MGMT650B Consulting Skills for Managers Alan Law: 08933655 Angelika Mehta: 09993004

1. MGMT650B Consulting Skills for Managers Alan Law: 08933655 Angelika Mehta: 09993004 Ivy Wong: 08936487 Joanne Wong: 08936712 Rayman Wong: 08930225 Dummy Pack PROPOSAL FOR

2. Pyramid Situation • Maxclean has an established market share of 60% of the cleanroom market in China. Their revenue last year was US$240M worldwide Complication • The US operation’s direct sales strategy is bringing in zero profit as oppose to the forecasted $2.4M net profit. The revenue was 55% below the forecasted $20M US.

3. Pyramid Question • How can we increase US revenue from $9M to $20M and increase profit from zero to $2.4M net profit in the next 18 months? Answers • The Maxclean sales force should shift their focus to spend 70% of their time building relationships with and selling through distributors while spending the remaining time on existing clients

4. BECAUSE….. Rationale Corporate end users prefer to purchase through distributors Distributors want to sell Maxclean’s product since it is beneficial for them to do so Going through distributors provides better economics for Maxclean Going through distributors will allow Maxclean to sell high volumes since distributors order more product than direct customers Wider choice of products therefore minimize number of suppliers Better and faster delivery service as the distributors have operations across US Distributors always have QC manager to examine product quality before shipping to the users Distributors will receive a higher profit margin compare to other brands Distributors see benefits in carrying more than one brand of cleanroom product therefore willing to accept new partnership Going through distributors will save Maxclean warehousing & transportation costs, & therefore increase gross profit Going through distributors allows Maxclean to extend its product reach, since distributors can sell to larger sales territory Maxclean offers a better quality product at a lower price Distributors are looking for new suppliers for better pricing and terms Distributors can broaden their product portfolio Distributors can diversify vendor capacity risk if there are products overlapping each other

5. US revenue and profits are under performed in both FY 2007 and 2008 Real Data Source: Maxclean, 2008

6. 77% of cleanroom products are sold through distributors • XXX distributors • Made up of over XXX end users composing: • Universities/college • Government • Reseller • Laboratories • Industrial • BioPharma • Science education Total market size: US$ 5.35 bil Real and Fake Data Source: Frost & Sullivan - CLEANROOM MARKET USA 2007

7. Distributors deliver THREE times more sales revenue Current situation • Direct sales (50 customers) • Maxclean 2008 sales • =US$9.3 mil (0.01%) • 1% of potential market size • = US$ 12.3 mil • New channel strategy • Sell via distributors • 1% of potential market size • = US$ 41.2 mil Real Data Source: 1/ Frost & Sullivan - CLEANROOM MARKET USA 2007, 2/ Maxclean sales data 2008

8. End users prefer distributors because… Distributor Real Data Source: Company reports of distributors

9. Maxclean benefits from dealing with distributors Save sales & marketing effort Save sales & marketing effort • Increase of • market share • Save logistics • arrangement • Economies of • Scale Real Data Source: Surveys and interviews with distributors

10. More cost effective to use distributors to get larger geographic reach Percentage of Distributors that are located in each state Real Data source: Frost & Sullivan - CLEANROOM MARKET USA 2007

11. More cost effective to use distributors to lower direct costs therefore increase gross profit 43% Real Data source: Maxclean financial statement

12. Re-organize the sales force to focus on distribution instead of direct sales • Lack of distribution experience in current sales force • Hire a new sales director with solid experience in distributors channel to lead the existing team • 70% of sales force time will be spent to build relationships with distributors • 30% of time to maintain the revenue from current direct sales

13. Focus on distributors by allocating 70% of time Real Data (based on 250 working days/year/salesperson) source: Maxclean, 2009

14. Distributors allow for higher sales volumes Fake Data source: XXXX

15. Corporate end-users not aware of Maxclean’s competitive advantage Quote from Mr. YYY: “I have never heard of the company Maxclean and I am not aware of what products they sell” Quote from Ms ZZZ “I am not aware that Maxclean offers the same quality products as Texwipe but at a lower cost” Fake Data source: Quote from interview with potential end-user

16. X% of distributors and Y% of corporate users are looking for NEW supplier Distributors Corporate users Fake Data source: Surveys on corporate user & distributor

17. The top 7 attributes for selection of new supplier Percentage of Respondents Fake Data source: Surveys on corporate user & distributor

18. Maxclean fulfills the top three attributes Fake Data

19. Maxclean has a superior quality product than its competitors • Insert quality report here with details Maxclean’s superior data

20. Maxclean has better payment terms for their distributors than competitors • Insert comparison payment scheme here

21. Corporate end-users & distributors are not satisfied with their current suppliers “We do not feel that our suppliers can meet our current production demands” Quote from Mrs XXX (YY of end user company) Quote from Mr. XXX (YY of XX distributor) Quote from Mr. XXX (YY of XX distributor) “We are not satisfied with the range of products offered by our current suppliers” “We feel like we should be able to get a better price for the cleanroom products that we purchase” Fake Data source: Quote from interview with corporate user & distributor

22. Value proposition for Maxclean Fake Data

23. Appendix 1 – Interview schedule

24. Appendix 2 – Action plan

25. Action plan - continue

26. Action plan - continue

27. Appendix 3 - US market share in different states Texas