Uspk

In: Business and Management

Submitted By yhel
Words 389
Pages 2
Tom Sloane, marketing manager of USPK, would prefer to make about 90 percent of the company's sales directly to retailers and the remaining 10 percent directly to high-voulume users. He believes, however, that this strategy is not possible because there are so many small retailers. Not only is the sales volume per retailer small, there is also a risk involved in extending them credit. USPK tends to deal directly withe large urban retailers and leaves most of the nonurban retailers to the wholesalers. However, the use of wholesalers bothers Sloane for two reasons: (1) He has to give them larger discounts than he gives retailers that buy directly from the firm, and (2) because of the intense competition (300 pharmaceutical manufacturers in Korea), his wholesalers frequently demand larger discounts as the price for remaining loyal to USPK. This interse competition affects another aspect of USPK's operations-collecting receivables. USPK has found that many wholesalers collect quickly from retailers but delay paying USPK. Instead , they invest in ventures that offer high short-term returns. For example, lending to individuals can bring them interest rates of up to 3 percent a month. The company's receivabels, meanwhile, range from 75 to 130 days. Wholesalers are also the cause of another probelm. Many are understaffed and have to rely on "drug peddlers" for sales. The drug peddlers (there are perhaps 4,000 just in Seoul) make most of their nibet either by cutting the wholesalers' margins (selling at lower than recommended prices) or by bartering USPK's products are sold for less than the pringted price. They exchange USPK's products at a discount for other drugs, which they sell to other retail outlets at a profit. As a result, USPK's products end up on retailers' shelves at prices lower than those that the company and its reputable wholesalers are selling…...

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