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One of them is that of not interfering. The remaining three are succinctly presented below:
Increase the number of vendors in the already existent markets Recommended Alternative
Pro
The 350 dealers currently selling Peak Garage doors are likely unable to support the growth goal established for 2004 even when considering the 2.4% increase foreseen for the overall industry
The strategy stands increased chances of retrieving fruitful results on the long-term
Con
They would be independent dealers and their chances of success would be reduced even more so when 70% of corporate revenues are generated by the 50 exclusive dealers
High implementation costs of an estimated $80,000 per annum
Franchising Contracts
Pro
Reduced risks as these would be shared with the dealers
Increased interest from vendors and better motivation to sell the Peak Garage Door products
Con
The 27 dealers in favor of franchising requested that the company not collaborate with other vendors in the region
Expansion opportunities in the regions operated by franchise partners would be limited to inexistent
Reduction in existent dealers
Pro
70% of all sales are generated by the exclusive dealers
Costs would be reduced
Con diminished distribution channel would be incapable to support the growth projections for 2004
At a first glance, it would seem that the second alternative is the most appropriate one. By signing franchising contracts with 27 vendors, Peak Garage Door Inc. would benefit from the intensified efforts of those vendors, materialized in increased sales. Foremost, aside from some contracts that would have to be annulled in the respective areas, the remaining deals would not be negatively affected.
6. Analysis
However at a first glance the management could decide in favor of franchising operations, the final decision must be based on further analysis. The most relevant quantitative method of financial analysis in this instance would be the Monte Carlo Simulation. This technique considers various possible outcomes to an implemented solution, based on several changing variables.
7. Conclusions
Peak Garage Door Inc. is a regional manufacturer of garage doors. They sell their products through 350 vendors in 150 markets in 11 states. Their current strategy revolves around increasing the sales volume and revenues by 36% for the following year. In achieving their desiderate, they could sign franchising contracts with part of their vendors. The final decision however must be based on further analysis.
Reference:
Kering, R.A., 2004, Peak Garage Door, Inc.
Reference:
Kering, R.A., 2004, Peak Garage Door, Inc.
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