Alternative Strategies for Swisher

SMC

Goal

The company's goal have always been to make a quality product, to provide exemplary service to their customers, and to take care of the employees.

Alternative Strategies

Private-brand distribution program - Wayne Swisher know that the future of his company may be in question if he allows business to continue in the same direction it has been. He and SMC have been presented with a proposal of a private-brand distribuition through a national retail chain. This chain account for 65 to 75 percent of total industry sales.

The SMC must analyze the costs associated to taking on this new opportunity. They must take minor cosmetic changes to their product, incor some one time start up costs, as well as to add to their existing labor base to meet both current and proposed demand. They are also being asked to sell the product for 5% less than their established cost to wholesale. There are also issues of extended inventories and longer payment terms that will increase the need for SMC to obtain short term financing.

Advantage

* Access to metropolitan area with minimum marketing expenses.

* (The costs of the marketing campaign are incurred by the intermediary).

* (SMC just have 25% of sales in metropolitan areas).

* Distribution in another channel for different consumers with manufacturer's brand.

* (access to a national retail merchandise chain).

* Opportunity to increase the sale.

* Opportunity to use a full manufacturing capacity.

* Opportunity to triple their volume of sales from 4.100 unit to 12.300 unit

* (annual order could be 8.200 unit)

Disadvantage

* Cannibalization of sales, and possible loss of couple dealers in metropolitan areas.

* Reduction in grow profit, since the volume of sales will be bigger for the private-brand, and will be sold at a price 5% less.

* Additional costs as material and other production costs....