Loctite Corporation – International Distribution

1128 WordsJun 8, 20085 Pages
Loctite Corporation – International Distribution Background 1. Loctite Corporation was founded in 1956; Headquartered in Hartford, Connecticut. It had grown to become the global leading manufacturer and marketer of adhesives, sealants, and relative products, especially the impressive growth during the 1980s. It had achieved Fortune 500 status in 1990,and in 1991 was ranked 477 in revenue, 190 in profits, 24 in profit as a percentage of sales, and 18 in per share annual growth over the previous decade. By 1992, the company’s worldwide market share in industrial adhesives was estimated to be at 70%-80%. 2. Its growth had been based on the strategy of promotion diversity in end of use markets and geographies for their core business;…show more content…
Loctite is considering some ways to boost sales growth in Hong Kong and other markets; bellows are some options regarding the operation in Hong Kong: 1. Buy 51% or more of the existing Hong Kong distributorship, and grow the business from its existing base 2. Find a new distribution partner, probably an established local business, and form a second joint venture in Hong Kong 3. Buy out 100% of the Hong Kong business and attempt to build a Great China subsidiary Advantages and Disadvantages Advantages Disadvantages 1. >51% equity interests based on existing distributorship •Controlling power in current distribution system•Closer cooperation with Loctite to implement its business strategies•May take advantage of the partner’s strengths handling local relationships(government, etc)•Chance of increasing stake in the distributor in future •Possible reluctance of the local partner (distributor)•The possible isolation of Loctite representative in the JV which may lead to inefficiencies of work 2. New Joint Venture with a new partner distributor •Reduce the bargain power of the original distributor and force it to adjust its performance to compete•Enlarge user base/coverage through the new distributor •May anger the original distributor and lose current business in short run•Longer lead time for the second distributor/JV to be mature enough to handle Loctite business•Competition between the two may have negative impact on Loctite business 3. 100% equity interests

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