Product details

This is the second of a three-case series (502-039-1 to 502-041-1). On 1 April 1997 BP Fujian Ltd, a joint venture between British Petroleum and the Fuzhou Municipal Coal Gas Company, opened for business in Fuzhou (the capital of Fujian province) with its LPG filling and distribution operation. Demand is brisk and dealers are signed up to distribute bottled gas throughout Fuzhou and its surrounding counties. But soon the dealers start filling BP bottles not with BP gas but with cheaper, lower quality gas from alternative sources. Losses mount and the company must decide to either close down or radically redesign its business model. The case illustrates a variety of concepts and issues, including: (1) the strategic implications of defining a product by the needs which it satisfies; (2) the use of market segmentation as a strategic weapon; (3) the application of Michael Porter''s five forces model; and (4) the design and management of a distribution network.