BUSINESS MARKETING CASE

CALOX MACHINERY CORPORATION

S U B M I T T E D B Y:
GROUP2

CALOX MACHINERY CO.

Manufacturers of High Quality excavation
equipment
and
accessories,
primarily
replacement items for OEM parts.
Product line includes pay loader buckets, dozer
and scraper blades and aerial equipment parts
like forklift etc.
Target Customers are Independent contractors in
excavation of building sites & airport and highway
construction.

CALOX INTERNATIONAL SALES

Picked up in 1971 with small order in Canada.
Products were available through Exclusive
Distribution channels.
However, independent distributors were given
non exclusive rights.
Till 1991, 25% of sales was generated outside US.

NEW ZEALAND DISTRIBUTORSHIP

Exclusive Distributorship to G.W Diggers, also
producer of equipment.
Later known as Glade Industries.
Issues with Glade distribution
Zero sales
Competitive products by Glade
Price factor
Low Market Share
Sales to G.W Diggers
Sales to Glade
1986

1987

1988

1989

1990

1991

1992

21

310

535

801

105

70

10

DISTRIBUTORSHIP RESTRUCTURING
Establishment of new Exclusive distributorship,
Calox New Zealand Ltd lead by Geoff Wiggins.
Terminating Distributorship agreement with Glade
Industries.

ISSUES TO AGREEMENT TERMINATION

Company Policy regarding exclusive
distributorship.
Glade Industries Reaction
Accept Termination with some compensation
Or Renegotiation of agreement

No Immediate termination
60 days termination notice
Legal proceedings
Ongoing delivery of Orders to Glade
2 year contract binding

TIMELINE OF B2B COMMUNICATION

CONFLICTS
Aug 20, 1992 Notice from Calox to Glade
Asking for termination of contract on the basis of business
failure.
Concerning delivery of last Order to avoid legal problems of
termination .

Aug 24, 1992 Fax from Glade to Calox

Unexpected response of going through legal procedures
Asking for fulfilment of last order.

GLADE EFFORT: REVAMPING

RELATIONSHIP
Aug 31,1992 Fax from Glade to Calox
Reconsideration of Terminating contract on the
basis of
Restructuring of Glade Organisation Process
Assurance of Increase orders from Glade
New Order of 10 times the Normal amount of Product
Improve in Market Share
Recruitment of new experiences talent to deliver.
Displacing competitors in coming years

CALOX DILEMMA: INTERNAL CONFLICT

Reconsideration of contract leads to
Probability of Greater market share through new
organisation
Better Business process
Relationship and Network maintained

Terminating contract leads to

Less competition
Able to re-establish as premier supplier
Long term establishments

CALOX DECISION
Terminating the distributorship on the basis
Interests didnt met for both parties
Repurchase of last order at 80% after termination

GLADE COMMUNICATION
Sep14, 1992
Breach of undertaking
Claim of sales profits from other distribution
channels in New Zealand
Sep17, 1992
Willing to forgo their rights concerning breaches
on the fact that no repurchase of order would be
in effect.

IMPLICATIONS OF CALOX DECISION

SWOT ANALYSIS

Better communication
In house mechanisms

Build Market Share

Increase in Sales
Overtake competitors
Better analysis of market
Relation with customers

New Distribution channel

Legal Issues with Glade

RECOMMENDATIONS
Acceptance of no repurchase Agreement
Legal issues to Glade on strong facts
Timely delivery of orders to Calox New Zealand
ltd.
Improved Distribution mechanism
Analysis of Competitors
Re-establishing as Premier Provider

THANK YOU