leclerc machines de cuisine

LECLERC MACHINES DE CUISINE :CASE STUDY

Dressayre Mathilde

Martel Élise

OVERVIEW

LeClerc Machines de Cuisine• Paris manufacturer for food processors, blenders, grinders and other chefs supplies• Overseas Sales Manager: François Jost

Creative Cuisines• US ditritributor located in Atlanta, Georgia• CEO: Bill Lewis• Firm’s Attoney: Marie Dominic

Context:• Leclerc wants to export its products to the US through a sole

distributor • Both companies signed an exlusive distribution agreement• Creative Cuisines is now in charge of :

- marketing and sales promotion costs for the Leclerc line- marketing and diffusing the products progressively in the

US

OVERVIEW

Problem: Creative Cuisines discovered someone else in the US is selling products of the Leclerc line• A mail order firm, « Reliable Restaurant and Home Kitchen Supplies »• Placed ads in consumer and trade magazines• Propose 2 lead products: LeClerc LMC Professional and LeClerc LMC Standard • Prices are considerably lower than those offered by Creative Cuisines

Phone Call between LeClerc and Creative Cuisines:• LeClerc did not authorized a sale to Reliable• Nobody can understand how Reliable managed to receive shipments from LeClerc

Investigation of Reliable by Mr Lewis, CEO of Creative Cuisines:• Reliable is a New Jersey company specialized in mail order discount kitchen supplies

Next Step: consult his firm’s lawyer to undertake a legal action

DOCUMENTS

DIALOGUE

Mr. Bill Lewis, President of Creative CuisineMs. Marie Dominic, attorney representing Creative Cuisine

• Does Reliable act in legality according to the law

• Genuine Leclerc products?

« If Reliable has a warranty, Leclerc has to honor it »

• Who are the clients of Creative Cuisine ?

•Who is the supplier of Reliable ? Does he was aware of the exclusivity?

EXHIBIT 1

English version of a letter sent by Leclerc to all distributors

Action of Leclerc :

Explain the current situation to its distribution network

Ask his network not to supply Reliable Restaurant & Kitchen Supplies

EXHIBIT 2

Letter from Dominic to Albert Rose,President, Reliable Restaurant and Home Kitchen Supplies

Mrs Dominic informs Reliable they are violating an agreement of Leclerc

& Creative Cuisine

EXHIBIT 3

Memo from Jane Watson, sales manager , Creative Cuisines, to Bill Lewis

Genuine Leclerc LMC Standard

Genuine warranty of Leclerc France

Names Reliable on the return

EXHIBIT 4

Memo to Creative Cuisines sales department from Jane Watson

Action of Creative Cuisines :

Quick reaction

Lowering the prices during 2 monthes on :

- LMC Professional Food Processor from $399 to $310

- LMC Standard Food Processor from $279 to $189

EXHIBIT 5

Reliable’s Ad in a Number of Consumer Food Magazines and Professional Journals

Prices Reliable current price

Creative Cuisines with its

promotion in

september

Model Standard

$189 $279 $189

Model Professional

$319 $399 $310

EXHIBIT 6Letter to Bill Lewis from Sandra Jordan, account executive at feingold advertising, Creative

Cuisine’s advertising agency

Action of Creative Cuisines :

Quick reaction

Agressive Marketing / advertising through Food Magazines

Make the customers aware of the illegal actions of Reliable

Publication : 15th and 20th of August 1994

STRENGHTS AND WEAKNESSES OF THE EXISTING SITUATION

COMMUNICATION

Strenghts Weaknesses

- Good communication of Creative Cuisines

- Good communication of Leclerc inside their distribution network

-Mrs. Dominic, attorney of Creative Cuisine is active and involved

-Quick communication : action taken in less than one month

-No answer from Reliable

-Leclerc don’t say what they will do to help Creative Cuisines

ETHICS


• Lawyer consulted

• Diplomatic letter to keep good relationships

- LeClerc doesn’t help Creative Cuisines in its investigation

- Tested products are genuine : LeClerc may have lied

- LeClerc refuses to recognize the truth

MANAGEMENT


-Good teamwork and internal communication in Creative Cuisine

-Take initiative quickly with their partner to create a strategy and counter Reliable

-Leclerc is not aware about the contracts signed by their distributors

-Creative Cuisines don’t know who their clients are

TAKING INITIATIVE : MARKETING

Strenghts Weaknesses-Agressive marketing to charge Reliable and cut cost

-Quick in the implementation (july september)

-Cut in cost could led to increase the number of sell and clients.

-Marketing cost : publications

-Dangerous as they start a prices war

-Fallout of price reduction could be negative

-The publication could be published too early : no answer from Reliable for the moment. (They maybe didn’t know they were violating the law.)

PROBLEM STATEMENTS

PROBLEM STATEMENT

The company with the arrival of a new distributor which have a legal licencee to sell the same Leclerc product at a lower price face

financial and juridicial issue.

What initiative should solve the litigation between Creative Cuisine & Reliable Cuisine?

OPTIONS

OPTION 1 : LEAVE THE CASE TO LECLERC


-No cost from Creative Cuisines

-Better prices, no more cut in costs

-Leclerc’s responsability if it is the mistake of a distributor

-Drop in the sales for Creative Cuisines if they do nothing

-Take times

-Bad relation with Leclerc

OPTION 2 : COMPLAIN AGAINST RELIABLE RESTAURANTS


- Indemnisation

- Recognition of Creative Cuisines as the sole legal distributor

- Too radical solution

- Bad image for Creative Cuisines

OPTION 3 : COMPLAIN AGAINST LECLERC


-Indemnisation

-Recognition of Creative Cuisines as the sole legal distributor

-Stop the sole distribution contract : loss a supplier

-Bad relation

-Earn nothing if not Leclerc’s fault

OPTION 4 : KEEP AN AGRESSIVE STRATEGY AGAINST RELIABLE


- To show to customers and LeClerc Creative Cuisines’ reactivity

- Re-increase the sales of LeClerc products

- To be too focused on defense strategy

- High costs

OPTION 5 : SEARCHING PRODUCTS FROM NEW SUPPLIERS


-New sources of earnings

-Diversification in their offers

- Added Value for Creative Cuisines

-Bad relation with Leclerc

-Could end the contract with Leclerc

-Not the goal of Creative Cuisines at the beginning of the case

-Bad image?

If Leclerc didn’t respect its contract, Creatives Cuisines could do the same after several months if no change happens

OPTIONS 6 : SECRET ASSOCIATION WITH RELIABLE TO HAVE THE MONOPOLY ON THE MARKET


- Increase the prices for the whole LeClerc line products

- Take advantage of the excellence of Reliable’s marketing and communication methods

- No more stress about competition

- The alliance must be kept secret

- This situation is illegal

- Bad for the brand image

Thank you for your attention!

DEBATE

1- Which option do you find the best?

2- Would you be willing to complain against another company if you just have set up your company?

3- Do you think that a company like Leclerc can let this kind of situation on going and do nothing when it doesn’t affect its profitability?

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