Homework answers / question archive / What strategy for Affodglass & 3G ? Affodglass Case study   Background   Affodglass is located in the Middle East and had been acquired by the French Global Glassware Group (3G) in 2014

What strategy for Affodglass & 3G ? Affodglass Case study   Background   Affodglass is located in the Middle East and had been acquired by the French Global Glassware Group (3G) in 2014

Management

Share With

---

What strategy for Affodglass & 3G ?

Affodglass Case study

 

Background

 

Affodglass is located in the Middle East and had been acquired by the French Global Glassware Group (3G) in 2014. Its factory produces low cost and quality drinking glasses under the brand Affodglass. Two furnaces are producing approximately 40 tons per day of finished products with two lines; one is producing clear drinking glasses and one producing a mix of tableware products. 3G decided to build an additional furnace producing approximately 100 tons per day of drinking glasses that presently has 7 lines and is able of being extended to 10 lines, all producing clear glass.

 

This new furnace manufactures the 3G brands products range.  The yield from the new furnace improved from 45% to 67% within one year. The quality of the items is as good as anything produced by 3G in France.  At the same time, with technical assistance from France, 3G improved the quality of the Affodglass brand products.

 

The sales and marketing strategy for the Middle East is to use the production capacity to grow the market in the region and to provide SKU (Stock Keeping Units)'s to other 3G entities both in the International Division and to other Divisions of the Group. The key sales Manager positions were held by French Nationals who were based in the 3G office in the Middle East. The Affodglass Glass sales team, report to the French VP Sales for the region. They are not typical sales people as they take orders from distributors on a monthly basis and liaise with production to produce what has been ordered on a 'make and ship' basis.

 

The problems

 

The Affodglass sales target for 2016 is $25 million. Since 3G acquisition, the quality of the production has been improved. The price has been increased by 7% and the sales revenue target for 2015 (over 2014) has been increased by 8%.  

 

1. Difficulty with sales targets - in 2015 the Affoglass sales team struggled to meet their monthly sales targets. This may have been because the Regional VP Sales had been focusing on selling other 3G Brands in the region.  There is an Affodglass Sales Manager who manages the team, but they have a very mixed sales performance. They always seem to struggle to achieve their targets.  It is recognised that the target is achievable; although the Regional VP Sales and the Affodglass Sales team seem think the target is a difficult one to achieve.  The volume is decreasing and the growth in sales revenue for 2015 (over 2014) was only 2% in real terms.

 

1. Logistics problems - there is also a problem with the processing of the Affodglass sales.  The orders are taken normally around the beginning of the month and the products are produced to meet this order, within that month, in the old furnace that was in place when 3G bought the company.  Many of these orders are made up of multi-sets of drink and dinner ware (this can be 200-250 different sets). Due to the number of SKU's, they have to wait until all the items are produced and then they can pack and ship them.  Production is normally completed by around the 24^th of the month. Then they pack the items into the box sets and fill the containers before the end of the month.  Items are only shipped once the LC is released or the cash is in the bank account.  This process results in a bottle neck as they have to load around 90 containers plus 40 flat rig trucks, with a value of between $2-3million dollars a month, within a few days.  In addition they have to pack 3G products. These ones are spread more evenly out over the month. The outcome is a lot of frantic activity, creating tension and often arguments between, sales, production, logistics and finance.  Each side claims that it's not their fault and that there are other factors beyond their control.  Some months they are not being able to complete the packing and shipping of all the containers by the month end, resulting in monthly loss of approximately $500,000. This phenomenon happens at least 4 times a year.

 

1. Brand & marketing issues - the Affodglass brand has improved its quality recognition to the point that our marketing people believe that it is potentially taking sales away from our lower end 3G products.  We have increased the price of the products but they are still around 50% cheaper than our own 3G brands.

 

Your assignment

 

Assume you are General Manager of this operation in the Middle East. From the information you have been provided, can you please make a presentation addressing each of the following questions

 

1. What changes would you make to ensure that the Affodglass sales people achieve their sales targets every month and meet or exceed the overall targets for the year?
2. How would you go about dealing with the logistics problem and what would be your recommendations to improve this situation?
3. What would you do to address the concerns on marketing on the Affodglass brand and what would be your recommendations?

 

Deal with these questions through a strategic perspective and methodology.

Please indicate in your presentation what assumptions you are making.