ComupterVision

Japan Time for

migration??
Group 4
Keshav, Krishna, Kham, Ulkrisht, Parth, Tanay

Background
of CV and
the product

The industry is in the growth phase (growth rate of 3050% till 1987)
CV is the worldwide leader in the CAD/CAM turnkey systems
CAD/CAM is the core building block of Computer Integrated
manufacturing (CIM) which will automate and computerize all
aspects of product design, engineering and production
It is thus a high involvement product.
The customers need support from the company. (High
Interaction Product)
The clientele is mostly big corporates. Relationship Marketing is
the key

 49% of their revenues come from Japan(70% systems

installed here.)
They want to grow their revenues from 17mn to 55mn in
3 years. (223% growth)

Current
problems
being faced
by CVJ

CVJ and TEL working with significant strain in their

relations. TEL is their exclusive distributor in Japan.
Marketing support costs have risen by 600% in the last
4 years.
Still IBM and Fujitsu are gaining market share at CVs
expense. The competition is also getting intense with
most new CAD/CAM suppliers targeting Japan.
The industry structure was also changing with large
computer hardware companies licensing third party
software
Lack of credible marketing data (DataQuest reports not
accurate)
Different work culture of Japan from Europe and America

Relationship
with TEL
(A
distribution
strategy
audit)

Lowest sales from CCS which primarily looks after CVJ

systems (80% of its sales from CV CAD/CAM)
Their relationship has been weak since 1977. Since 1980, they
have no long term contract. They are working on a 30 day
notice temporary contract.
TELs strategic orientation had changed. It has a strong
preference for manufacturing, assembling and selling
American products in Japan.
Their Joint Venture Proposal not acceptable to CVJ due to
genuine reasons.
TEL not able to meet CVJ sales demands. Not able to dedicate
sales force too due to their company policy and Japanese

Options available to
Computer Vision Japan
Enter into a joint venture with TEL
Built their own Direct Sales Team with or
without TEL
Add more distributors
Enter into agreements with trading companies
???

Without TEL
High increase in costs and total short term disruption of their
sales
Any solution will take a much longer time to execute. CVJ
does not have the time as it needs to meet its managements
goals and take advantage in the growth stage of the market
1 year to train and hire a sales rep. 6-12 months of training
for the support staff. TEL has a good reputation in the market
which helps us too

Pros

TEL happy, no channel conflicts. May improve

relations and TEL can give more resources to CVJ

Joint
Venture
with TEL

Cons

Japanese Management have stronger allegiance to

Japanese owners
Many examples of Japanese companies not needing
their American partner after few years when JV
expires.
TEL already very ambitious in its strategy of
manufacturing and assembling.
CV can lose control of its product completely in Japan

Pros

Both competitors (IBM & Fujitsu) doing this.

CV traditionally sells successfully through this channel.

Direct Sales
Team with
TEL

Their product also requires such a channel

Channel conflict can be avoided by segregating areas
and giving some commission on sales to TEL
Cons

Japan totally different from Europe and America

People wont be willing to work for American companies
Human resource problem not solved. Dependence on TEL still high

Pros

Reduction in dependence on TEL

More reach due to higher sales reps

Additional
distribution
partners

Cons

No new clientele will be added by these channel

partners
High Channel conflicts with TEL.
May not be able to deliver on promises in the short
term
Problem of hiring manpower not solved

Our Recommendation

Tie up with Trading partners and maintain

relations with TEL using Nomuras 2nd option

New Value proposition trading

partners bring
CVJ will gain access to a company part of the famed Zaibatsu

This is the biggest clientele for CVJs product

Strategic
logic for this
channel
migration

The trading companies associated with the 16 industrial

groups often plays a very significant role in selling their
groups product both within their group(to other group
companies, suppliers and subcontractors) and to
outside markets
They can hire people easily too being in the Zaibatsu group
from the top Japanese schools solving a major problem
Their 7% margin plus the additional costs of hiring the support
team (which will help TEL also) can be recovered if the major
Zaibatsu contracts can be cracked. This access is not available
with TEL

 Use Nomura to manage TEL when tying up with trading

partners (top management support)
CVJ accounts for 80% of his departments sale. He will
not want to jeopardize that specially when we are
managing their interests too.

Mobilizing
Support for
Channel
Migration

This migration will add a new customer base and help CVJ
meets its target too in the short time frame it is working in
110 units need to be sold to meet their 55 million target. 1 SE
and AE are required for 5 systems. 44 recruitments. Current
Technical team strength 24. They nearly need to hire 2.5
times more people. CV has differentiated itself from its
competitors on its service
Foreign nationals can also be hired as service and technical
support may not require high end graduates and huge
knowledge of Japanese culture

 They also act as brokers for distributors for non-group products

giving it a good advantage on TEL also for their other products.
They will not be needing exclusive rights which will reduce channel
conflicts

Managing
channel
conflicts

The sales will also be increasing with this single increase in channels
We are already meeting the demands of Nomura as well to develop
our own support tech team which does not contribute much to the
revenues of TEL.
Over distribution is not a problem as the market is pretty
huge for both the players and TEL themselves agree they
are unable to spare enough resources
Meanwhile CVJ should also take efforts to develop their own sales
force for future

Thank you