Sodick Group Lingnan University EMBA 655 Business to Business Marketing Group Project Moon Ho Ivan Ng Denny Yuen 13 Dec 2008

Presentation Focus Company Background SWOT Analysis B2B Marketing Strategy Pricing Channel Strategy Problem Identification & Current Situation Financial Analysis, Sales and Profit forecasts Recognition and handling of risks Recommendation

Sodick Video http://uk.youtube.com/watch?v=hHLYqFGUsFI

Company Background Sodick established in Japan for over 30 years. One of the listing companies in Japan. A worldwide company. Manufacturing : -Electrical Discharge Machine (EDM) -Wire-cut electrical discharge machine -High speed milling center -Plastic injection molding machine -Linear pressing center, linear feeder and etc

Company Background One of the world leaders in Electrical Discharge Machine (EDM). By obtaining the latest technologies in the world of manufacturing, Sodick is able to offer optimal solutions for customers' manufacturing needs.

Total Manufacturing Solution Total Manufacturing Solution concept. Assists all manufacturing processes ranging from CAD/CAM product design to the machining of dies, molds and parts by electrical discharge machines. Targeting 5 largest markets: Japan, China, Asia, the United States and Europe.

Core Technology Electrical Discharge Power Unit – the heart of Sodick Products. CNC unit computerized numberial control unit is the brain of Sodick products. Ceramies products – are the brain of Sodick products. Linear motors – the muscles of Sodick products. Motion controllers – the nerves of Sodick product.

SWOT Analysis - Strength Over 30 years in manufacturing and development of EDM. Total manufacturing solution concept. Provide 10 years’ warranty for machines. Provide worldwide repair and maintenance services. Continue to tackle research and development. Its machine achieves the highest level of accuracy, speed and versatility. Quality assurance system – maintains the highest possible performance and quality in its products (ISO9000). The prices of its machines generally are cheaper than other competitors.

SWOT Analysis - Weakness Domestic demand remains weak as capital investment appeared to be slowing down in the dies and molds industry. When Comparing with other competitors, late development for Total Manufacturing Solution (some competitors have over 100 years history in TMS).

SWOT Analysis - Opportunities New product development e.g. Food processing machine, hybrid wire machine. Development of new markets North and South America’s demand came mainly from medical equipment and aerospace industry, and energy development-related industries.

SWOT Analysis - Threats Competitors: Mitsubishi, Aqie Charmilles, Makino, Fanuc Customers prefer European-design machines. Other large corporations (the competitors) have heavy investment in market development. Only has advantage in Asia, Japan, and China market. Difficult to change customers’ preference and the long established practice. Difficult to gain market share e.g. US Market.

B2B Marketing Strategy Performs relevant researches and try to publish articles in Professional Journals. Free machines to local Japan Universities. Free training to the to-be-practitioners, university engineering students, to develop Brand Recognition. Advertises at Professional Magazines and Industrial Newsletters. Give lectures in Universities and arrange seminars in Trade Show and Exhibition.

Pricing Market structure: Oligopoly Only 4 major players in Sodick’s molding machine manufacturing industry. Relatively lower price than the major competitor, Mitsubishi, to maintain competitiveness. But not likely to compete on the basis of price because oligopolies are especially susceptible to price wars.

Channel Strategy Dual-channel Strategy: Dealers Own Sales Force and Services Team in major cities Dealers’ performance is not satisfactory. Dealers carry many brands and have diversified businesses. Therefore, Sodick started to establish its sales and services team in 1997 to reduce its reliance to the existing dealers.

Problem Identification and the Current Situation Japan’s dies and mold industry is getting weak. Main markets shifted from Japan to China and European. To meet customers’ needs through research and development of new and advanced products, and enhancement of their production bases. e.g. setup EDM machining base in Xiamen City To develop hitherto untapped markets e.g. food processing machinery.

Financial Analysis -Sales Turnover Compare with previous year - sales increased by 5.7% (Jpy75,647million)(USD77million) Sales increased in China and European markets

The Reason for the 93.5% Net Profit Reduction Net profit reduced by 93.5% (JPY244million) (USD2.5milion) Increase in production cost - crude oil and other raw materials. Increase in R&D cost – to improve the product quality (LP Electric Power), change of the EDM with new series. To reinforce the production bases. Setup new factory at Xiamen City. Increase the production in Fukui Plant in Japan (increase in production cost) Established R&D center in Kaga City in Japan. Setup a new operation for develop of the Food processing machinery.

Recognition and Risk Handling Effects of the business cycle Revenue tends to be strongly affected by business performance and capital investment trends of its customers. Risk affecting overseas production Over 90% machines are Manufactured in Thailand and China. Less than 10% in Japan factory.

Recommendation replicate the free-to-university strategy in new markets like China and EU as a long term brand building strategy. Further upscale the services level to differentiate the company (the total manufacturing solution) Enhance the channel effectiveness. Consider to lower the percentage of production in countries outside Japan to maintain its quality. Maintain the competitiveness in R&D of the most advanced products.

Comments and Questions?

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