Sulzer Textile Spare Parts Business

Transcription

Sulzer Textile Spare Parts
Business
Marketing Concept for “Cheap Brand”
by
Congyu Zhang
International Management 3.4
Sulzer Textile Marketing Concept for “Cheap Brand”
Project Number: 3-W-0712DA/07-PA
Supervisor: Mike Domenghino
Final Presentation: 22 August 2007
Handed in: 27 August 2007
Author: Congyu Zhang
Email: [email protected]
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Acknowledgments
The author gratefully acknowledges Sulzer Textile for supporting this study. The author would like to
thank Mr. Käser Gerhard for initiating this study and would also like to thank Mr. Fawer Oliver and
Mr. Lesic Davor for their help during the past months.
Special thanks to Mike Domenghino and the University of Applied Sciences Northwest Switzerland
for the opportunity to work on this diploma topic.
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Executive Summary
This paper was initiated by Sulzer Textile that wishes to regain market shares due to the current
challenges it is facing. During the three months of the project, various sources of information and
ideas were confronted, different business tools were applied and strategy alternatives were generated.
In cooperation with Sulzer Textile, a survey was initiated and analysed towards the end of the project
period.
This diploma paper‟s emphasis lies on developing marketing strategies for Sulzer Textile to recapture
business in the cheap spare parts market. It is a primary study to find out whether the new brand
should be connected to Sulzer Textile and whether the existing agents should be used. At the
beginning, the paper analyses Sulzer Textile and its business, discovers that its main competitive
advantages are its good reputation, reliable quality and good service. Afterwards the major markets
like Pakistan, India, and Bangladesh are researched, market forces and SWOT analysis follow. Later
on the author determines that to position the business it is recommendable to combine the cost
leadership and differentiation strategy and points out that cost efficiency and product standards are the
competitive advantages on the new market focusing on cheap spare parts. Towards the end several
marketing strategy alternatives are generated; market entry, branding and pricing methods are
illustrated along with the major strategies. At last, the author recommends that the cheap spare parts is
linked to the brand Sulzer Textile and a mixture of existing and new agents are used based on different
market shares. Sales scenario, profit forecast are provided as well. Based on the result, Sulzer Textile
will be able to apply the strategy to various markets.
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Table of Contents
1.
Sulzer Textile Spare Part Business............................................................................... 7
1.1. The Company Sulzer Textile ............................................................................... 7
1.1.1.
History ....................................................................................................... 7
1.2. Spare Parts Business ........................................................................................... 8
1.2.1.
Sales........................................................................................................... 8
1.2.2.
Products...................................................................................................... 8
1.2.3.
SFDrake Spare Parts.................................................................................... 9
1.2.4.
Core Competences....................................................................................... 9
1.2.5.
Distribution and Service............................................................................. 10
2.
Marketing Concept for “Cheap Brand” ...................................................................... 12
2.1. Background...................................................................................................... 12
2.1. Cheap Spare Parts............................................................................................. 12
2.2. Goal ................................................................................................................ 13
3.
Market Analysis ....................................................................................................... 14
3.1. Sourcing: China................................................................................................ 14
3.1.1.
Economy .................................................................................................. 14
3.1.2.
Legal System ............................................................................................ 14
3.1.3.
Business Culture ....................................................................................... 14
3.1.4.
China Sulzer Textile Spare Parts Suppliers .................................................. 15
3.2. Major Markets: Pakistan, India, Bangladesh ....................................................... 16
3.2.1.
Pakistan .................................................................................................... 16
3.2.2.
India ......................................................................................................... 20
3.2.3.
Bangladesh ............................................................................................... 23
3.3. Logistics Hub Dubai ......................................................................................... 24
3.3.1.
Economy .................................................................................................. 24
3.3.2.
Logistics ................................................................................................... 25
3.3.3.
Taxation ................................................................................................... 25
3.4. Porter‟s Five Forces.......................................................................................... 25
3.4.1.
Barrier to New Entrants ............................................................................. 25
3.4.2.
Threat of Substitutes .................................................................................. 26
3.4.3.
Bargaining Power of Buyer........................................................................ 26
3.4.4.
Bargaining Power of Suppliers ................................................................... 26
3.4.5.
Rivalry among Existing Firms .................................................................... 27
3.5. Porter‟s Generic Strategies ................................................................................ 28
3.5.1.
Overall cost leadership............................................................................... 28
3.5.2.
Differentiation........................................................................................... 28
3.5.3.
Focus........................................................................................................ 29
3.5.4.
A Combination of Generic Strategies .......................................................... 29
3.5.5.
Generic Strategies and Five Forces ............................................................. 30
3.6. SWOT Analysis ............................................................................................... 31
3.6.1.
Internal Analysis ....................................................................................... 32
3.6.2.
External Analysis ...................................................................................... 33
3.7. Competitive Advantage..................................................................................... 33
4.
Strategy Basis .......................................................................................................... 34
4.1. International Expansion Modes.......................................................................... 34
4.1.1.
Importing/Exporting .................................................................................. 34
4.1.2.
Licensing/Franchising................................................................................ 34
4.1.3.
Joint Venture/Strategic Alliance ................................................................. 34
4.1.4.
Wholly Owned Foreign Subsidiary ............................................................. 35
4.2. Branding .......................................................................................................... 36
4.2.1.
Line Extensions......................................................................................... 37
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4.2.2.
Brand Extensions ...................................................................................... 37
4.2.3.
Multi-Brand/New Brands........................................................................... 38
4.3. Pricing strategies .............................................................................................. 38
4.3.1.
Competition-Based Pricing ........................................................................ 38
4.3.2.
Economy Pricing ....................................................................................... 38
4.3.3.
Cost-Plus Pricing....................................................................................... 39
4.3.4.
Standard Mark-up Pricing .......................................................................... 39
4.3.5.
Psychological Pricing (Combine with Other Pricing Strategy) ...................... 39
4.3.6.
Penetration Pricing .................................................................................... 39
5.
Strategy Alternatives ................................................................................................ 40
5.1. Branding Decision ............................................................................................ 40
5.1.1.
Branding Decision Trees............................................................................ 40
5.1.2.
Branding Decision Alternatives .................................................................. 41
5.2. Agent Selection ................................................................................................ 45
5.2.1.
Agent Selection Tree ................................................................................. 45
5.2.2.
Agent Selection Alternatives ...................................................................... 46
5.3. Supplementing Strategies .................................................................................. 47
5.3.1.
Sourcing Company in China ...................................................................... 47
5.3.2.
Distribution Hub Dubai / Sharjah ............................................................... 48
6.
Sulzer Textile Survey Analysis .................................................................................. 49
6.1. Current Market Coverage of Sulzer Textile Original Parts ................................... 49
6.2. Potential Market Coverage of Sulzer Textile Original Parts ................................. 50
6.3. Profitability of Selling Sulzer Textile Cheap Spare Parts ..................................... 51
6.4. Agents‟ Willingness to be in Charge of Both Original and Cheap Spare Parts ....... 52
6.5. Reasons for Customers to Choose Cheap Spare Parts .......................................... 53
6.6. Competitive Advantages of Cheap Spare Parts Business...................................... 54
6.7. Potential Customers .......................................................................................... 54
6.8. Competitors ..................................................................................................... 55
6.9. Success Factors for Developing Cheap Spare Parts Market.................................. 55
7.
Final Recommendation ............................................................................................. 56
7.1. Strategy ........................................................................................................... 56
7.2. Marketing Mix ................................................................................................. 57
7.2.1.
Marketing Mix Sultex to Agents................................................................. 57
7.2.2.
Marketing Mix Agents to Customers .......................................................... 59
7.3. Organization .................................................................................................... 61
7.4. Sales Scenario (Example Pakistan) .................................................................... 62
7.4.1.
Target....................................................................................................... 62
7.4.2.
Commission and Bonus ............................................................................. 63
7.4.3.
Sales......................................................................................................... 64
8.
Conclusion............................................................................................................... 66
9.
Appendices .............................................................................................................. 67
10. Bibliography ............................................................................................................ 76
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Sulzer Textile Spare Parts Business
Marketing Concept for “Cheap Brand”
1. Sulzer Textile Spare Part Business
1.1. The Company Sulzer Textile
Sulzer Textile is specialized on the development and manufacture of weaving machines and is
considered to be one of the world‟s most innovative companies in its field. Sulzer Textile is the only
manufacturer worldwide offering leading shuttleless weft insertion systems.
In terms of quality, performance, environmental friendliness and economy, Sulzer Textile can offer
tailor-made solution to match every requirement due to its wide range of products. 1
Worldwide more than 220‟000 weaving machines, manufactured by Sulzer Textile, are producing a
wide range of fabrics.2
1.1.1. History
The company Sulzer was founded in 1834. After 40 years of development, Sulzer Technology Group
took over Ruti Engineering Works, which had been founded in 1842, and introduced the brand name
SULZER RUTI in 1982.
In 1993, Sulzer Ruti became an independent company within the Sulzer Technology Group and was
renamed to Sulzer Textile Limited five years later.
Finally, in 2003 Sulzer Textile was incorporated into the ITEMA Group as an independent company
and was named Sulzer Textile Limited. In accordance with the EU antitrust ruling Sulzer Tessile SpA,
Schio Italy is divested. 3
1
Weaving System, Su lzer Textile Ho mepage
2
Welco me, Sulzer Text ile Image brochure
3
History, Sulzer Text ile Ho mepage
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1.2. Spare Parts Business
Sulzer Textile has declared that their weaving machines must fulfil two important key aspects: firstly,
quality in design and manufacturing; secondly, quality in Customer Support Service (CSS) and spare
parts supply.
The very profitable spare parts business operated by Sulzer Textile ensures quality and guarantees
efficient delivery. The spare parts service centre is located in Switzerland and handles all spare parts
orders for the Sulzer Textile weaving machines. It delivers for over 160‟000 shuttleless Sulzer Textile
Weaving Machines in more than 2‟900 installations in over 130 countries.4
1.2.1. Sales
The sales information for 2004 is shown in Fig. 1.
Fig. 1: Spare Parts Sales 2004
Source: Sulzer Textile Data
1.2.2. Products
Sulzer Textile can supply spare parts for the following machines:5
-
Shuttle weaving machines
o
Type B marketed 1942 – 1978
4
Spare Parts Service, Su lzer Textile Ho mepage
5
Products, Sulzer Textile Ho mepage
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o
-
Projectile weaving machines
o
-
-
All models marketed since 1953
Air-jet weaving machines
o
L5xxx marketed since 1974
o
Terry Jet marketed since 1996
Rapier weaving machines
o
-
Type C marketed 1962 – 1981
All models marketed since 1960
Multi-phase weaving machines
o
M8300 marketed since 1998
In total, there are about 130„000 original spare parts supplied by Sulzer Textile.
1.2.3. SFDrake Spare Parts
SFDrake spare parts are still Sulzer Textile original spare parts, but it is a “Migros Budget” version of
the Sulzer Textile original spare parts. These spare parts are cheaper than the original spare parts, but
still of reasonable quality. SFDrake does not offer all spare parts of Sulzer Textile weaving machines,
it supplies only the high frequency spare parts: fifty-five spare parts of Sulzer Textile projectile
weaving machines; three spare parts of Sulzer Textile rapier machines; thirty-four spare parts of
Vamatex6 rapier weaving machines spare parts; fifteen items of Somet7 rapier weaving machines; and
21 accessories of all manufacturers.
The reason why SFDrake spare parts are cheaper is that Sulzer Textile can have a price discount by
ordering large volumes of certain spare parts. The price of SFDrake spare parts are usually 20-40%
cheaper than the genuine parts but still a lot higher than pirates‟ parts prices.8
1.2.4. Core Competences
The core competences of Sulzer Textile spare parts business are threefold:
-
Quality
The term quality here refers to more than just the material. Sulzter Textile quality includes
qualitatively high standing material and manufacturing processes, excellent availability for parts and
6
Weaving Machine Brand
7
Weaving Machine Brand
8
Sulzer Text ile SFDrake Spare Parts Broacher, 18 August 2007
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quick delivery and a high quality of customer service and support. The good quality of Sulzer Textile
spare parts can ensure the high availability of the weaving machines which avoids costly machine
downtimes.
-
Cost Efficiency
Sulzer Textile‟s spare parts provide the customers with the possibility of producing a broad range of
fashion and technical textiles cost-efficiently.
-
Efficient Logistics
The efficient logistics system leads to a cost reduction, an increase of accuracy and enhancement of
customer satisfaction. The online system EDOSnet of Sulzer Textle links the customers to the spare
parts logistics. By using the online system, customers can simplify processes and achieve the shortest
possible delivery times.
1.2.5. Distribution and Se rvice
Sulzer‟s Textile Distribution Centre in Zuchwil manages over 150‟000 individual, spare and
conversion parts. It is open around the clock, five days a week. On weekends, it can be reached via a
standby service. Over 95% of all orders are dispatched within 24 hours of receipt and are shipped to
the customer by the fastest route.
Two services Sulzer Textile provides help to optimize the supply of spare parts:
-
The ELSPACE Electronic Spare Parts Catalogue
ELSPACE is an electronic spare parts catalogue through the means of which customers can determine
easily and reliably which spare parts they need. Customers can also print out drawings and spare parts
lists.
-
The EDOSnet Electronic Ordering System
The EDOSnet electronic ordering system is a tool to help manage spare parts. Through EDOSnet
customers are connected online to the spare parts service and can find out in real time whether or not a
particular part is available; customers then ar eable to check the price and monitor the shipment. Fig. 2
shows the detail of the EDPSnet electronic ordering system.
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Fig. 2: Ordering Process with EDOSnet
Source: http://www.sultex.com/wd_02_02_e.pdf
Using EDOSnet is simple and allows the customers to reach a large range of spare parts. This system
allows customers to reduce their storage because of the fast delivery which in turn can optimize the
customers‟ costs.9
9
Weaver‟s Digest
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2. Marketing Concept for “Cheap Brand”
2.1. Background
Although the spare parts business of Sulzer Textile has a relatively high market share in many
markets, it is facing some serious challenges. There are two major influences which are putting
pressure on the business. Firstly, the number of weaving machines being installed is decreasing. There
are more old weaving machines being scrapped than new weaving machines being added. Because of
the cost efficiency in Asian countries, the machine population is being shifted to Asia. Secondly, due
to the boom in China and its ability to manufacture cheap products in particular, the existences of
cheap spare parts are increasing. In response to this influence Sulzer Textile has decided to take
serious and quick action.
2.1.Cheap Spare Parts
In the pirate market for spare parts, there are only about 30 frequently used spare parts available.
Because the pirates can copy these spare parts and produce them in large quantities, the price is
usually 5-25% of the original parts‟ price. Most of the pirate spare parts are coming from China, some
from India and other Asian countries.
See Appendix I a case study produced by Sulzer Textile, it shows a comparison between the cost of
original parts and pirate parts.
From the case study one can see that up to 40% can be saved by using non-genuine parts, but if
maintenance and missed opportunities are considered, the additional costs of using non-genuine parts
are 39% more. Therefore, in the end customers are not really better off when using non-genuine
parts.10
However, in the pirate spare parts market, the customers are usually using second hand weaving
machines or leasing machines, they simply just cannot afford original spare parts. Therefore, to satisfy
customers‟ needs and recapture business in the major markets, Sulzer Textile has to cover the cheap
spare parts market as well.
10
Sulzer Text ile Handout
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07/08/2007
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2.2. Goal
The main goals of this market concept for a “cheap brand” are:11
-
To recapture business from the spare parts pirates (copycats) with the help of existing
distributors/traders.
11
-
To reach new customers that are not currently using Sulzer Textile spare parts
-
To source parts at very low prices
-
To not create competition with Sulzer Textile original spare parts
Kaeser, Gerhard, E-mail to Florian Vogel
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3. Market Analysis
3.1. Sourcing: China
3.1.1. Economy
China‟s economy is booming. This becomes apparent when looking at China‟s gross domestic product
(GDP), which has been growing by a yearly average of 9% during the last 15 years. Its GDP ppp (USD
8.883 trillion) 12 ranks, second only to the USA. Nevertheless, approximately 150 Million Chinese live
below the international poverty level of one disposable US Dollar a day.
Analysts‟ predictions that the country‟s trade surplus will shrink for some time, was dispelled by the
figures from 2006. However, a collapse in prices by -8.8% at the stock market of Shanghai in February
2007 delivered the expected correction of the overheating economy. However, the emergence of China
still attracts foreign companies. Hence, many markets became extremely competitive, despite many
restrictions, a complicated regulatory environment, and increasing costs.13
3.1.2. Legal System
Although the Chinese legal system is improving steadily, in particular due to the WTO‟s influence,
foreign companies are still facing problems, as the authorities treat foreign and local companies
differently.
Another problem is the law making in the various provinces and areas. Because each province is
allowed to make its own laws, the regulations vary greatly from province to province and are very
incompatible. Even the laws set by the Central Government are implemented and interpreted in
different ways.14
3.1.3. Business Culture
The Chinese culture is very complex. Several aspects of the Chinese culture are very prominent and it
can help to understand and prepare for various situations. Firstly, harmony is considered to be very
important in all situations and it is deeply rooted in Confucian teachings. Harmony is the reason why
Chinese will not disagree openly. They do not like to say “No” or something similar like “I
won‟t/can‟t/shan‟t do that”. Instead, they will refer to the topic vaguely and say, “Let‟s talk about it
12
CIA The World Fact
13
China Annual Report
14
Bläsi, Denise and Alain Grandjean, Kuhn Rikon in Ch ina
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later” or “We‟ll see”. People are suggested to abide by those ideas instead of trying to confront them
directly. Confronting could lead to a loss of “face” which must be avoided at all costs. Loss of face
can lead to end the relationship and negotiations immediately.
Secondly, relationships are valued as more important in China than in many Western cultures.
Consequently, relationship building is an extremely important part of any sort of business with
Chinese. While in Switzerland the mentality often is “First work, then relationship”, it is exactly the
opposite in China. Because of its importance, there are many procedures and aspects to consider.
Among those are gifts. Relationship building can take a long time. It will typically involve several
meals, meetings, and showings of respect. In general, it is a good idea not to impose a time limit, as
such phases can last for a long time and the Chinese are very skilled in postponing issues to deal with
them until it suits them.
3.1.4. China Sulzer Textile Spare Parts Supplie rs
There are a lot companies that supply Sulzer Textile spare parts among which some are copycats. In
Table 1, the author researched some Sulzer Textile spare parts suppliers. Sulzer Textile needs to
identify copycats for sourcing reasons.
Table 1: China Sulzer Textile Spare Parts Suppliers15
Company Name
Product
China Textile Machinery Import & Export
Corporation
Sulzer p rojectile loo m spare parts
Huahong Textile Machinery Parts Co., Ltd.
Sulzer Text ile machinery spare parts
Weaving Loom Parts
Sulzer parts, PU/p7100/tw11/ps
Liaoning Hu iming International Trade Co.,Ltd.
Textile weaving loo m parts such as sulzer, p icanol,
tsudakoma, toyota, nissan, air-jet, water-jet
Nanjing Kingpros Textile Accessory Co. Ltd.
Spare parts of sulzer loo ming machine
Honfe Supplier Co., Ltd
Sulzer p rojectile, Sulzer loom parts
Beijing Jinsuyuan Precision Machinery Factory
Sulzer p rojectile loo m spare parts
Xi'an Aviation Keda Co. Ltd
Sulzer spare parts, http://www.kedacam.co m
Source: See Footer 15
15
WebPages: Go For World Business, Alibaba, Texbuyer, Made in China, and Texindex
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3.2. Major Markets: Pakistan, India, Bangladesh
3.2.1. Pakistan
3.2.1.1.
Economy
Pakistan, having faced many challenges on both political and economic fronts, is now a rapidly
developing country, which registered an economic growth rate of 7%. In particular, reforms in the
financial and manufacturing sectors have led to great improvements. Despite a gross domestic product,
as measured by purchasing power parity (PPP), of an estimated 439.7 billion US Dollars and a per
capita income of 2803 US Dollars, the Asian Development Bank places the poverty rate in Pakistan
between 23% and 28%.
Because of the growth of the service sector to 53%, the structure of the economy has greatly changed
in the last few years, with the agricultural sector merely covering 20% of the economy. Major
industries, which have emerged over the years and now dominate the economic landscape, are
telecom, software, automotives, textile, cement, steel and shipbuilding. 16
3.2.1.2.
Legal System
In the Pakistan legal system, although many values of democracy and a parliamentary system deriving
from the English common law, the laws were all adjusted as not to contradict the principles of the so
called Golden Principles of Islam. Nevertheless, many of the principles of the commercial law were
inherited from the British.17
3.2.1.3.
Textile Industry
Due to Pakistan‟s world leading role in cotton production, the textile industry quickly became the
backbone of Pakistan‟s economy. Pakistan‟s textile sector, which makes up more than 67% of the
country‟s total export earnings and accounts for about 46% of total manufacturing, is the principal
industry of the country. The labour force, which accounts for over 38% of the workers that are
employed by the textile sector, require more than 4 billion US Dollars per annum in order to import
textile and garment machinery into Pakistan.
16
Pakistan, Wikipedia
17
Asia Trade Hub and Emory Law
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07/08/2007
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3.2.1.4.
Textile Machinery Industry
3.2.1.4.1.
Overview
The spinning sector is clustered around Karchi, Hyderabad, Multan, Lahore and Faisalabad. Although
the textile industry is the most important of the manufacturing sectors, Pakistan unfortunately has not
been able to develop the indigenous manufacturing of its machinery. As a result, the demand is met
through global imports.
In general, reliable agents manage the channel of sale of machinery, equipment and spares.
Accordingly, foreign firms employ local agents in the Pakistan market to provide intelligence and
connections. The most popular and also the most effective distributorship arrangement in Pakistan is
the exclusive agency agreement: the agency receives a commission on all sold products in the country,
regardless of the channels through which products are sold.
The exports of textiles has grown from $5.9 billion in 1999-2000 to $7.4 billion in 2002-2003; the
growth mainly originated from exports of the value added components. Import numbers of textile
machinery in to Pakistan are shown in Appendix II .18
3.2.1.4.2.
The Decline in Textile Exports
Pakistan is currently facing serious problems in textile exports, losing lots of its market share to China,
Bangladesh and India. While Pakistan‟s export has declined by 13.34%, China‟s has grown by 98%
and India‟s by 50%. Many instances within the country are trying to tackle the problem from several
sides, but it seems doubtful whether Pakistan has the capacity to stop the declining imports and
exports that are heavily taxing the industry, while at the same time China is like ly to increase exports
after the WTO trade embargo will be lifted in 2008
Several attempts to improve the situation are aimed at changing the national laws in order to decrease
the cost of doing business in Pakistan by lowering the mark-up rates, adjusting the currency exchange
rates, by trying to win technical staff as well as by trying to get rid of the many indirect taxes.
They are also trying to adopt strategies that other countries have introduced, such as the Technology
Up-Gradation Fund (TUGF) in India, where the government allows 5% of interest reimbursement of
the normal interest paid on the new investments. With only that scheme, India is calculated to have
generated 8 billion US Dollars are it is expected to attract another 31 billion US Dollars worth of
investments in the next five years.
18
Noor, Ah med, Memon, Pakistan Text ile Journal
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Another attempt is aimed at trying to get the US to give Pakistan free market access (FTA) and allow
them to enter Special Opportunity Zones (SOZs) which would allow duty free exports to the US
market.
Another major problem the industry is facing are the increasingly high costs of gas and power, which
make for 31% of the costs in the spinning sector.19
One scenario to overcome the crisis Pakistan is currently facing due as well to its obsolete textile
machineries is to attract investors and concentrate more on the processing sector.
It has been estimated that to reach the government‟s export target, roughly of 32 billion US Dollars are
required in form of investments. 20
3.2.1.5.
Spare Parts Market
3.2.1.5.1.
Overview
Since the textile industry in Pakistan is divided into two sectors, organized and unorganized, the spare
parts market reacts differently in these two sectors. In Pakistan, almost 90% of the customers belong to
the unorganized sector. Table 2 is an analysis of projectile weaving machines and its customer in
Pakistan.
Table 2: Projectile Weaving Machines in Pakistan
City
P-Machines
Customers
Active
Inactive
Lahore
2‟200
28
10
Karachi
8‟800
155
187
Faisalabad
7‟600
45
102
Source: Sulzer Textile Handout
In Lahore, there are in total 2‟200 projectile weaving machines installed. It has thirty-eight customers
in this region, among which twenty-eight are active. The customers are shifting from organized parts
19
Pakistan Observe and Govern ment of Pakistan, Min istry of Text ile Industry
20
Pakistan Textile Machinery Industry, Idea Marketers
Congyu Zhang
07/08/2007
18
to unorganized parts; the weaving machines installed are changing from projectile to A irjet weaving
machines; pirates are not very strong.
In Karachi, there are in total 8‟800 Projectile Weaving Machines installed, which makes it the city
with the most projectile machines installed and the most customers. Sulzer Textile has 342 customers
in this region, among which less than half are active. More and more customers are starting to use
second-hand machines and the pirates are quite active in this region.
In Faisalabad, there are in total 7‟600 projectile weaving machines installed. There are 147 customers
in this region, among which 45 are active, which is less than one third of the total customers. In this
region most customers buy second-hand machines and produce low quality fabrics, therefore it is
almost totally occupied by the pirates.
3.2.1.5.2.
Customers
The customers in Pakistan buy spare parts from different sources like China, Russia, Turkey and so on.
They use the spare parts from different sources at the same time. Customers are used to paying net
prices. Net price means no custom duty or other additional price is charged, it includes all costs.
Furthermore, most of the customers are “Best price buyers”, they are not aware of opportunity costs,
so they would put a large amount of effort on getting something cheaper. Basically customers live
with pirates spare parts suppliers, without them they can hardly survive.
There is a list shown in Appendix III about the textile companies and exporters in Pakistan.
3.2.1.5.3.
Competitors
Many competitors exist in Pakistan, for example: the Chinese, Russian, Turkish, Iranian and local
spare parts sellers. These copycats offers 5-25% of Sulzer Textile original spare parts price, see Table
3 some examples. The pirate spare part‟s lifetime is usually half of the original spare parts lifetime, but
it is accepted since the lower quality of fabrics produced is acceptable. The pirates‟ spare parts usually
do not create consequential damages either. Competitors usually have huge warehouses so that they
can make sure the spare parts are always available.
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Table 3: Pirate Spare Parts in Pakistan
Part No.
Description
Sulzer
China
Pakistan
(CHF) (CHF)
(CHF)
%of Sulzer
911.322.896
Picking Link
79.12
4.28
5%
911.322.945
Picking Shoe
304.45
19.29
6%
911.622.051
Picking Shoe
220.5
12.86
6%
911.319.773
Projectile Feeder Gripper
72.75
19.29
27%
911.826.021
Projectile Returener
133.23
9
7%
911.127.170
Rear Brake Lining
7.47
1.41
19%
911.127.175
Front Break Lining
9.3
1.43
15%
Source: Sulzer Textile Handout
3.2.2. India
3.2.2.1.
Economy
India‟s economy is one of the fastest growing economies in the world with a GDP growth rate of 9.4%
in 2006. Over the last two decades, the Indian economy has grown steadily as a whole. When
comparing different social groups, geographical regions and areas it is, however, quite unbalanced.
Traditionally income inequality has been relatively low but due to the unsteady development, it has
been increasing of late with about one quarter of the population below the poverty threshold earning
less than 0.40 US Dollars per day. 60% of India‟s 509.3 million peopled work forces are employed in
agriculture, 28% in services and 12% in industries. 21
3.2.2.2.
Government and Policy
As the largest democracy in the world, India has three branches of governance: the Legislator,
Executive, and Judiciary. The official head of state, the President of India, is elected indirectly by an
electoral college for a five-year term. However, the person who is the de facto head of the government
is the Prime Minister, as it is that position that holds and exercises the most executive powers. In
21
India, W ikipedia
Congyu Zhang
07/08/2007
20
India, the Legislature is the bicameral Parliament, which consists of the Upper and Lower House. The
Judiciary consists of the Supreme Courts, which is headed by the Chief justice of India.
3.2.2.3.
Textile Industry
The textile industry in India has grown to become a key input to the country‟s economy, contributing
to about 30% of India‟s exports and 14 % of industrial production, in fact, with a work force of 15
million, it is considered to be the second largest vital sector of employment initiator after the
agricultural sector.
After the end of the limitations agreement on 1st January 2005, India increased its share of the global
market greatly. With huge investments and a planned marketing backing the industry, India managed
to penetrate all the different textile markets.
The reason why India was able to raise its investment was the low costs of labour and raw material, a
growing domestic textile market, resourceful exporters and steady support of the government for the
second largest employment generator.
To remain competitive in a liberalised trading environment, India‟s apparel exporters employed
several strategies, while at the same time the manufacturers took action to improve production
efficiency through advanced automation systems, re-engineering of production systems, diversifying
their product range, improving their design capabilities and even through setting up joint ventures with
foreign firms.
Among other measures, the Indian government supported the textile industry by setting up Technology
Up-gradation Fund Schemes (TUFS), reducing basic customs duty on selected machinery and spare
parts, abolishing certain taxes on textiles and liberating government policies as well as actively
recruiting investors and arranging special agreements with certain countries to improve exports.
Despite all the natural advantages and all the efforts from various sides, the Indian textile industry will
not rest on its laurels, as the industry is facing threats from cheap imported fabrics. Although it is
assumed that WTO will result in a better distribution of the world trade, India is not the only
developing country that will profit from that. So in order to maintain its strong global position, India‟s
textile industry will keep on improving its weak points. 22
22
Ezine Art icles
Congyu Zhang
07/08/2007
21
3.2.2.4.
Textile Machine Industry
3.2.2.4.1.
Textile Industry in Tenth Plan
India‟s tenth five year plan (2002-2007) is aimed at facilitating the textile and apparel industry by
strengthening the domestic market, providing funds to develop excellent production facilities and
introducing the Technology Up gradation Fund Scheme (TUFS). Schemes to strengthen investments
in textiles cover rearranging spinning capacity by modernising and adding spindles and strengthening
the finishing units which are currently for the main part of
medium to low technology (227
establishments are modern, 1775 are of medium technology and 322 are obsolete).
3.2.2.4.2.
Growth in the Textile Machinery
India‟s textile engineering industry (TEI) was initiated as a response to the increasing demand of the
machinery sector, in particular the spinning sector. TEI was supported by the government, which
modified excise duty on textile machinery from 16% to the merit rate of 8%.
Due to recent developments in technology, it has been predicted for the textile industry to increase its
market worth from 36 billion US dollars to 85 billion US Dollars by 2010.
The goal in the tenth five-year plan is set at a very high level. In order to overcome the disadvantages
of the fragmented industry, in particular the processing sector will require investments of 35 billion
US Dollars to achieve the goal by 2010. 23
3.2.2.5.
Spare Parts Market
In the year 2000, there are about 9‟056 machines installed in India, among which 8‟200 are currently
running, but only spare parts for 5‟400 projectile machines were sold. So the loss of sales revenue to
pirates is estimated to be up to 45% (CHF 5‟000‟000)
There were in total about 330 customers in India in the year 2000, among which 50 are using new
weaving machines and 280 are using second-hand weaving machines. There are about 115 secondhand machines whose users are buying original spare parts from Sulzer Textile.
23
Ezine Art icles
Congyu Zhang
07/08/2007
22
3.2.3. Bangladesh
3.2.3.1.
Economy
Bangladesh‟s industry employs more than 3 million workers, 90% of which are women, and it
exported 5 billion US Dollars worth of products in 2002. Bangladesh has achieved an average annual
growth rate of 5% since 1990.
Despite numerous hurdles, such as frequent cyclones and floods, inefficient state-owned enterprises,
mismanaged port facilities, a growth in the labour force that has outpaced jobs, inefficient use of
energy resources (such as natural gas), insufficient power supplies, slow implementation of economic
reforms, political infighting and corruption, Bangladesh was named one of the “Next Eleven” by
Goldman Sachs. In the last years, Bangladesh has seen many multinational corporations making
major investments (the natural gas sector being a priority) and in order to further promote such
investments, the Bangladeshi government set up several export processing zones.
3.2.3.2.
24
Government and Policy
Bangladesh has a secular parliamentary democracy, which is headed by the prime minister as head of
government. That post, however, mostly has ceremonious functions at the beginning of term. During
the tenure of a caretaker government, which is responsible for the conduct of elections and transfer of
power, the president‟s powers are expanded substantially. The laws in Bangladesh are loosely based
on English common law, but the judicial and law enforcement are weak. Family laws such as marriage
and inheritance are more based on religious scripts and vary in the different religious communities.
3.2.3.3.
Textile Industry
The textile industry has played a major role in Bangladesh‟s economy for a long time, accounting for
45% of all industrial employments and contributing 5% to the total national income and 78% of the
country‟s export earnings.
Bangladesh‟s textile industry can be divided into three sectors: the public, the handloom and the
organized private sector, which is the fastest growing sector in the country.
There is a concentration of manufacturing activity around the capital city of Dhaka and a growing
amount of garment manufacturers in the country‟s export processing zones.
24
Bangladesh, Wikipedia
Congyu Zhang
07/08/2007
23
The government supports the industry by putting no restrictions on repatriation of profits and
investments and tax-free imports of machinery and raw materials and liberally issues working permits.
Companies using local fabrics are offered great incentives.
Although the textile industry is one of the largest of the country and still expanding, it faces serious
problems. The main problem is that Bangladesh does not have enough raw materials necessary for the
industry. Some materials such as raw cotton and manmade fibers have to be imported completely,
while other materials, such as certain fabrics can at least partly be produced in Bangladesh.
After Bangladesh gained its independence from Pakistan in 1971, the textile industry was nationalised
under Bangladesh Textile Mills Corp. (BTMC). The role of BTMC has drastically changed from a
company with a monopoly to a denationalised company with currently 21 textile companies.
It has been predicted that the country needs an investment of 3 billion US Dollars in the textile
industry to grow from a 21.5 billion US Dollar industry to 23 billion US Dollars.
Several experts say that the lifting of the quota will not influence Bangladesh‟s textile industry that
much; they say that China will affect the industry in the long run.25
3.2.3.4.
Spare Parts Market
In Bangladesh, the Sulzer Textile original spare parts has about 10% of market share, which means
90% of the market is covered by pirate spare parts. The agent in Bangladesh is not that active because
the market for original parts is quite small. There are about 10-15 competitors who are very active in
the market.
3.3. Logistics Hub Dubai
3.3.1. Economy
In 2006, the GDP of Dubai was 46 billion US Dollars. Contrary to popular belief, however, revenues
from oil and natural gas combined accounted for less than 3% of the GDP. Dubai is increasingly
looking to develop its service industries, in particular IT and finance, as it is presumed that within 20
years the oil and natural gas reserves will have been used up. In order to promote that scheme, Dubai
has set up industry-specific free zones in the city. Because of the government‟s decision to diversify
from a trade-based market to one that is service and tourism-oriented, real estate has become more
valuable.
25
T.C. Malhotra, Text ile World Asia
Congyu Zhang
07/08/2007
24
3.3.2. Logistics
One particular focus of the government‟s diversification scheme is logistics. Geographically, Dubai is
well positioned between Europe, Africa and Asia and is easily accessible by water, offering relatively
easy access to a potential consumer market of 2 billion people. The government additionally is
supporting the scheme with several regulations.
One important support is the government‟s adjustments of several laws, policies and regulations.
Amongst which are liberal visa regulations, the possibility of 100% foreign company ownership and
extraordinary tax regulations. 26
3.3.3. Taxation
In order to promote Dubai as an attraction for many businesses, the government has introduced several
tax laws, which make Dubai a very attractive location. Dubai itself is not tax free, although that
generalisation is often made. Instead, there are several free zones, with special tax regulations. In those
free zones, companies may profit from not having to pay any corporate taxes and no custom duties as
well as free capital transfers. Officially, however, once a company has received the license to set up in
a free zone, the exemption of the various taxes lasts for 15 - 50 years (depending on the zone). At the
end of that period, the company have to re-apply for the next period.
For individuals it is also attractive to work there as no personal income taxes are levied. 27
3.4. Porter’s Five Forces
Dr. Michael E. Porter developed the Five Forces model in 1980. 28 It is a concept to assess the
attractiveness of a marketplace by means of five central market forces. It analysis the entry barriers of
the target market, the bargaining power of buyers and suppliers, the situation of competition and the
threat of substitutions.
3.4.1. Barrie r to New Entrants
Barrier to new entrants describes the amount of effort that has to be made by a new entrant and what
kind of challenges have to be overcome in order to enter the market. The amount of effort and the type
26
Dubai World Central Logistic City
27
Mark, Stevens. International Tax Review and Wise Geek webpage
28
Michael E. Po rter, Co mpetit ive Strategy
Congyu Zhang
07/08/2007
25
of challenges is directly related to how well the market is protected from competitors and new
entrants.
The capital investment for Sulzer Textile to enter the cheap spare parts business is relatively low since
at the beginning the company will not produce the spare parts, but rather buy existing product form the
open market.
3.4.2. Threat of Substitutes
This force refers to the ability of customers to turn their back on a certain product or service and pick
another. The easier it is for a customer to find a substitute, the less power the supplier of the product or
service has and the more power the customer has. Switching costs and customer loyalty are key factors
in this force.
There is no substitute as such because spare parts are just some sub-products of textile machinery.
However, in the major markets, Pakistan for example, there is a renting service available for spare
parts, which can be seen as a substitute.
3.4.3. Bargaining Powe r of Buyer
This force takes into consideration the amount of power a customer has to drive the price down to his
or her advantage. The more easily the customer can do this, the more power he or she has.
The bargaining power of Sulzer Textile customers is quite high since there are thousands of cheap
spare parts suppliers. How to convince customers to rather buy spare parts from Sulzer Textile than
from competitors is crucial for the success of the business.
3.4.4. Bargaining Powe r of Suppliers
This force assesses how easy it is for the supplier to drive up the prices that the company has to pay
for the product. The more choice the company has among suppliers, the more powerful is its market
position.
As China is the sourcing market and there are many companies producing cheap spare parts, Sulzer
Textile has power over suppliers so that the suppliers cannot bargain up the price that much. However,
to source cheap spare parts with a preferred quality might not be that easy.
Congyu Zhang
07/08/2007
26
3.4.5. Rivalry among Existing Firms
The force of rivalry among existing firms carefully considers what the amount and level of the existing
competitors are. A certain amount can be good for business, but when there are too many competitors,
it will damage the business for the firms.
Since copycats do not have the cost burden of research and innovation and do not have any service
costs, it is fairly easy to form such a company. Because of this reason, there are thousands of cheap
spare parts sellers on the market. Competition is huge. Illegal import of cheap spare parts into the
major market pushes the price even further down and in turn contributes to the intensive competition.
So in order to eliminate competition, Sulzer Textile has to offer something more than just a low price.
The final analysis of the five forces of the cheap textile spare parts market is shown below in Fig 3.
The smileys represent how good the situation for Sulzer Textile is for each force.
Fig. 3: Porter’s Five Forces
Source: http://www.libraries.psu.edu/business/industryguides/analysis.htm (Snow)
Congyu Zhang
07/08/2007
27
3.5. Porter’s Generic Strategies
The Generic Strategies were developed by Dr. Michael E. Porter. 29 They show the strategic
positioning of an enterprise within an industry. The Generic Strategies provide a good starting point
for strategic thinking and consist of: overall cost leadership, differentiation, and focus. 30
3.5.1. Overall Cost Leade rship
With this strategy, the business has the lowest cost in the market at a certain level of quality. The
company gains market shares by selling its products at or even below average industry prices but
making a higher profit than the competitors sell. In the event of a price war, the firm will be able to
have a higher profitability or less loss than its competitors will and can in the long term survive. The
generic strategy usually targets abroad. Some ways of acquiring cost advantages are by improving
process efficiencies, gaining access to large sources of cheap cost materials or optimal outsourcing.
Firms that manage to succeed using the generic strategy usually have access to a large amount of
capital need for the investment in production assets, efficient manufacturing and a high level of
expertise in process engineering as well as highly efficient distribution channels.
The danger of this strategy is that other firms will respond by producing at an even lower price that in
turn requires the first firm to retaliate with even lower prices.31
3.5.2. Differentiation
When choosing the strategy of differentiation, the firms need to have a clearly superior performance in
an important customer area. The product(s) will then be perceived as better and can justify a premium
price.
An advantage of this strategy is that if the costs will rise for reasons such as more expensive raw costs
or distributers raising their fees, the additional costs can safely be passed on to the customer who is
unlikely to change because it is difficult to replace the product.
Disadvantages are imitations from competitors or customers‟ change in taste, both having the effect
that the attribute that was considered special and worth more money loses its special status.
29
30
31
Michael E. Porter, Co mpetit ive Strategy
Philip Kotler, Market ing Management
Philip Kotler, Market ing Management and Generic Strategy, Quick M BA
Congyu Zhang
07/08/2007
28
Firms that choose the differentiation strategy in particular need access to leading scientific research, a
highly skilled and creative product development team, a strong marketing team that can point out the
strengths of the product and a good corporate reputation. 32
3.5.3. Focus
The business focuses on one or more narrow market segments. The firm gets to know these segments
intimately and pursues either cost leadership or differentiation within the target segment.
A firm using a focus strategy often enjoys a high amount of customer loyalty that discourages other
firms from competing directly. Because firms with the focus strategy only concentrate on a narrow
segment of the market, it has lower volumes and therefore less bargaining power with the suppliers.
If a firm manages to succeed in a focus strategy, will be able to tailor a broad range of product
development strengths to a relatively small market segment. However, the risks of focus strategies
include imitations, changes in the target segment or competition from broad market cost leaders that
are able to adapt their products. 33
3.5.4. A Combination of Generic Strategies
These generic strategies are not necessarily compatible with each other. If a firm tries profit from all
the advantages of the three strategies, it may end up having no advantage at all because it is stuck in
the middle. A firm that drives a differentiation strategy usually has high quality products, but if it
moves toward cost leader, the product quality could suffer and the firm may appear to have a
confusing image.
Although for a long-term success, Mr Michael Porter suggests a firm to have one of the three
strategies. A combination of these three strategies can be also successful by creating separate business
units for each strategy. A firm can creates different cultures for the different business units that drive
different strategies. This idea is also supported by reality. If a firm drives a differentiation strategy,
there will often be competitors joining the market with a low cost strategy to get some market shares.
In real life, customers are usually looking for multi-dimensional satisfactions, a reasonable quality
with not too high price. For example, IKEA is driving a combination of cost leadership and
differentiation strategy by offering customers low price and trendy design. 34
32
Philip Kotler, Market ing Management
33
Generic Strategy, Quick M BA
34
Generic Strategy, Qu ick MBA
Congyu Zhang
07/08/2007
29
For Sulzer Textile, a combination of cost leadership and differentiation strategy is recommended since
it cannot compete with copycats that drive completely low cost strategy; instead it still wants to give
their customers something special by putting quality control over the cheap products. See Fig. 4
Porter‟s Generic Strategy, inside the red frame is the strategy recommended to Sulzer Textile.
Fig. 4: Porter’s Generic Strategy
Source: http://www.quickmba.com/strategy/generic.shtml
3.5.5. Generic Strategies and Five Forces
These Generic Strategies each have attributes that can serve to defend against competitive forces. Fig.
5 compares some characteristics of the generic strategies in the context of the Porter‟s five forces.35
35
Generic Strategy, Quick M BA
Congyu Zhang
07/08/2007
30
Fig. 5: Porter’s Generic Strategies and Five Forces
Source: http://www.quickmba.com/strategy/generic.shtml
3.6. SWOT Analysis
SWOT analysis stands for strengths (S), weaknesses (W), opportunities (O) and threats (T). Internal
environmental factors usually can be classified as strengths or weakness, and external factors are
considered to be opportunities or threats.
The SWOT analysis helps in matching the firm‟s resources and capabilities to the competitive
environment. It is a very strong tool in strategy formulation and selection. See Table 4 the SWOT
Matrix.
Congyu Zhang
07/08/2007
31
Table 4: SWOT Matrix
Strengths
Weaknesses
1. Reliable and high quality product image
2. World leader in textile machine industry
3. Advanced R&D development of machinery
4. Expertise and technical know how
5. High customer satisfaction
6. Available capital for investment
7. Flexible capacity and production
8. Dedicated employees
1. Lack of experience in pirates market
2. Mind-set for high quality products
3. High cost at headquarter
4. Sales force effectiveness
Opportunities
Threats
a. Innovative technology
b. Fast growing textile industry in major
markets
c. Large choice of cheap spare parts on the
market
d. Favourable government regulation and
government support for textile industry
e. Reduction of trade barriers
f. Tax exemption in industrial free zone
g. Advanced logistics management
h. Growing market through growing number
of people and increasing living standard
a. Economies of scale
b. Imitations by other leading textile machine
company
c. Low profit margin
d. Additional transportation cost if all spare
parts are redistributed from Dubai
e. Increasing growth of textile industry in
China due to technological advanced
machines vs. decreasing growth in major
markets because of obsolete machines
f. Illegal importing of cheap spare parts
g. Renting spare parts service
h. Creating confusing image
Source: Author
3.6.1. Inte rnal Analysis
3.6.1.1.
Strengths
Since Sulzer Textile is one of the leading companies in textile machine industry, so the major
strengths are considered to be the reliable and high quality product image; advanced R&D
development of machinery; expertise and technical know-how as well as high customer satisfaction.
Being a global company the availability of capital for investment can also be seen as strength.
3.6.1.2.
Weaknesses
Like a coin has two sides, Sulzer Textile also has its weakness. Years of experience on quality
orientation make it difficult for Sulzer Textile to switch to low cost. Lack of experience in the pirates
market is a major weakness of Sulzer Textile. Moreover, how to sell the low price products efficiently
is challenging for Sulzer Textile.
Congyu Zhang
07/08/2007
32
3.6.2. External Analysis
3.6.2.1.
Opportunities
The external environment provides many opportunities for Sulzer Textile. The fast development of
new technologies like telecommunication, IT system, gives the company a chance to become more
efficient. Sulzer Textile can benefit from its efficient SAP based logistics system and can continuously
apply this to its global expansion. The raising volume of import demand from western countries and
growing population with increasing standards keeps the textile industry going up. In addition,
favourable government regulations as well as government support for textile industry in the major
markets give Sulzer Textile a big development potential.
3.6.2.2.
Threats
In the fast growing global world, companies have to keep an eye on the threat from the external
environment. Sourcing existing products rather than producing can reduce risks but the company may
not be able to profit from Economies of Scale 36 and leave the cheap spare parts manufactures to enjoy
it. Because of the low profit margin, the company has to compensate it with high volume. If the
volume cannot reach a certain level, the business would become unattractive. Furthermore, the
transportation hub in Dubai may also generate additional costs resulting from indirect transportation.
The biggest threat is the increasing growth of the textile industry in China since the Chinese textile
industry is updating itself w ith technologically advanced machines; Pakistan, India and Bangladesh on
the other hand have more obsolete machines. Finally, the illegal importing of cheap spare parts is also
stealing market shares.
3.7. Competitive Advantage
The author derives from the SWOT analysis that Sulzer Textile‟s competitive advantage is reliable
quality insurance with mass price on a large range of product categories. This asset helps the company
to set itself apart from competitors. By driving a low cost strategy, Sulzer Textile will just end up one
of thousands of spare parts suppliers. However, by driving a combined low cost and differentiation
strategy with a mass choice of products, Sulzer Textile can best serve the customers.
To achieve this, the sourcing and distribution is advised to reduce to the lowest costs.
36
Econo mies of Scale: characterizes a production process in which an increase in the scale of the firm causes a
decrease in the long run average cost of each unit.
Congyu Zhang
07/08/2007
33
4. Strategy Basis
4.1. International Expansion Modes
The decision on how to enter a foreign market is central to the firm. There are four general modes of
international expansion: importing/exporting, licensing/franchising, joint ventures/strategic Alliances
and wholly owned foreign subsidiary.
4.1.1. Importing/Exporting
Exporting is defined as the marketing and direct sale of domestically produced goods in another
country. Exporting is a traditional and well-established method of reaching a foreign market. No
investment in foreign production sites is needed as the required goods are not produced in the foreign
country. The majority of costs associated with exporting derive from transportation, tariff and
marketing expenses.37 There are four players, exporter, importer, transport provider and government,
involved in the process of exporting, amongst which coordination is needed.
4.1.2. Licensing/Franchising
Licensing allows for a company in the target country to use the property of the licensor. Such property
commonly is intangible, for example tidemarks, patents, and production techniques. A fee is paid by
the licensee in exchange for the rights to use the intangible property and possibly for technical
assistance.
There is little investment required from the licensor, which gives licensing the potential to provide a
very large ROI. However, potential additional incomes from manufacturing and marketing activities
are forfeit as that part of the chain goes to the licensee.38
4.1.3. Joint Venture/Strategic Alliance
A joint venture (commonly abbreviated JV) is an alliance formed between two or more parties to
undertake economic activity together. All parties create a new entity by all contributing to it and then
sharing its revenues as well as its expenses and control over it. The entity can be called to life for
merely one project or a continuing business relationship.
37
38
Market Entry, Quick M BA
Market Entry, Qu ick M BA
Congyu Zhang
07/08/2007
34
A strategic alliance involves in contrast to a joint venture no equity stake by participants and is
considered a much less rigid arrangement.
Advantages of forming a joint venture can be that it builds on a company‟s strength, the costs and
risks can be spread, that it improves access to resources (funds, technology, customers, know how,
etc.), economies of scale and advantage of size. 39
On the other hand, the main disadvantages derive from the fact that there are at least two parties
involved. Problems originating from that situation can be partners that merely attempt to maximize
their own advantage by contributing as little as possible but trying to get as much profit and control as
possible.40
Key issues to consider are ownership, control, length of agreement, pricing, technology transfer, local
firm capabilities and resources and government intentions.
Studies show joint ventures have
considerable rate of failures (30-61%). 60% of the failed joint ventures failed at the very beginning or
at least within the first five years. Furthermore, studies indicate that joint ventures in low-developed
countries show a greater instability and that joint ventures involving government partners are more
likely to fail than joint ventures only involving private firms .
In order to gain access to some countries, such as the People's Republic of China and to some extent
India, foreign companies are forced by the government to form joint ventures with domestic
companies. This requirement often transfers a disproportionate amount of control to the domestic
company.41
4.1.4. Wholly Owne d Foreign Subsidiary
Foreign direct investment (FDI) is the direct ownership of facilities in the targeted country. The parent
company transfers capital, technology and personnel. FDI can be made by acquiring an existing entity
or establishing a new one.
Direct ownership allows for a high degree of control and gives a reliable insight into consumer and
competitive environment and it can be advantageous from certain taxation points of view. It can also
be used to manage risks by letting the subsidiary enter risky markets but in case of litigation or
liability, the subsidiary corporation and not the parent would be legally liable. On the other hand, it
requires a lot of resources and commitment. 42
39
Market Entry, W ikipedia
40
“Foreign Market Entry Mode.” Qu ick MBA
41
Market Entry, W ikipedia
42
Quick M BA and The Free Dictionary
Congyu Zhang
07/08/2007
35
Table 5 shows the analysis of the different international expansion modes.
Table 5: Analysis of International Expansion Modes
Importing
Licensing
Joint ventures
Wholly-owned
Exporting
Franchising
Strategic
Foreign Subsidiary
Alliances
Involvement
Low
Medium
High
Very high
Time to set up
Short
Medium
Long-Very Long
Long-Very Long
Investment
Low
Low
High
Very High
Risks
Low
Low
High
Very High
Low import
tariff, good
logistics and low
transportation
cost, reliable and
good distributors
Partner selection, Partner
Control system
selection,
Culture,
repatriation of
profit
Critical success
factors
Culture, situation,
repatriation of profit
Source: Author
4.2. Branding
Branding is a major issue in product strategy. A well-known brand requires a price premium and
developing a branded product needs a great deal of long-term investment, especially for advertising,
promotion and packaging.
A brand is defined as a name, term, sign, symbol, or design, or a combination of them, intended to
identify the goods or services of one seller or group of sellers and to differentiate them from those of
competitors. Therefore, a brand identifies a company, and is thereby linked to the seller or maker.
A company can choose between five different types of branding: line extensions, brand extensions,
multiband, new brands, and co-branding. 43
43
Philip Kotler, Marketing Management, page 431
Congyu Zhang
07/08/2007
36
4.2.1. Line Extensions
A line extension consists of introducing additional items in the same product category under the same
brand name, such as new flavours or colours. Generally speaking, a vast majority of product
introductions consist of line extensions.
Line extension involves risks. It can happen that line extensions lead to the brand name losing its
specific meaning. On the other hand, such line-extensions have a much higher chance of survival than
unknown new products. Ideally, a line extension takes sales away from competing brands without
deflating or cannibalizing the company‟s other items. The size of the company and its marketing
competences in particular play a role when making line-extension a success.
For Sulzer Textile, if the company wants to use line extension, “Sulzer Textile Budget” or “Sulzer
Textile Economical” would be suitable for the cheap spare parts business.44
4.2.2. Brand Extensions
A company can extend its brand by launching different products under that brand name. Honda, for
example, uses one name for all sorts of similar and dissimilar products ranging from automobiles over
motorcycles to marine engines. Another example is Nike, which transitioned from sports shoes to
clothing, sports equipment and watches. The brand extension strategy offers many advantages that are
quite similar to line extensions.
The best result would occur if the brand name builds the sales of the old as well as the new product
with the positive feelings for the first product being transferred to the following one.
The unwanted result would be if the following product is not well received by the customers and
affects the proceeding products in a negative way, decreasing sales for the whole brand. Brand dilution
occurs when a brand is no longer associated with the specific or similar product
This method is being used by Sulzer Textile; they sell both weaving machines and spare parts. It also
can be used if Sulzer Textile wants to sell spare parts other than textile machine spare parts.
Nevertheless, before doing that research on how well the brand‟s associations fit the new product is
needed.45
44
Philip Kotler, Market ing Management, page 431
45
Philip Kotler, Market ing Management, page 432.
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4.2.3. Multi-Brand/New Brands
A company might introduce additional brands in the same product category. By doing that, the
company is trying to establish different features or appeals to different buying motives. A multi-brand
strategy enables a company to use up more distributor shelf space and to protect its major brand by
setting up various flanking brands.
A major pitfall in introducing multi-brand entries is that each might obtain only a small market share
from the main brand and thus damaging it without making a respectable amount of profit. Ideally, a
company‟s brands within a category should eat away at competitors‟ brands and not each other. A
tolerable result would be, if the net profit with multi-brands is slightly bigger than without, even if
some cannibalism occurs.
The concept of SFDrake Eco for cheap spare parts business fits into this category; if managed well, it
can protect the major brand of Sulzer Textile. 46
4.3. Pricing strategies
Pricing strategies are methods that give more or less specific guidelines on how to determine the price
the company can charge for its products. Depending on the goal of the strategy, the information it
considers can vary greatly. In the following, a few of the most useful strategies shall be outlined.
4.3.1. Competition-Based Pricing
Competition based pricing sets the prices based on similar products of the competition. This strategy is
quite simple as it does not require a lot of research and calculations. By choosing this strategy, the
company automatically adopts the pricing strategy of its competition. The advantage for new entrants
is that the customers accept the competitors‟ prices. However, without any other advantages of the
products, it might be difficult to get market shares, as the product does not stand out.47
4.3.2. Economy Pricing
The strategy of economy pricing keeps the price as low as possible. As a result, the quality is relatively
low, but still good enough to serve the products purpose. This strategy does not pay any attention to
46
Philip Kotler, Market ing Management, page 433.
47
Webpage: Marketing teacher, Wikipedia, Web Marketing Today, and About.com
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the rest of the market. It presumes that competitors have similar or higher costs, and therefore is highly
unsuitable for any company that cannot have the lower costs than its competitors can.
4.3.3. Cost-Plus Pricing
Cost-plus pricing consists of a simple calculation. Costs + profit margin = price. One calculates the
costs of production for a certain product and then adds the amount of profit one wishes to make.
Although this strategy is very simple, it has a similar flaw to the economy pricing strategy: it does not
consider the market. The customers might not be willing to pay the set amount of money, particularly
not, if there is a competitor who has lower prices.
4.3.4. Standard Mark-up Pricing
It is a pricing strategy that sets the price by x percentage over the cost. For example, a manufacturer
marks his price up 15% over his costs, a wholesaler 20% over his costs, and a retailer 40% over his
costs. The retailer gets a larger mark-up based on the idea that, since he is closest to the end user, he is
required to spend more services and individual attention meeting the buyer's needs.
4.3.5. Psychological Pricing (Combined with Other Pricing Strategy)
Psychological pricing does not so much consider economic and market factors as much as that prices
should have a positive psychological impact.
This strategy is seldom used on its own; it is mainly used to do fine tuning of prices after another
strategy has set certain pointers. It takes into consideration that human beings do not weigh things in a
mathematical and logical way. An example is that a price set at 4.95 will be perceived as a lot less than
5.00, although this mathematically is not the case.
4.3.6. Penetration Pricing
A new market entrant normally uses penetration pricing. The price is set below the normal market
price on purpose to gain market shares. The idea is that the low price is able to break or weaken
existing brand loyalties. After an initial phase, the price will be raised as the profits with this strategy
are minimal if not negative.
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5. Strategy Alternatives
5.1. Branding Decision
5.1.1. Branding Decision Tree
To answer the question of whether the cheap spare parts of Sulzer Textile should be connected to the
brand Sulzer Textile or not, the author developed a decision tree to facilitate the analysis, see Fig.6.
Fig. 6: Decision Alternatives: Connection to Sulzer Textile
Spare Parts
Original
Economical
High Quality, High Price
Low Quality,Low Price
Related to
Sultex?
Yes
Quality
Control By
Sultex
New brand name, but
advertise it to have sultex
quality contral
e.g. SFDrake Eco.
A
No
Subsidiary
New
Company
Sultex can add
into brand name,
e.g.Sultex Eco.
Totally new
brand name
e.g. XingHua
B
C
Source: Author
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Fig. 7 summarizes the advantages and disadvantages of relating and not relating the cheap spare parts
business to Sulzer Textile.
Fig. 7: Advantage and Disadvantage Analysis
Adv.:
-Profit from Sultex image
-Easier to convince customers
-Easier to advertise
Yes
-Increase Customer Loyalty by being honest
to customer
Disadv.:
-Confusing image
-Limitation of business, can only sell Sultex
spare parts, not all spare parts
Related to
Sultex?
Adv.:
No
-Does not affect Sultex image
-More flexible
-Can easily extend spare parts business to
sell not only Sultex spare parts
Disadv.:
-Risk for customer loyalty because
customers may find out Sultex is behind
this new company later
-Difficult to convince customers
Source: Author
5.1.2. Branding Decision Alternatives
The three decision alternatives (A, B, and C) are analysed here by the author.
5.1.2.1.
Branding Alternative A: Quality Control by Sulzer Textile
Alternative A suggests the cheap spare parts business related to Sulzer Textile brand by announcing a
quality control from Sulzer Textile. The idea is similar to licensing (see Chapter 4.1.2 Licensing for
more detailed information). Here we call it an internal licensing. The idea is that when Sulzer Textile
introduces the cheap spare parts to customers, it Sulzer would say there is a new company in Dubai (or
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wherever the distribution hub is) that supplies cheap spare parts and Sulzer Textile is doing the quality
control for them.
5.1.2.1.1.
Branding : New Brand
A new brand name is recommended in this scenario, for example SFDrake Eco or Eco Spare Parts
(See Chapter 4.2.3 Multi-brand/New Brands for detailed information of New Brand).
5.1.2.1.2.
-
Advantages and Disadvantages
Profit from Sulzer Textile Image
By relating to the Sulzer Textile brand, the cheap spare parts can partly benifit from the good image of
Sulzer Textile. To have a good image is like adding value to the existing products, it makes the spare
parts more reliable; because it is a well-known brand, the market entry barrier is lower and marketing
costs would also be lower. It is easier to convience customers and gain customer trust.
-
Shorter Implimentation Period
By linking to a famous brand, the introduction process of the cheap pare parts could be much faster
than when a new brand fight for recoganition of the market.
-
Be Honest to Customers and Increase Customer Loyalty
Since the cheap spare parts operation is conducted by Sulzer Textile, it is good idea to be honest to the
customers from an ethical point of view. In addition, customers are likely to find out that Sulzer
Textile is behind this cheap spare parts business any way because information flows quickly and
through many channels.
Customers that are using original parts have a quite strong brand loyalty, it is not likely for them to
change from original parts to pirate parts. Honesty may increase customer loyalty and customer
satisfaction, and customers may even think Sulzer Textile is very clever to expend its market
coverage. And if the customers try to reduce costs and want to switch to cheap spare parts anyway
they would be aware of this new move and realize the opportunity to switch to cheaper spare parts
from Sulzer Textile.
-
Limits of the Expansion of the Cheap Spare Parts Business
Sulzer Textile only does quality control for the cheap spare parts, it therefore only represents the spare
parts for Sulzer Textile. If the business also wants to supply competitors„ spare parts, the quality
control by Sulzer Textile would lose its power.
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-
Low Risk of Creating Confusing Image
Although there could be a risk of creating a confusing image regardless of whether the cheap spare
parts business end up successful or become a failure, being not 100% related to Sulzer Textile can
reduce the risk because Sulzer Textile is only resposible for the quality control of the products.
5.1.2.2.
Branding Alternative B: Subsidiary of Sulzer Textile
Alternative B suggests that the cheap spare parts business is treated as a subsidiary of Sulzer Textile.
This is an international expansion mode of Wholly Owned Foreign Subsidiary (see Chapter 4.1.4
Wholly Owned Foreign Subsidiary for more detailed). It means to add a low cost line into the existing
original spare parts line. As a subsidiary the cheap spare parts business is naturally related to Sulzer
Textile.
5.1.2.2.1.
Branding: Line Extension
For a subsidiary, a name that has Sulzer Textile in it is recommended, for example Sulzer Textile
Spare Parts SFDrake Eco. (see Chapter 4.2.1 Line Extension for detailed information). It is advised to
advertise the news on the Sulzer Textile homepage as an important action to inform existing customers
and also attract new customers.
5.1.2.2.2.
-
Having Good Image Directly from the Name
As a subsidiary, the cheap spare parts automatically benefit from the good image of Sulzer Textile.
Like what has been said with Decision Alternative A, a good image adds value to the existing
products, it makes the spare parts more reliable. Making a news release on the homepage will have
quite a big influence but no additional costs, this can make the marketing concept simpler.
-
Be Honest to Customers and Increase Customer Loyalty
It is the same reason like as has been described in Decision Alternative A.
-
High Risk of Creating Confusing Image
The risk of creating a confusing image is big in this case because creating such a cheap spare parts
subsidiary means Sulzer Textile spare parts business is shifting from a differentiation strategy(good
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quality, high cost) to a mixture of low cost strategy and differentiation strategy. So in a long term,
Sulzer Textile may not be recognized by customers as a high quality and expensive brand any more.
-
Not Possible to Sell Spare Parts from Competitors
The business expansion to selling competitors„ spare parts is not possible here because it is under
Sulzer Textile name, copy rights is the major argument in this situation.
5.1.2.3.
Branding Alternative C: New Company
Alternative C suggests starting a very new company for the cheap spare parts business that is not
connected to Sulzer Textile brand at all. The business will start from scratch, just like the car strategy
with Smart; it is treated as a new business. As there will be no connection between the new brand and
Sulzer Textile, using new agents is recommended here.
5.1.2.3.1.
Branding: New Brand
For a new company, a very new name that has no connection to Sulzer Textile is recommended, for
example Swiss Economical Weaving Spare Parts. (see Chapter 4.2.3 Multi-brand/New Brands for
detailed information of New Brand)
5.1.2.3.2.
-
No Confusing Image
By using a totally new brand the creation of a confusing image can be avoided. Separating cheap spare
parts business from the original brand of Sulzer Textile has the advantage that the original spare parts
users are still superior and special and at the same time one can compete with copy cats through a new
brand. Therefore Sulzer Textile‟s brand image is not touched, but recapture of business is achieved.
-
Be able to Expand Business
The business expansion to also selling competitors„ spare parts is a good opportunity for Sulzer
Textile in the future. Since the profit margin is quite low in the cheap spare parts business, to be able
to sell also competitors„ spare parts can compensate the low profit margin. It is also a good argument
for the growth of the cheap spare parts business since there are other weaving machines installed all
over the world.
-
Can not Profit from Sulzer Textile„s Good Image
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Making the cheap spare parts a totally new business means no connection to the Sulzer Textile brand.
Therefore this new company can not profit from the good image that Sulzer Textile already has, it has
to build trust and good relationships with new customers. It eliminates the risk of damaging the
original brand, but to convience custmers to buy spare parts from this new company would be quite
difficult. It makes the marketing concept harder as well.
-
Small Risk of Customer Loyalty
Although a new brand name is used in this situation, the cheap spare parts is operated by Sulzer
Textile. Sooner or later customers will find out that Sulzer Textile is behind this cheap spare parts
business. Therefore customers might have the feeling that Sulzer Textile is not being honest to them.
However, this risk is very small because customers that are using original parts have quite a strong
brand loyalty, it is not easy for them to change from original parts to pirate parts.
5.2. Agent Selection
5.2.1. Agent Selection Tree
To answer the question whether the cheap spare parts of Sulzer Textile should use their existing agents
or look for new agents, the author developed a decision tree to analyse this, see Fig.8.
Fig. 8: Agents Selection
Control Target
Not Compete
Not Control Target
Compete
Communicate
Not Compete
Not Communicate
Compete
a
Yes
Use Existing
Agents?
b
No
Source: Author
From Fig. 8 one can draw the conclusion that in order to eliminate competition between the cheap
spare parts and the original spare parts, target control is needed. If existing agents are used, the
existing agents are suggest to have separate sales teams, each sales team targeting different customers;
if new agents are used for the cheap spare parts business, either somebody from headquarter take
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responsibility on coordinating target customer lists or communication between old and new agents is
needed.
5.2.2. Agent Selection Alternatives
There are two alternatives generated from Fig. 8: alternative a and alternative b.
5.2.2.1.
Alternative a: Using Exisiting Agents
5.2.2.1.1.
-
Advantages
A bigger market means more profit which leads to a higher motivation for existing agents
(especially the agents in those markets that do not have high original spare parts market
coverage).
-
No need to look for new agents and put effort into building good relationships.
-
Accumulated experience of working with Sulzer Textile and selling original spare parts.
-
The customer target control can be easily done by the agent head so that competition is
eliminated. Less risk of stealing customers from original spare parts business.
5.2.2.1.2.
-
Disadvantages
Fixed minds on how to sell (only experience in selling good quality and expensive spare
parts).
-
If for cost reasons the agents do not seperate the sale team for original parts and cheap parts,
the same sales people have to go to customers that are using original parts and also customers
that are using pirate parts. They might have difficulties keeping up a credible image towards
the customers representing high and low quality.
-
For countries that already have more than 50% market coverage of Sulzer Textile original
spare parts, it would be difficult to motivate the agent to deve lop the cheap spare parts market
because the profit margin is a lot lower. The cheap spare part could be just put aside and not
been developed because the existing agent still have the original spare part business which
make a lot of profit.
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-
Because the commission would be set differently for original and cheap spare parts sales team,
conflicts may occur.
5.2.2.2.
Alternative b: Using New Agents
5.2.2.2.1.
-
Advantages
By concentrating on only developing the cheap spare parts business, the desirable market can
be reached faster.
-
New ideas might be introduced to the business and as a result increasing creativity.
-
No fixed ideas due to previous selling experience in a different market.
-
No internal conflict due to different treatments because the original spare parts and cheap
spare parts are seperated.
-
Can easily set target range for the new agents and avoid competition with original parts
business. Agents are approaching different customers.
-
Seperate sales people are approaching different customers. It does not create a confusing
image for customers.
5.2.2.2.2.
Disadvantages
-
To find new agents and building good relationships is time consuming.
-
Lack of experience with working specifically with Sulzer Textile and selling spare parts.
-
It is difficult to find good agents.
5.3. Supplementing Strategies
5.3.1. Sourcing Company in China
There are two factors that the author thinks are crucial to the success of the cheap spare parts business:
-
Since the cheap spare parts that Sulzer Textile will sell in its major markets are from China
and the customers are very familiar with products from China including the pricing, it is
recommended that Sulzer Textile register a new company name for the sourcing company in
China. In other words, when customers see the company name of Sulzer Textile spare parts on
the internet and search for related information, the Chinese sourcing company of Sulzer
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Textile is not advised to ever show up. A Chinese name would be practical for local
recognition and bargaining the price. For example, a Chinese name “Rishang”, which means
every day the business grow bigger and making more profit. The Chinese Characters are:
.
-
In order to buy spare parts at the lowest price, using local people for the negotiation is
recommended. Firstly, local Chinese are usually more familiar with the market, know better
how to bargain the price, and are more used to bargaining; secondly, when foreigners are
involved, prices will automatically go up because Chinese are aware of the fact that
“foreigners have more money”.
5.3.2. Distribution Hub Dubai / Sharjah
“A logistic centre is needed since it is very complicated to trade in China”, said Mr. Käser. 48 Where to
set up an efficient distribution hub needs to be put into consideration. The branding issue described in
Chapter 5.2 Decision Alternatives is advised to be the base of registering the name of this distribution
hub. Costs and delivery time are the two major arguments of a distribution hub.
-
Cost Issue
To have a logistics centre means first transporting the spare parts from China to this hub, then
distributing them to customers. Theoretically, transporting goods from country A to country B via
country C would add more costs than transporting them directly from A to B. This additional cost will
in the end be added to the product price. In the cheap spare parts market, price is one of the major
reasons to convince customers.49 Sulzer Textile needs to do further calculations to find out how much
the additional costs would be generated by the logistic centre and its effect on the product price and
check whether this price is still competitive.
-
Delivery Time
In the cheap spare parts market, delivery time is usually within 24 hours because these spare parts are
frequently used parts and Sulzer Textile spare parts competitors can offer delivery within 24 hours,
sometimes only several hours. If the logistic centre cannot fulfil this requirement of 24 hours, local
stock is needed. Local stock means warehouses, labour, transportation within the country etc., which
again would increase costs. Therefore, the author suggests that Sulzer Textile pay attention to the
delivery time when choosing logistics centre.50
48
Gerhard Käser, Sulzer Text ile Head of Spare Parts Service.
49
Sulzer Text ile Survey
50
Sulzer Text ile Interview with Peter Stutz and Sulzer Text ile Su rvey
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6. Sulzer Textile Survey Analysis
In order to gain more detailed insight into the spare parts market and find out how agents in different
regions think about going into the cheap spare parts market, the author initiated a survey (see
Appendix IV for the survey questions).
Because the questionnaires are not only sent to the agents but also the sales representatives, so the
analysis is based on a mixture of countries and country groups.
The final analysis of the survey is shown in the following sections.
6.1. Current Market Coverage of Sulzer Textile Original Parts
Fig. 9: Sulzer Textile Market Coverage in Different Countries
Mexico
Bangladesh
Vietnam
Philippine
Egypt
A. Below 25%
B. 25-50%
South Africa
Turkey
Nigeria
Indonesia
USA/Canada
Malaysia
Colombia
Taiwan
Argentina
Korea
Thailand
Southeast Africa
C. 50-75%
D. 75-100%
Source: Survey
As one can see in Fig. 9 the original spare parts market in most of the regions are well developed. For
example, Malaysia already has a market share of 90-95% and Mexico is around 80%. However, a few
markets do not have a high original spare parts market share. These markets are the best-suited
markets for developing cheap spare parts.
Bangladesh only has a 10% market coverage for original parts because cheap spare parts are in major
demand and in Nigeria there are four mills covering approximately 50% of turnover with original
parts, the remaining nine mills are forced to go for cheap spare parts because of the high operational
cost and low margins on their fabric.
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The South Africa region includes about nine countries; some countries are within 50-75% some have
75-100% market share. In Egypt, the current market coverage of 45% is still rather low in comparison
to other regions. The original spare parts business in Argentina for the last three years 2004-2006 was
growing quite fast with the following market shares: 32%; 58%; 80%.
6.2. Potential Market Coverage of Sulzer Textile Original Parts
Fig. 10: Potential Market Coverage Original Parts
Philippine
A. Below 25%
Nigeria
Argentina
Thailand
Egypt
Bangladesh
Vietnam
B. 25-50%
C. 50-75%
South Africa
USA/Canada
Colombia
Mexico
Turkey
Indonesia
Malaysia
Taiwan
Korea
Southeast Africa
D. 75-100%
Source: Survey
Looking into the future, most of the regions‟ original spare parts market shares will be in the range of
75-100%. However, in the Philippines, Bangladesh and Vietnam the cheap spare parts seem to have
more than 50% of the market shares. Therefore, when developing the cheap spare parts business, it
would make sense to focus on regions that have low market shares of the original spare parts.
Argentina has many TW11/PU machines and is a market with a strong repairing mentality; many
parts get repaired 2-3 times or more; electronic parts get repaired many times and even modified; some
parts are even produced/copied by nearby firms.
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6.3. Profitability of Selling Sulzer Textile Cheap Spare Parts
Table 6: Profitability of Cheap Spare Parts
Region
Profitability
Bogota - Col ombi a / South
America
High profit
Bangladesh
Mexico
USA / Canada
Maslak Istanbul-Turkey
Thailand
Philippine
Egypt
South-America
Argentina
Indonesia
Malaysia
Taiwan
Korea
Vietnam
Southeast Africa
Lagos Nigeria
High profit
Medium profit
Medium profit
Medium profit
Medium profit
Medium profit
Medium profit
Low profit
Low profit
Low profit
Low profit
Low profit
Low profit
Low profit
Low profit
No profit
Source: Survey
Table 6 shows the profitability of the cheap spare parts in different regions. Theoretically, the
profitability is linked with the potential market coverage of the original spare parts. The lower the
original spare parts market coverage, the more the profit. However, the answers are not exactly like
that.
South America and Bangladesh appear to be very confident in their market potential. Mexico,
USA/Canada, Turkey, Thailand, Philippine, Egypt expect rather medium profit levels. The rest of the
regions‟ agents think they would only make low profits with the cheap spare parts.
This might have something to do with the profit margin. Because of the low profit margin of the cheap
spare parts, to come to the same amount of profit like original parts, agents have to compensate by
volume, which is not easy to reach.
The agent in Nigeria said the current price structure of the Eco-parts could still not match the prices of
any of the "pirate" suppliers. Therefore, they believe there will be no profit at all.
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6.4. Agents’ Willingness to be in Charge of Both Original and Cheap
Spare Parts
Fig. 11: Willingness to In Charge of Original and Cheap Spar Parts
Source: Survey
Fig. 11 shows that among the thirteen replies, eleven said yes and only two said no. This gives a hint
that it would be good of Sulzer Textile to use existing agent for the cheap spare parts business because
it raises agents‟ satisfaction. Although not all of the agents that said yes believe a profit can be made;
some of them want to avoid competition between original and cheap spare parts agents.
There are still two negative answers: The agent in Malaysia believes that if Sulzer Textile sells cheap
spare parts on their market, it would confuse the customers unless it is not mentioned. In addition, the
agents in Turkey also do not want to be in charge of the cheap spare parts because in the past they had
bad experience with the cheap spare parts.
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6.5. Reasons for Customers to Choose Cheap Spare Parts
Fig. 12: Reasons to Choose Cheap Spare Parts
Source: Survey
Fig. 12 shows that the main reasons for customers to choose the cheap spare parts are considered to be
low price and constant quality, which means it is really important for the sourcing in China to reach
the price of low parts and to make sure they have constant quality.
Several agents pointed out fast delivery is a crucial factor because competitors are offering same day
or next day delivery.
Since constant quality is very important for customers, customers once happy with the conditions, tend
to stay with the supplier regardless of whether they are original spare parts buyer or cheap spare parts
buyer.
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6.6. Competitive Advantages of Cheap Spare Parts Business
Fig. 13: Cheap Spare Parts Competitive Advantages
Source: Survey
The competitive advantages are analysed in Fig. 13.
In general, cost efficiency is the biggest
competitive advantage that the cheap spare parts business has. Product standard is also ranked quite
high because Sulzer Textile needs to do quality control and provide constant quality.
The agent in Bangladesh explained that the price should not be higher than competitors‟ prices; two
US dollars more expensive would result in nobody buying the product.
Argentina‟s agent points that out providing guarantee and better quality than the pirates and the
increasing demand would make local stock necessary.
6.7. Potential Customers
A list of potential customers is provided in Appendix V.
From the answers, one can see that there are agents who intend to introduce these cheap spare parts to
all Sulzer Textile customers, which means original spare parts customers could be affected by the
cheap alternative. This is not what Sulzer Textile management want, so target control has to be strict.
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6.8. Competitors
The competitors of the cheap spare parts business are summarized in Appendix VI.
6.9. Success Factors for Developing Cheap Spare Parts Market
The most important factors of the success of the cheap spare parts business are analysed here.
-
Maintain a reasonable level of local stock .
-
Shortest delivery time.
-
Maintain a reasonable degree of quality and a constant quality is needed.
-
Have competitive pricing, prices include quality and guarantee and fast delivery and after sale
service.
-
Main concentration on selling OEM quality and OEM priced parts. There is still a fair amount
of demand and high profit margins lead to more profit.
-
No conflict between original spare parts business and cheap spare parts business.
-
Select strong and active sales people who have machine knowledge.
-
Have separate distribution channels for original and cheap spare parts.
-
Customers communicate with each other, so Sulzer Textile needs to make sure the cheap spare
parts do not confuse customers concerning Sulzer Textile‟s image.
-
Good webpage.
-
Separate from Sulzer Textile main brand.
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7. Final Recommendation
7.1. Strategy
Table 7: Strategies Combination
Banding
Agent
Existing Agents
Decision
Original spare parts market coverage < 50%
Bangladesh, Pakistan, India, etc.
New Agents
Original spare parts market share > 50%
Thailand, Colombia, USA / Canada, etc.
Quality Control by
Sulzer Textile
Be careful
Original spare parts market share > 75%
Mexico, Turkey, etc.
Not applicable
Original spare parts market share >90%
Malaysia, Indonesia, etc.
Source: Author
-
The branding alternative Quality Control by Sulzer Textile is the final recommendation the
author suggests.
The reasons are to achieve the fast implementation by profiting from the Sulzer Textile image and the
flexibility of expanding business without creating a confusing image.
-
If the original spare parts market coverage is lower than 50%, using existing agents is advised.
To do so, the existing agents would be best motivated because they see potential and hope; they know
they could make more profit; cheap spare parts business can also be better developed since the agents
would put a lot effort in generating profit.
-
If the original spare parts market coverage is larger than 50%, using new agents is suggested.
Because in these markets selling original spare part can make much more profit than selling cheap
parts, the agents would be likely to concentrate on original parts and leave cheap spare parts out even
if Sulzer Textile lets them be in charge of it. Too much effort for too little money, they might think.
Moreover, the existing agents would not be motivated enough to develop the cheap spare parts; in
addition, these agents would also have a strong fixed mind from selling original parts; it would be
difficult for them to switch to cheap parts.
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-
If the original spare parts market coverage of the country is more than 75%, Sulzer Textile
management needs to be very careful when making the decision whether or not to enter the
cheap spare parts market. The low profit and trade-off of Sulzer Textile‟s good image have to
be balanced out.
-
When the original spare parts market coverage is more than 90%, it is not recommended to
introduce cheap spare parts into these markets simply because it is not worth the hassle.
7.2. Marketing Mix
For Sulzer Textile since the sales in different markets are through agents one has to consider the
marketing mix for both agents and customers.
7.2.1. Marketing Mix Sultex to Agents
Table 8 contains the recommended marketing mix of cheap spare parts for agents; it is compared to
the marketing mix of original spare parts.
Table 8: Marketing Mix Comparison: Sulzer Textile to Agents
Marketing Mix Sultex-Agent
Original
Cheap
Reasonable and constant quality
(quality control)
Increasing product range
Price
Highest constant quality
Broad product range (for all Sultex WM
produced)
Innovative products
Frequent new product development
Availability(for all machines)
Fast delivery
Internet platform (place order, monitoring order
online etc.)
Technical Support
Provide new product development information
and education
Frequent direct contact and on-site visit
Commission
Brochures
Sales training
Credit payment(30 days)
Standard price (include commission)
Process
Centralized distribution in Switzerland
Product
Service
Promotion
Active and persistent sales force
Experts
Innovative technicians
Source: Author and Sulzer Textile
People
Congyu Zhang
07/08/2007
Immediate delivery
Brochures
Frequent direct contact and visit
Commission
Sales training
Continuous info. On changes in
spare parts portfolio
Samples
Low and competitive (not
including commission)
Centralized distribution in hub
(Dubai)
Active and persistent sales force
57
7.2.1.1.
-
Product
Ensure frequently used spare parts are available
At the beginning concentrate on the 30 common frequent used spare parts to gain experience and find
out what customers want in each market.
-
Constant quality
Firstly, constant quality can better serve customers. Secondly, sourcing from fixed suppliers can
reduce costs and the amount of work for quality control.
-
Increasing product categry
When the basic demand is met, more product categories will be brought in to better satisfy customers
because customers prefer constant quality and one supplier. Since cheap spare parts have a lower
profit margin, increasing product category may raise sales volume.
-
Also supply competitors„ spare parts
In the future, it is recommended to supply competitors„ spare parts in order to become the leader in the
cheap spare parts business. But if the cheap spare parts business is put under Sulzer Textile brand, this
is not advisable because of ethic reasons and protection of brand image.
7.2.1.2.
Service
For the cheap spare parts sold to agents, there is only immediate delivery offered.
7.2.1.3.
-
Price
A Combination of Cost-Plus Pricing and Psychological Pricing
In Chapter 4.3.3 and 4.3.4 the Cost-Plus Pricing and Psychological Pricing strategy are explained. The
Cost-Plus strategy is a very simple pricing strategy, Price = Total Cost + Margin. The price to agents
does not include commission; the commission is shifted to the customer (see price in marketing mix
for customers). The Psychological Pricing strategy takes advantage of the psychological difference
people think between a price at 2.95$ and 3.00$. The Cost-Plus Pricing is to make sure that profit is
generated in selling spare parts.
Congyu Zhang
07/08/2007
58
7.2.1.4.
Promotion
-
Brochures and samples are provided to agents.
-
Offer agents frequent visits and inform changes in spare parts portfolio.
-
Sales training especially at the beginning of the market development.
-
Commission is offered to agents with a higher rate than original parts to compensate the low
profit margin for cheap spare parts and to encourage the agents.
7.2.2. Marketing Mix Agents to Custome rs
Table 9 has the recommended marketing mix of cheap spare parts for agents to customers; it is
compared to the marketing mix of original spare parts as well.
Table 9: Marketing Mix: Agents to Customers
Marketing Mix Agent-Customer
Product
Service
Promotion
Original
Cheap
Highest constant quality
Broad product range (for all machines)
Innovative products
Frequent new product development
Availability (if have local stock)
Technical support
Fast delivery (if delivery from CH)
Local immediate delivery (if locally stocked)
Provide new product development information
and education
Customer testimonials
Brochures
Exhibition
Customer visit(sales and technicians)
Gifts
Package discount(in corporate with Sultex)
Credit payment(30 days)
Reasonable and constant quality
(quality control)
Increasing product range
Local immediate delivery
Guarantee (2 months)
Brochures
Customer visit(only sales)
Samples
Continuous info. On changes in
spare parts portfolio
Package
discount(automatic
from system and/or based on
negotiation)
Payment allowance(3 months
delay and leasing)
Local currency
Low and competitive price
Distribution
Combination
of
from
local(if
have
Local centralized immediate
Process
local stock) and from Switzerland
distribution
Active sales and technician
Active sales
People
Price
Congyu Zhang
Standard price
07/08/2007
59
7.2.2.1.
Product
The products that agents offer to customers are the same products that Sulzer Textile sells to agents.
7.2.2.2.
Service
-
If in the region, local stock is offered, agents can offer local immediate delivery
-
Guarantee
A 2-3 months garantee is offered and customers can have free replacement within guarantee period
7.2.2.3.
-
Price
Price has to be competitive in comparison to competitors‟ price
In several markets, a slightly higher price is acceptable when offering guarantee and quality control.
However, Sulzer Textile needs to keep the price as close to the competitors‟ as possible. This pricing
strategy is a Competition-Based Pricing (see chapter 4.3.1)
Another reason to use this strategy is in different markets the price for cheap spare parts can be very
different, for example in Mexico, the pirates‟ price is around one third of the Sulzer Textile original
parts and in Pakistan the pirates‟ price is about 5-25% of Sulzer Textile original parts. Therefore, the
author suggests Sulzer Textile sets its price based on competitors‟ prices to be competitive in each
different market.
-
A Psychological Pricing shall be considered
7.2.2.4.
Promotion
-
Brochures and samples are offered to customers.
-
Offer customers frequent visits and inform changes in spare parts portfolio.
-
Customer visits and gifts to customers (e.g. Christmas)
-
Payment Allowance
Allow local currency payment since cheap spare parts customers usually avoid big hassle like
exchanging foreign currency and so on. Offer different payment choices: extendable payment period
up to half a year, leasing.
-
Quantity Discounts
Congyu Zhang
07/08/2007
60
Offer discount based on the volume that customers order, it encourage customers to buy larger
quantities, and thus cut marketing costs.
7.2.2.5.
People
Strong and active agents and sales people are very crucial to sales. Diligent employees and committed
agents are needed for the success of the business.
7.3. Organization
Fig. 14: Organization Chart Scenario
Sulzer Textile
Head of Spare
parts
Head of
Representatives
.......
Rep. Bangladesh &
Asia
Bangladesh Agent
Head
Original spare
part sales team
Rep. South
America
........
Cheap spare
parts sales team
Rep. South
Africa
.......
Vietnam
Original parts
Agent
Cheap Parts
Agent
Source: Author
-
Reginal Sales Representitives are Recommend
Having regional sales representatives can allow for a better control on sales and at the same time it is
possible to coodinate with agents, motivate and educate them.
 If new agents are selected
Congyu Zhang
07/08/2007
61
Regional representatives are supposed to set the target customers for the two different groups agents to
eliminate competition between the two groups. Training is necessary for the new agents.
 If Existing Agents are Selected
Separate sales teams for original and cheap spare parts and the two different sales teams are advised to
be put into separate buildings to avoid conflict caused by different commission treatments. The
coordinators of the agents need to set the target customers for different sales teams to eliminate
competition.
-
Annual Review:
Make an agent MBO, do annual review for agents. Link the result to reward or punishment.
For example, Very good: 1%; Good: 0.5%; Bad: -0.5%; Very bad: -1%
-
Customer List
Agents need to develop a customer list for each market; renew the list every half a year
-
Competitor Price List
Agents need to develop a competitor price list for each market, analyse their price in order to be
competitive in the market.
7.4. Sales Scenario (Example Pakistan)
7.4.1. Target
In Pakistan, the current original market coverage in terms of money is 20%, which means the pirates
have about 80% market coverage. Let us say the target for the 20% original parts is 3 million CHF. If
we assume the original parts cover the whole market (100%, five times of 20%), the target would be 3
million*5=15 million CHF. 15 million-3 million=12 million tells that if the rest of 80% market is
covered by original parts how much the target could be. However, the 80% is covered by pirates spare
parts and they usually have a price of 20% of the original parts price, 12 million*20%=2.4 million
CHF gives the turnover of pirates. To recapture business from the pirates, this 2.4 million CHF would
roughly be the goal that Suzer Textile cheap spare parts business has to achieve in Pakistan in the
future.
Congyu Zhang
07/08/2007
62
7.4.2. Commission and Bonus
The cheap spare parts business is recommended to use the same agent because the current market
coverage is less than 50%. (see Final Recommendation: Strategy the detail) Moreover, the sales in
Pakistan is through local sales agents, which is based on commission. Therefore, the cheap spare parts
through the same agent would be also on the basis of commission. Table 8 gives a suggestion of the
commission and bonus for cheap spare parts based on the current commission and bonus for original
spare parts (assuming the target for Sulzer Textile cheap spare parts is set to 1.5 million for 2008 out
of the total 2.4 million).
Table 10: 2008 Target and Commission for Pakistan
Cheap Spare Parts
Target
1.5 million
Commission
15%
If reach
2 million
Bonus
1.5%
If reach
2.5 million
Bonus
2%
Original Spare Parts
0.225 million
0.03 million
0.05 million
Target
3 million
Commission
9%
If reach
4 million
Bonus
3%
If reach
5 million
Bonus
4%
0.27 million
0.12 million
0.2 million
Although the cheap and original spare parts are both based on commission but the commission for
cheap spare parts are shifted to customers instead of Sulzer Textile. See below the comparison.
Congyu Zhang
07/08/2007
63
Fig. 15: Money Flow for Commission
Original Spare Parts
3Million CHF
Sulzer Textile
3 Million CHF
Agent
Customer
0.27 Million CHF Commission
Cheap Spare Parts
1.5 Million CHF
Sulzer Textile
1.5 Million CHF
Agent
Customer
+ 0.225 Million CHF Commission
7.4.3. Sales
The price charged by Sulzer Textile to its agent for the cheap spare parts is recommended to be
calculated differently from the original price calculation.
Original Spare Parts:
Price = Variable Cost + Fix Cost + Commission + Sulzer Textile Margin
Cheap Spare Parts:
Price = Variable Cost + Fix Cost + Sulzer Textile Margin
See Table 9 a cost and sales forecast calculation for Pakistan cheap spare parts in 2008, clear pictures
are shown in Appendix VII.
Congyu Zhang
07/08/2007
64
Table 11: 2008 Cost and Sales Forecast for Cheap Spare Parts
Target 1.5 Million
Congyu Zhang
07/08/2007
65
8. Conclusion
In general, the author believes that going into the cheap spare parts business is very good strategic
decision. In the short-term, it can help Sulzer Textile recapture business, expand market shares and in
a long-term provide Sulzer Textile with cheap sourcing and win the fight against copycats.
The fast growth of economy, raising required quality of export, and upgrading of equipment will push
the demand for original spare parts even up in the future. Therefore, the author suggests that Sulzer
Textile concentrates on the long-term goal of moving customers of the cheap spare parts to customers
of original spare parts and be able to supply more product categories.
In order to deal with the increasing volatility in the international economic and political environments,
especially the rapid changes in currency exchange rates, it is crucial for Sulzer Textile to become more
innovative and more responsive to local needs while retaining its global efficiency.
The author recommends Sulzer Textile the following:
Instead of centralizing the key activities and resources at the parent company or decentralizing so that
each subsidiary can carry out its own tasks on a local-for-local base, the resources and activities need
to be dispersed but specialized in order to achieve efficiency and flexibility at the same time; these
dispersed resources are integrated into an interdependent network of worldwide operations; to create a
worldwide learning network to enable people to have a comprehensive global view and learn from
each other on a global level. Fig. 15 gives a graphic view of this recommendation.
Fig.16: Integration/Responsiveness Matrix
Source: Author
Congyu Zhang
07/08/2007
66
9. Appendices
I.
A Cost Comparison between Original Parts and Pirate Parts
Fabric style:20x20/108x58, 2x160cm, 3/1
Measure
Original
Twill
Pirate Parts
Parts
Speed(rpm)
Rp m
270
240
Picks p.a. (at 92% efficiency)
Mio
129
114
Spares consumpti on
USD/105
0.47
0.43
605
492
USD
212
0
USD
817
492
100%
60%
picks
Spares consumpti on
USD/WM/Y
ear
Import taxes
35%
Total costs of s pare parts/WM
Total costs of spare parts/WM
Produced fabric
M
127‟085
112‟964
Net margin per m of fabric
USD
0.036
0.036
USD
0
508
Addi tional cost of l oss of production due to:
Speed reducti on
Machine downtime for add. Mai ntenance
1%
USD
0
41
Quality reducti on(2 nd quality)
3%
USD
0
92
2$/hr
USD
0
173
USD/WM
817
1‟133
100%
139%
Increased cost of personnel
Total cost of maintenance and missed
opportuni ties
in %
Source: Sulzer Textile Handout 2004
Congyu Zhang
07/08/2007
67
II.
Import of Textile Machines in Pakistan
Source: Federal Bureau of Statistics, Government of Pakistan
Congyu Zhang
07/08/2007
68
III.
Textile Companies and Exporters in Pakistan
Name of Customers
Homepage
Kausar Processing Pakistan-textile exporters and
manufacturers
http://www.kausar.com/
Nina Industries - Home Textile Manufacturers /
Exporters
http://www.nina-industries.com/
Naveed Nawaz Textiles - Manufacturers / Exporters
http://www.nntextiles.com/
RAUF TEXTILE AND PRINTING MILLS (PVT.)
LTD
http://www.rauf.com/
AFROZE - MANUFACTURERS & EXPORTERS OF
TERRY TOWELS - TOWELLING CLOTH HOUSEHOLD LINEN
http://www.afroze.com/
Venture Trading Company
http://www.vtcpak.com/
Al-Abid Silk Mills Ltd.
http://www.alabid.com/
Dynamic Sportswear (Pvt) Ltd
http://www.dynamicsportswear.com/
Century21
http://www.c21tex.com/
DYNASTY TEXTILE AND DYEING (PVT.) LTD.
http://www.dynasty.com.pk/
Fairdeal Textiles (Pvt) Ltd
http://www.fairdeal.com/
Gulistan Group
http://www.gulistan.com/
Fitfor Trading Company
http://www.fitfor.com.pk/
Zeenat Industries
http://www.zeenatind.com/
Magna Textile Industries (Pvt) Ltd
http://www.magnatextile.com/
FEROZE TEXTILE INDUSTRIES
http://www.fti.com.pk/
Friendship Textile Mills (Pvt) Ltd
http://www.ftextile.com/
Nadia Textile Mills
http://www.nadiatextile.com/
Source: http://www.geocities.com/textiledirectory/
Congyu Zhang
07/08/2007
69
IV.
Sulzer Textile Agents Survey
Questionnaire Regarding Developing Sultex
Cheap Spare Parts Market
Please type your answer in the brackets. If you have would like to add your opinions or
explanations of your answers, please do so on the comment line under each question.
Thank you very much for your help!
1. How do you see the current market coverage of Sultex original parts in your country?
A. Below 25%
B. 25-50%
C. 50-75%
D. 75-100%
Comment:______________________________________________________________
2. What do you think would be the most optimistic coverage of Sultex original parts in
your country? ( )
A. Below 25%
B. 25-50%
C. 50-75%
D. 75-100%
Comment: _____________________________________________________________
3. How profitable do you think selling Sultex‟s cheap spare parts would be in your
country? ( )
A. No profit
B. Low profit
C. Medium profit
D. High profit
Comment: _____________________________________________________________
4. Would you like to be in charge of both original spare parts and cheap spare parts? ( )
A. No
B. Yes
C. Do not mind
Comment: ____________________________________________________________
5. What do you think are the most import two factors for the customers in your
country when they are choosing the cheap spare parts products? ( )
A. Constant
quality
B. Low
C. Broad range of
products
price
D. Fixed
supplier
Comment: _____________________________________________________________
6. What are the important reasons for the majority of your customers to buy original spare
parts from you? ( )
A. Marketing
B. Networking
C. Sultex image
D. Others
Others: ________________________________________________________________
Comment: _____________________________________________________________
7. What kind of spare part product do you think have the largest market demand?
Congyu Zhang
07/08/2007
70
A. Good
quality, high price
B. Middle
quality, medium price
C. Acceptable
quality, low price
D. Dirt
cheap product
Comment: ____________________________________________________________
8. What do you think would be the competitive advantages of Sultex cheap spare parts
business? ( )
A. Cost
efficiency
B. Global
player
C. Product
standard
D.
Image
Others:________________________________________________________________
Comment:______________________________________________________________
9. What do you think should be the competitive advantages of Sultex cheap spare parts
business? ( )
A. Cost
efficiency
B. Global
player
C. Product
standard
D.
Image
Others:________________________________________________________________
Comment: _____________________________________________________________
10. Who do you think would be the potential customers in your country for the cheap spare
parts business?
____________________________________________________________________________
11. Who should Sultex consider as competitors? Among those competitors who are selling
spare parts and who are producing spare parts?
____________________________________________________________________________
12. What are the aspects do you think Sultex management should pay attention to in regard to
developing the cheap spare parts market?
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Thank you very much for your taking the time to answer the
questions!
Congyu Zhang
University of Applied Science
Email: [email protected]
Congyu Zhang
07/08/2007
71
V.
Potential Customers
Region
Contact
Customer
South-America Region
Small customers / low fabric quality
Mexico
[email protected]
[email protected]
USA/Canada
[email protected]
50% of the Pirates customers, around Chf 500,000.00 per year
(Step by step in two or three years)
All customers can benefit from low cost spare parts.
Argentina
[email protected]
Small activiites with low buying power and no import structure
Bogota - Colombia /
South America
Maslak Istanbul
[email protected]
All textile companies
[email protected]
Lagos Nigeria
[email protected]
All customers if the cheap spare parts have long life time,
constant quality and long payment period
Customers that buy "pirate" spare parts
[email protected]
Five Star, Simoplas, Carillon, Sinar Indah, Eratex, Sadetex,
Gunungmasindo, Tyfountex.
All Sultex customers
Indonesia
Thailand
[email protected]
Malaysia
[email protected]
Tailand
[email protected]
Basically no one, sultex can produce the cheap parts but
without change the quality
Masterpack, Santavee, Raja
Indonesia
Bangladesh
[email protected]
Five Star, Simoplas, Eratex, Sadetex, Gunungmasindo
[email protected]
Qualitex, Echo, Arkay, Zaber & Zubair
Philippine
Vietnam
[email protected]
All Sultex customers
[email protected]
Vicotex
Southeast Africa
[email protected]
A few mills before closing to extend live time
Switzerland
Egypt
[email protected]
Misr Helwan for Spinning Co. & Weaving , Samanoud
Co. for Weaving & Terry Fabrics, Delta Spinning &
Weaving Co., El Nasr Spinning, Weaving and Dyeing
Co., El Nasr Co. for Spinning, Weaving and Knitting
“Chourbagui”, Misr Amria Spinning & Weaving Co. Misr Fine Spinning & Weaving Co. “KED” - El Nasr
Spinning & Weaving Co. “STIA”, Bishara Worsted
Wool Co. “BTM”, Happytex for Fine Textile, El
Namouzagy Textile Co.
Source: Sulzer Textile Survey
Congyu Zhang
07/08/2007
72
VI.
Cheap Spare Parts Competitors
Region
South-America
Mexico
USA/Canada
Bogota - Colombia /
South America
Switzerland
Egypt
Contact
[email protected]
Competitor
All pirates - in the SA-Region ITG,
Tümkalib and Bridge are the most
importanat competitors
[email protected]
Rematex , ITG Giamminola, Bell wheter
[email protected] Probity, Bell Weather, Probity Purchases
Parts nd Bell Weather Manufacutes
Spares
[email protected]
Pirate spare parts manufacture and trader
[email protected]
Maslak Istanbul-Turkey [email protected]
Lagos Nigeria
[email protected]
Indonesia
[email protected]
Thailand
Malaysia
Asia, Bangladesh
[email protected]
[email protected]
[email protected]
Southeast Africa
[email protected]
Northriver, Taiwan (Producer); Texmer,
Germany (Producer); Ningbo Concord
Industries Co., China (Producer); Tum
Kalip, Turkey (Producer); F.I.R.S.T., Italy
(Trader); China Texmatic, China (Trader);
Honfe, China (Trader)
Pirate spare parts manufacture and trader
The Chinese and the Indians
Pirate Makers/Traders in China, India and
Rusia.
Local Traders : Sekawan & GTP = Selling
products from above countries.
Those who are selling spare parts
no competitors
All suplliers from China, Taiwan and
Pakistan
http://www.giamminola.it
http://www.tekemint.com
Source: Sulzer Textile Survey
Congyu Zhang
07/08/2007
73
VII.
Cost and Sales Forecast for Cheap Spare Parts
Congyu Zhang
07/08/2007
74
Congyu Zhang
07/08/2007
75
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Congyu Zhang
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78

Sulzer Textile Spare Parts Business

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