Confused about Turkish Market Entry Strategy - Distribution bucket: OEM

Question

Hi, I am confused as to how the idea of OEM works in this case. Is the solution suggesting that (1) the client should partner with an existing, local OEM? Or is it suggesting that (2) the client should set up its own OEM company in Turkey? Both seem like plausible ideas to explore:

Assuming that the client is a large premium lubricant manufacturer, it could make sense to set up its own factories in Turkey if the long term growth of the premium lubricants in the European market looks promising.

On the other hand, it could make sense to first partner with a local OEM to minimize the cost of shipping or potentially setting up its own factory.

Answer 1

Hi Andrew,

I can understand your confusion, but I recommend you take a step back and re-read this case!

OEM is only ever mentioned in this case under Brand and Channels of distribution.

Remember, what's important to understand in any case is how the business/industry works. So, remember that lubricants are used on machine parts. OEMs are the manufacturers of these parts. When they products these parts, they finish the product by lathering it in lubricant. As such, they are a possible channel of distribution because we could sell the product to them. Additionally, they are useful for branding because, the logic would go, if the guys who know machine parts best use this lubricant, it must be good!

Just to re-iterate: No part of this case has to do with partnering with and OEM or setting up an OEM. OEM is a seperate supply chain/product to lubricants.