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LECLERC MACHINES DE CUISINE :CASE STUDY
Dressayre Mathilde
Martel Élise
OVERVIEW
LeClerc Machines de Cuisine• Paris manufacturer for food processors, blenders, grinders and other chefs supplies• Overseas Sales Manager: François Jost
Creative Cuisines• US ditritributor located in Atlanta, Georgia• CEO: Bill Lewis• Firm’s Attoney: Marie Dominic
Context:• Leclerc wants to export its products to the US through a sole
distributor • Both companies signed an exlusive distribution agreement• Creative Cuisines is now in charge of :
- marketing and sales promotion costs for the Leclerc line- marketing and diffusing the products progressively in the
US
OVERVIEW
Problem: Creative Cuisines discovered someone else in the US is selling products of the Leclerc line• A mail order firm, « Reliable Restaurant and Home Kitchen Supplies »• Placed ads in consumer and trade magazines• Propose 2 lead products: LeClerc LMC Professional and LeClerc LMC Standard • Prices are considerably lower than those offered by Creative Cuisines
Phone Call between LeClerc and Creative Cuisines:• LeClerc did not authorized a sale to Reliable• Nobody can understand how Reliable managed to receive shipments from LeClerc
Investigation of Reliable by Mr Lewis, CEO of Creative Cuisines:• Reliable is a New Jersey company specialized in mail order discount kitchen supplies
Next Step: consult his firm’s lawyer to undertake a legal action
DOCUMENTS
DIALOGUE
Mr. Bill Lewis, President of Creative CuisineMs. Marie Dominic, attorney representing Creative Cuisine
• Does Reliable act in legality according to the law
• Genuine Leclerc products?
« If Reliable has a warranty, Leclerc has to honor it »
• Who are the clients of Creative Cuisine ?
•Who is the supplier of Reliable ? Does he was aware of the exclusivity?
EXHIBIT 1
English version of a letter sent by Leclerc to all distributors
Action of Leclerc :
Explain the current situation to its distribution network
Ask his network not to supply Reliable Restaurant & Kitchen Supplies
EXHIBIT 2
Letter from Dominic to Albert Rose,President, Reliable Restaurant and Home Kitchen Supplies
Mrs Dominic informs Reliable they are violating an agreement of Leclerc
& Creative Cuisine
EXHIBIT 3
Memo from Jane Watson, sales manager , Creative Cuisines, to Bill Lewis
Genuine Leclerc LMC Standard
Genuine warranty of Leclerc France
Names Reliable on the return
EXHIBIT 4
Memo to Creative Cuisines sales department from Jane Watson
Action of Creative Cuisines :
Quick reaction
Lowering the prices during 2 monthes on :
- LMC Professional Food Processor from $399 to $310
- LMC Standard Food Processor from $279 to $189
EXHIBIT 5
Reliable’s Ad in a Number of Consumer Food Magazines and Professional Journals
Prices Reliable current price
Creative Cuisines with its
promotion in
september
Model Standard
$189 $279 $189
Model Professional
$319 $399 $310
EXHIBIT 6Letter to Bill Lewis from Sandra Jordan, account executive at feingold advertising, Creative
Cuisine’s advertising agency
Action of Creative Cuisines :
Quick reaction
Agressive Marketing / advertising through Food Magazines
Make the customers aware of the illegal actions of Reliable
Publication : 15th and 20th of August 1994
STRENGHTS AND WEAKNESSES OF THE EXISTING SITUATION
COMMUNICATION
Strenghts Weaknesses
- Good communication of Creative Cuisines
- Good communication of Leclerc inside their distribution network
-Mrs. Dominic, attorney of Creative Cuisine is active and involved
-Quick communication : action taken in less than one month
-No answer from Reliable
-Leclerc don’t say what they will do to help Creative Cuisines
ETHICS
Strenghts Weaknesses
• Lawyer consulted
• Diplomatic letter to keep good relationships
- LeClerc doesn’t help Creative Cuisines in its investigation
- Tested products are genuine : LeClerc may have lied
- LeClerc refuses to recognize the truth
MANAGEMENT
Strenghts Weaknesses
-Good teamwork and internal communication in Creative Cuisine
-Take initiative quickly with their partner to create a strategy and counter Reliable
-Leclerc is not aware about the contracts signed by their distributors
-Creative Cuisines don’t know who their clients are
TAKING INITIATIVE : MARKETING
Strenghts Weaknesses-Agressive marketing to charge Reliable and cut cost
-Quick in the implementation (july september)
-Cut in cost could led to increase the number of sell and clients.
-Marketing cost : publications
-Dangerous as they start a prices war
-Fallout of price reduction could be negative
-The publication could be published too early : no answer from Reliable for the moment. (They maybe didn’t know they were violating the law.)
PROBLEM STATEMENTS
PROBLEM STATEMENT
The company with the arrival of a new distributor which have a legal licencee to sell the same Leclerc product at a lower price face
financial and juridicial issue.
What initiative should solve the litigation between Creative Cuisine & Reliable Cuisine?
OPTIONS
OPTION 1 : LEAVE THE CASE TO LECLERC
Strenghts Weaknesses
-No cost from Creative Cuisines
-Better prices, no more cut in costs
-Leclerc’s responsability if it is the mistake of a distributor
-Drop in the sales for Creative Cuisines if they do nothing
-Take times
-Bad relation with Leclerc
OPTION 2 : COMPLAIN AGAINST RELIABLE RESTAURANTS
Strenghts Weaknesses
- Indemnisation
- Recognition of Creative Cuisines as the sole legal distributor
- Too radical solution
- Bad image for Creative Cuisines
OPTION 3 : COMPLAIN AGAINST LECLERC
Strenghts Weaknesses
-Indemnisation
-Recognition of Creative Cuisines as the sole legal distributor
-Stop the sole distribution contract : loss a supplier
-Bad relation
-Earn nothing if not Leclerc’s fault
OPTION 4 : KEEP AN AGRESSIVE STRATEGY AGAINST RELIABLE
Strenghts Weaknesses
- To show to customers and LeClerc Creative Cuisines’ reactivity
- Re-increase the sales of LeClerc products
- To be too focused on defense strategy
- High costs
OPTION 5 : SEARCHING PRODUCTS FROM NEW SUPPLIERS
Strenghts Weaknesses
-New sources of earnings
-Diversification in their offers
- Added Value for Creative Cuisines
-Bad relation with Leclerc
-Could end the contract with Leclerc
-Not the goal of Creative Cuisines at the beginning of the case
-Bad image?
If Leclerc didn’t respect its contract, Creatives Cuisines could do the same after several months if no change happens
OPTIONS 6 : SECRET ASSOCIATION WITH RELIABLE TO HAVE THE MONOPOLY ON THE MARKET
Strenghts Weaknesses
- Increase the prices for the whole LeClerc line products
- Take advantage of the excellence of Reliable’s marketing and communication methods
- No more stress about competition
- The alliance must be kept secret
- This situation is illegal
- Bad for the brand image
Thank you for your attention!
DEBATE
1- Which option do you find the best?
2- Would you be willing to complain against another company if you just have set up your company?
3- Do you think that a company like Leclerc can let this kind of situation on going and do nothing when it doesn’t affect its profitability?