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Overview of Italy and TVS Project Italy Southern Europe, peninsula from Central Mediterranean Sea to northeast of Tunisia 301,340 sq. km Slightly larger than Arizona Italian People Population – 61 Million 90% Roman Catholic Languages – Italian, German, French Literacy – 98.4% Government Government – republic Capital – Rome Legal system – civil law Chief of State – Prime Minister Mario MONTI Economy Diversified industrial economy – developed North, welfare-dependent, agricultural South High underground economy (17% GDP) Reforms – balance budget, decrease debt, increase VAT, pension reforms, cuts to public administration Economy GDP – $1.847 trillion (11 in the world) GDP growth = 0.4% GDP per capita – $30,500 (45 in the world) Economy GDP composition – agriculture (2%), industry (24.7%), service (73.4%) Labor force – 25M Unemployment – 8.4% Inflation – 2.9% Economy Agricultural products – fruits, vegetables, grapes, potatoes, sugar, soybeans etc Industry – tourism, machinery, food processing, iron and steel, ceramics, etc Export Volume - $525 B Products – engineering, textiles, machineries, food Partners – Germany (13.3%), France (11.8%), US (5.9%) Import Volume - $549 B Products – engineering, chemicals, transport equipments Partners – Germany (16.5%), France (8.8%), China (7.7%) The Company Company Italian premier cookware company situated in Fermignano, Italy (near Ancona Port, 130 km from Bologna) Founded in 1968 Built factory in 1986 http://www.tvs-spa.it Company Starting in 2000, innovation and technological experimentation drove designs In 2008, developed “Ceramit” ceramic coating with Ilag Swiss Recipient of several awards, including the 2011 Compasso d’Oro Company Dual goal : tradition + innovation Theme : Made in Italy Spirit Culture of design Highest European standards International awards TVS Service Return rate < 1.5% Average lead time < 45 days On time deliveries > 95% Business Approach Respect for environment Green philosophy – Cadmium and lead free coatings, recyclable paper in packaging 260 employees (195Production, 10 - R&D, 5 – QC, 35 – Strategic Departments such as marketing, sales) TVS Sales 2008 – 54.9 M Euro 2009 – 54.79 M Euro 2010 – 62.70 M Euro 2011 – 67.55 M Euro 12 M pieces sold in 68 countries (2011) TVS Sales 30% - Italy 19% - France 14% - Switzerland 6% - Russia 5% - Sweden 4% - Holland 22% - Others TVS Market Positioning Big retailers – 68% Loyalty programs – 14% Independent shops – 7% Others – 5% Industrial – 4% Wholesalers – 2% Growth in ceramic coatings Ceramic – Euro 20M Roller – Euro 17M Lacquer – Euro 14M Induction – Euro 7M Enamel – Euro 6M Titan – Euro 5M 2012 Budget (in M Euro) Industrial investments 2.1 Product .700 R&S .150 Buildings and Services .600 ADV .800 Delocalisation 2.1 Total 6.45 TVS Production Range Rolled coated items Spray coated Ceramic Induction Titanium Handle Products Afrodite Arco Liquida Ho Terra 100% Ceramica Marketing shows attended – Paris, Hong Kong, Milan, Frankfurt, Turin, etc Advertising mediums – magazines, TV commercial, radio, cinema, outdoor, blogs, website, text messages, one-on-one meetings Chef sponsor – Carlo Cracco Trade The US Cookware Landscape US Cookware Sales, 2010 (in M) – 1087 Aluminum – 674 Stainless – 302 Cast iron – 100 Bakeware – 305 Kitchenware – 37 Cookware, bakeware, cutlery = $3 B market Total Cookware Industry Trends Cookware, bakeware, cutlery market sales in the US has been declining due to poor housing sales, declining consumer confidence, reduction in highend purchases. Some brands increased sales due to focus on education Growth in stainless steel cookware (ie, gourmet kitchen) Cookware Industry Trends Single people had food behavior suited for certain types of cookware High income household more likely to spend on high quality kitchen tools and cookware Childless couple with higher than average income most likely to purchase high end cookware Health issues associated with certain cookware (ie aluminum) Safety issues (ie glass bakeware shattering) Cookware Industry Trends There exist other premier brands (ie Demeyere) Cookware sales have been growing in other parts of the world ie Asia (India - $625M, South Korea – 270M, Thailand - $145M) Mini kitchenware have started to gain popularity Copper cookware from France makes inroads China Landscape China Landscape TVS entered the China market in 2012 through a distributor in Shanghai. In just a few months, sales have reached 300,000 Euro. TVS has been present in Korea and Taiwan and has performed well. The Project How should TVS grow their business in China ? Distributor 1. Should they work with only one distributor or multiple distributors to optimize market development in China ? Speed of growth 1. Should they grow fast or grow slow in the China market ? Success factors 1. What factors need to be considered to develop their business successfully in China ? Strategies 1. If you were a Business Development Consultant assigned to the TVS account, what five (5) strategies will you recommend in order for the company to optimize their business in the country ? Useful project resources 1. Review documents on Moodle and study articles that could be relevant to the case. 2. Check out the CIA World Factbook website for current business and economic information on China. 3. Check out this link : Country Commercial Guide – China (available at export.gov) export.gov/china/build/groups/public/.../eg_cn_025684.pdf