Peak Garage Door, Inc.
Peak Garage Door Inc. has set a sales goal of $12.5 million increase for 2004 which is 36% increase in sales over projected 2003 year-end sales. The company currently has 50 exclusive dealers and 300 non-exclusive dealers. Management has four new proposals to look in. The first proposal is to increase the number dealers in their existing markets. The second recommendation is to develop an exclusive franchise agreement with existing non-exclusive dealers. The third recommendation is to decrease the number of dealers and focus company’s resources on increasing support for the existing dealers. And the last option is to do nothing, i.e. not to change either the distribution strategy or the dealers. According to my analysis of the case it would be good for the company to stick on with the second recommendation because the exclusive dealers bring in 70% of the sales and the objective of the company for 2004 is to increase sales by 36% as against the sales of 2003. And this option is feasible because it speaks of converting the existing non-exclusive dealers into exclusive without adding new dealers. It would be smart move as they would be concentrating on the market that is bringing in their most of the sales. The plan is to develop formal exclusive franchise dealers, and 27 of the nonexclusive dealers had posed such a possibility in the previous year itself. This would make Peak Garage Doors to have 27 new exclusive stores in 27 new markets. Their advertising efforts in these areas would earn more value for $ every spent on advertising and promotion. The first option of bringing in new dealers would involve huge costs and would take them more time and manpower to accomplish it so in terms of feasibility it’s not at all feasible. The third option was to reduce the number of dealerships without granting any formal exclusive franchises, this option though has many merits but has demerits as well. This move would damage the goodwill of the firm....
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