1988 for export to Japan PRUL is SG Mark(1996) and ISO 9002(2000) certified. Established its own R & D department in 2001 Lately PRUL forayed into plastic-wood like products contributing to Global Environment Conservation effort. Honoured with Europe Award in Paris in 2000 for product and service quality excellence.. Credited with Japans Rising Star Award for outstanding performance in Japanese market by small and medium size importers in 2001 Globally recognized Company
Strive for innovation in its product design and production process in order to build customer satisfaction
Roadmap to success
Use the most advanced technology Maintain very high standards of product quality Understand customer needs Create new ideas Launch and promote new ideas Build awareness among customers to attract them
Louver panels
Vertical blinds Wood like venetian blinds Extruded plastic foam products
Unique product manufactured especially for Japanese market Reason- Product fits into Japanese lifestyle and their commitment to save energy. Market was very mature by 2001 & no significant growth was expected. Murakami Major players in market:
o Murakami Industrial Co. Ltd. o Nakajima Industrial Co. Ltd. o Takahashi o Nakai o PRUL
Market Share
Nakajima
Takahashi
Manufacturers
Distributors
Retailers
End Consumers
Distributors
Strong relationship between manufacturer and distributor Distributors are eyes and ears of PRUL for market survey and new trends
Retailers
Consumers
competitors.
Main focus for bathtub covers was to automate the production process.
QC processes rigorously observed at all stages of production. Of all the products bathtubs required most labor factor which is high in Taiwan.
a month.
Based on historical experience PRUL had developed learning curves for every production stage.
No plans to layoff any employee from taiwan factory even if it expand in china too, thus putting great emphasis on employee
morale.
Distributors
Strategy
o Increase business from its major customers o Add new distributor customers o Address B2B marketing challenges
B2B marketing strategy o To participate in international award winning activities o Develop credentials and attract more customers o Retailers: Products are selected on functionality first and later by price. o Consumer: Availability on retail store and not brand sensitive Opportunity in China o Save import duty of 3.9% o Overall differential saving:13.5%(Excluding Import duty) o With this PRUL can provide better pricing or increase margin. o Tap growing Chinese urban market in future
1.
2.
3.
4.
5.
PRUL decides to do nothing , foregoes this investment opportunity and expands as needed in Taiwan on its own. Cons associated with Option 1:-
1.PRUL would loose many cost conscious customers as clearly the cost of producing in China in quite less compared to Taiwan. 2. Takahashi may venture up with some other manufacturer and PRU may finally loose business with Takahashi also. 3. PRUL is looking for expansion and increasing its sales, the only way to do that in the present scenario is to lower down the costs and target competitors customers.
Hence Option 1 doesnt go well at all with the Strategy that PRUL is looking forward to.
Invest with Takahashi in building a new factory in China to produce bath tub covers exclusively for Takahashi, and share profit based on investment by each party.
Takahashi would shift its entire bathtub cover production (currently 15% of market) to this plant and hence PRUL would gain the extra 15% without any marketing effort. Investment in the JV 51/49 with majority belonging to PRUL Hence lesser risk involved. This would strengthen its relationship with Takahashi. PRUL would not be able to sell the bathtub covers produced in China Plant to Takahashis competitors such as Nakai. The opportunity to capture New Customers would be more constrained in this case. PRUL would continue to use its Taiwan Plant for producing bathtub covers for ABE, Nakai and other distributors.
Hence we see that if PRUL goes ahead with JV:Total Investment TW$20 million with Plant production capacity 20% of total market
Year 1 (10,835,400) Year 2 - (7,250,000) Year 3 - (678,400) Hence a total of about TW$ (678,400) After three years.
New production facility Customers Save 3.9% on import duty Attract new distributors Greater returns than sharing investment with Takahashi PRUL can sell bathtub covers at same prices thus increasing profits Political issues of owning factory by Taiwanese company more as compared to that of Japanese company
Hence we see that if PRUL goes ahead with its own production facility:Total Investment TW$25.8 million with Plant Production Capacity 30% of total market
Cumulative Cash Flow:Year 1 (10,484,400) Year 2 - (1,270,800) Year 3 - 11,155,800 Hence a total of about TW$ 11,155,800 After 3 years
Particulars
Depreciation Gross Margin Gross Margin %
Year 1
601800 5508000 27
Year 2 1530000
601800 8262000 27
Year 3 1530000
601800 11016000 27
1420146
(5526054)
2756754
1828554 (3697500)
4279716
3351516 (345984)
Particulars
Depreciation Gross Margins Gross Margin % Income After Taxes Annual Cash Flow
Year 1
1680000 23200000 29 7635600 (10484400)
Year 2 3000000
1680000 29000000 29 10533600 9213600 (1270800)
Year 3 3000000
1680000 34800000 29 13746600 12426600 11155800
Feature SEZ
Transportation Infrastructure International Trading Hub Low Labor Costs
Shanghai Yes
Yes Yes Yes
Guangzhou Yes
No No Yes
Shenzen Yes
No No Yes
growth is less
Future expansion plans in Shanghai or other markets require them to look at newer products as bathtubs are not as popular in every market as it is in Japan
Long-term interests
Establishing direct contacts with retailers will lead to additional expenses in the form of advertising costs and marketing effort
Relationship Management
Marketing channel
Effect of demography Strategic planning Positioning of product and its sustainability through innovation and customer satisfaction.
Thank You