Calox Machinery Corporation

Presented By:
HARISH
MILAN
Submitted To:
ANKUR
Dr. Waheed JAI SONI
SHIVANG SAH
 INTRODUCTION
Company Info

Started in 1946

By engineers John Caliguiri and William Oxley

Manufacturing of after-market replacement parts for Caterpillar, Eaton, Case and other construction equipment.

Incorporated in 1970 by Bill Oxley Jr. son of founder.

Competitors include Bobcat, Dresser, Grandall, Hitatchi, and Terex.

Going Global

Recorded its first international sale in 1971.

Due to the energy crisis in the 70's, sales were initially slow.

By 1991 International sales were attributed to 25% of all sales.

Lack of International experience.

No market research conducted.

G.W Diggers, Ltd
In 1986 G.W Diggers was appointed by Calox as their New Zealand agent.

Great relationship with great success.

Placed an $800k order in 1989 with Calox for equipment and supplies.

In 1990 G.W Diggers was purchased by conglomerate Excel Ltd and given the name Glade Industries

Owner Geoffrey Wiggins no longer with company and given a 24 month non compete clause

Glade Industries
Glade increased prices on Calox products and requested a rebate to keep prices competitive.

Began producing a competing line of products with Calox.

By 1991 sales declined to virtually 0%

In 1992 Mike Brown took over International sales for Calox, faced with a dilemma to rebuild New Zealand market
share by improving Glade relations or by other means
 New Options

Geoffrey Wiggins reaches out to Calox suggesting to rebuild a relationship and regain market share in
New Zealand.
Suggested creating Calox New Zealand as a new distributorship.

At Wiggin's peak with G.W Diggers he had achieved almost 50% of the market share.

To act quickly he left a $100k order with Calox.

Legal issues

Distribution termination letter sent to glade

Glade place 3 orders totaling $81k for first 5times in a months

Standard distributors agreement required a 60-day notice so mike had glades order completed

Glade sends a letter claiming exclusive distribution agreement despite contarary to calox company policy
 STRENGTH WEAKNESS
SWOT
ANALSIS
OPPORTUNITY THREAT
Strength..

Weakness
Superior product
Declining market
quality share in New Zealand

Strong Brand Less time to make

decision
40/110 distributor Bad relationship with
in international New Zealand's
market distributor
Opportunity
New International Legal lash back
Sales Manager- Mike from Glade Industry

Threat
Different
Partnership with
perspective in
Geoffery
Executive Board
Willingness of Glade
Wescot gaining
to fix relationship and
purchase new product market share
 Defining the Problem
Purchase of G.W. Diggers by the New Zealand conglomerate, Excel Ltd.

Former owner Geoff Wiggins was not associated with Glade Industries

Increase in prices on all Calox Products which lead to decline in sales of Calox products.

Production of a line of poor quality products by Glade that was competitive with the Calox
products
 Communication with Glade
Exclusive distributor agreement to sell Calox products by Glade which was against the company policy

Glade wanted Calox to reconsider the decision of termination of the contract between them

Order of 600 products and parts that was 10 times the amount ordered earlier as means to mend the
relationship between Calox and Glade
 Calox must decide whether to continue with
Glade industries as distributors in New
Zealand???

Annual Sales to G.W. Diggers and Glade Industries(in

000s US$)
1986 1987 1988 1989 1990 1991 1992 (6
months
)
21 310 535 801 105 70 10
 Terminating the Relationship with Glade
Retaining Glade as a distributor will be considered as a bad business decision

Historical performance of Glade was bad as compared to G.W. Diggers

The fulfilment of extraordinary order can be considered as a ploy to entice Calox and can be considered
in continuing the distributorship agreement

Glade might initiate fire sale prices of Calox product

Disadvantages of Terminating the relationship:

Consumption can be demanded

 Re-Establishing relationship with Glade
Reopen negotiation with Glade- As Glade appointed 3 new employees- increase market coverage

Diverting orders to Glade that has been already shipped to Calox New Zealand ltd.

Future drawback of Re-establishing the relationship:

Court can rule out the buy back provision as court can go through with the existing agreement
Decision
Temporarily put all distribution to New Zealand on hold until year end.

Hire a marketing team to conduct research and better analyze the situation.

Gather and evaluate prospective distributors.

Design a new exclusive agreement for distributors.

Action Plan
Respond to both Glade and Wiggins notifying orders cannot be fulfilled and termination of any
binding agreements.

Hire a reputable market research firm with experience in the New Zealand market.

Design exclusive distribution agreement.

Use findings to evaluate and choose new distributor.

Implement same process for entering all future international markets.