Kimura K K research and analysis

Kimura K.K. Case Study

The case study presents the situation of Pramtex Ltd and its relationship of Kimura K.K., a Japanese customer. The main issue of the case study relies on the fact that Pramtex was supposed to sell to Kimura K.K. three additional Spartacus machines. However, Kimura K.K. changed their mind and decided they will no longer respect their agreement with Pramtex and they will not buy the extra machines anymore. The problem is even more serious, since it is emerging after Pramtex had lost another customer in the same week. Even more, Pramtex is completely unaware of the reason Kimura K.K. had decided not to buy the company's products anymore. However the main question is what are the reasons that led to this decision. In other words, Pramtex must analyze why Kimura K.K. will not buy the Spartacus machines from Pramtex, especially since Kimura K.K. did not motivate their decision. When analyzing the situation and trying to find out the reasons that led to this decision, the chronology of these events is very important. Before this situation, Pramtex and Kimura K.K. had a very strong business relationship. Pramtex is one of the best optical disks manufacturing equipment producers, while Kimura K.K. is one of the most important customers for Pramtex. Kimura K.K. has always been a fan of Pramtex products. But out of the sudden, Kimura K.K. decides to reject the offer from Pramtex, giving no reasons for this decision. Sony was the other important customer that Pramtex lost in favor of local competitors. At first, Kimura K.K. declared that "Pramtex had the best and most technologically advanced equipment in the market" (Turpin, 2001). Even more, Pramtex lowered the machines' prices by 10%, hoping that Kimura K.K. would become loyal to Pramtex. In such conditions, Pramtex would gain other important customers also that would follow the example of Kimura K.K. In other words, Kimura K.K. agreed to the quality of Pramtex products and the price was significantly lower. Still, Kimura K.K. decided that the quality of Pramtex products and the 10% discount were not worth it. As developed in the case study, the most important elements that affect the buying decision for Kimura K.K. are: . Technological quality of the product . Price of the product . Having the products delivered on time.

Each of these elements has its degree of importance in making the buying decision. Regarding quality, Pramtex products are considered by Kimura K.K. to be the best in the market. However, there is a downside accompanying this quality, and that consists in high prices. Pramtex products' prices are considered to be too high for Kimura K.K. Two competitors of Pramtex have already presented their offers to Kimura K.K. Competition is very tough for the Kimura K.K. account. One of the competitors offers good quality products at much lower prices. The other competitor offers good quality products, lower prices, the company has supported Kimura K.K. since the company began its activity, and it also presents the advantage of being near Kimura K.K., which would significantly diminish transportation costs, and the maintenance process could be performed faster. Another extremely important factor that influenced the decision of buying these machines consists in receiving the products on time. Kimura K.K. had recently started a very important collaboration with Disney Studios. Therefore, Kimura K.K. cannot afford to lose time with these machines, since any delay could severely affect the collaboration between the company and the studios. Of course, all of the competitors that presented their proposals to Kimura K.K. have promised to deliver the machines in due time. Given the conditions described above, Pramtex was forced to do something in order to maintain Kimura K.K.'s interest in the company's machines. As a consequence, Pramtex decided to lower the prices by 10%. But Kimura K.K. was not satisfied by this discount. The company was expecting a significantly bigger discount. The machines' prices practiced by Pramtex are very high, which means that a 10% discount does not make much of a difference for Kimura K.K. It is obvious that Kimura K.K. would rather buy cheaper products that are not as good as Pramtex products are. Given the circumstances, Pramtex cannot win this account with these prices. Pramtex was the favorite supplier for Kimura K.K. and the company tried to allow Pramtex to do whatever they can to please Kimura K.K. It seems that Kimura K.K. have practically made their mind about this matter. The only thing that Pramtex can do in order to determine Kimura K.K. to buy the Spartacus machines is to significantly lower the prices. Another issue that must be taken into consideration by Pramtex when developing business relationships in the future is represented by the fact that Pramtex was not able to create customer loyalty. With the advantages that Pramtex presents and the relationship that the company has with Kimura K.K., it is unacceptable that Pramtex did not manage to become the first choice for Kimura K.K. It seems that Pramtex was unable to develop a suitable product strategy that would work best for Kimura K.K. Any product strategy is consisted of engineering issues, production and distribution activities (Crow, 2001). Also, through the product strategy, the company must evaluate the expectations that customers might have regarding the purchased products. The company must also anticipate and analyze any possible actions that its competitors might take in order to counteract them and not to lose ground in the favor of other competitors (Kivisaari, 2004). From these points of view, the product strategy that Pramtex applied in the case of Spartacus machines and Kimura K.K. was incomplete and was not suitable in this case. Regarding engineering issues, Pramtex behaved perfectly, providing the highest quality machines. The distribution process was not so perfectly developed, since Pramtex omitted to send Kimura K.K. an important spare part with the machines. This situation proves that Pramtex may not have taken seriously enough the Kimura K.K. situation. This might have been the decisive factor that led to Kimura K.K.'s choice of favoring a local competitor of Pramtex. Pramtex was also unable of anticipating competitors' moves. Even more, Pramtex was probably not interested at all in analyzing competitors' behavior. In such a case, the company would have been aware that its competitors will practice significantly lower prices compared to Pramtex. In order to counteract such difficulties, it is recommended that Pramtex applies the IBM business model (Business Innovation, 2008). This way, Pramtex will be able to anticipate competitors' actions.