ASSIGNMENT

Assignment

Assignment

Part A

Take the case of Revlon in Japan. The company unnecessarily alienated retailers and confused customers by selling worldstandardized cosmetics only in elite outlets; then it tried to recover with low-priced world-standardized products in broader distribution, followed by a change in the company president and cutbacks in distribution as costs rose faster than sales. The problem was not that Revlon didn't understand the Japanese market; it didn't do the job right (Theodore Levitt's, 1983), wavered in its programs, and was impatient to boot. By contrast, the Outboard Marine Corporation, with imagination, push and persistence, collapsed long-established three-tiered distribution channels in Europe into a more focused and controllable two-step system - and did so despite the vociferous warnings of local trade groups. It also reduced the number and types of retail outlets. The result was greater improvement in credit and productinstallation service to customers, major cost reductions and sales advances (Janes, 2005).

In its highly successful introduction of Contac 600 (the timedrelease decongestant) into Japan, SmithKline Corporation used 35 wholesalers instead of the 1,000-plus that established practice required. Daily contacts with the wholesalers and key retailers, also in violation of established practice, supplemented the plan, and it worked (Theodore Levitt's, 1983).

Denied access to established distribution institutions in the United States, Komatsu, the Japanese manufacturer of lightweight farm machinery, entered the market through over-the-road construction equipment dealers in rural areas of the Sunbelt, where farms are smaller, the soil sandier and easier to work. Here inexperienced distributors were able to attract customers on the basis of Komatsu's product and price appropriateness (Adams, 2001a).

Organizing to Win

In the cases of successful challenge to prevailing institutions and practices, a combination of product reliability and quality, strong and sustained support systems, aggressively low prices, and sales- compensation packages, as well as audacity and implacability (Adams, 2001a), circumvented, shattered and transformed very different distribution systems. Instead of resentment, there was admiration. Still, some differences between nations are unyielding, even in a world of microprocessors (Hsu, 2009). In the United States almost all manufacturers of microprocessors check them for reliability through a socalled parallel system of testing. Japan prefers the totally different sequential testing system. So Teradyne Corporation, the world's largest producer of microprocessor test equipment, makes one line for the United States and one for Japan. That's easy.

What's not so easy for Teradyne is to know how best to organize and manage, in this instance, its marketing effort. Companies can organize by product, region, function, or by using some combination of these. A company can have separate marketing organizations for Japan and for the United States, or it can have separate product groups (Weimann, 2004), one working largely in Japan and the other in the United States. A single manufacturing facility or marketing operation might service both markets, or a company might use separate marketing operations for each (Foucault, 2008).

Questions arise if the company organizes by product. In the case of Teradyne, should the group handling the parallel system, whose major market is the United States, sell in Japan ...