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Rossiter Tool Company PLC Case Solution

Solution Id Length Case Author Case Publisher
1173 877 Words (3 Pages) Mark Vandenbosch, Bruce Pearson, David Leighton Ivey Publishing : 8A97A06
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Numerous factors need to be considered before embarking on the decision of granting Stockton the territorial distribution rights. Firstly, the margin of the company would decrease as the result of a reduction of £3 in the retail price. Secondly, the participation of Rossiter in the Milbridge region was below normal. Consequently, even after its presence in the region for four years, Rossiter can boost its sales in that area. Thirdly, in the small town of Milbridge, the presence of a ‘local’ distributor would certainly enhance the confidence (in terms of prompt supply) of the local industrial firms. Fourthly, Stockton had experienced salesforce at his disposal which had a better understanding of the local manufacturing firms than the two national-level distributors. All these points approve the fact that in spite of the opposing disadvantages of this decision, Stockton should be given the territorial distributorship for the Milbridge area. This decision is also based on the reality that the current distributors will not perform better in the prescribed area because of the long-distance of the warehouses from Milbridge. Rossiter had historically believed in the policy of ‘keeping everyone on their toes’ and this decision of granting Stockton the distributorship will ascertain that the supply chain environment of the company is competitive and the end-user relishes prompt service from ‘authorized’ local distributors. Meanwhile, this is also recommended that Stockton should only be given the distribution rights of the prescribed ‘territory’ in order to reduce the inter distributor unease and the cannibalization of revenues.

Following questions are answered in this case study solution

  1. Paul Stockton has asked Smythe to appoint him as a territorial distributor. Should his request be granted? Give reasons.

  2. What are the consequences of?

  • Granting his request?

  • Refusing his request?

  1. What is the major problem facing the company? Illustrate your answer with two examples.

  2. Suggest possible solutions to the problems of Rossiter Tool Company Limited.

Case Analysis for Rossiter Tool Company PLC

2. What are the consequences of?

  • Granting his request?
  • Refusing his request?

In spite of the fact that it is recommended for Rossiter to grant Stockton the distributorship, it will not be wrong to assume that the decision also possesses some major disadvantages. However, the advantages of the proposed decision outweigh its shortcomings. The biggest advantage of having an experienced local distributor is that the profits, revenues and the market share of Rossiter can possibly experience a boost. Additionally, in a situation where the industrial firms naturally hesitate to order from a national distributor (which are situated at about 240 km from the town), the presence of a local ‘territorial’ distributor will surely upshoot the market share. Moreover, in the current scenario, where Rossiter had 1/3rd normal participation, any reliance on the existing national level distributors for increasing the company revenues in a given area is futile. Stockton and his sales crew have the potential to raise the revenues in the situation where they are guaranteed an authorized low purchase price.

On the contrary, by refusing the request, Rossiter will lose the chance of trying something new and innovative in their distribution strategy. In that case, the market share of Rossiter will remain the same and Stockton might also lose some confidence in its ability to cater to the needs of Rossiter. Additionally, by refusing this request, the company will also set a hard example of not catering to its ‘productive dealers’ in a profitable manner which might also influence its relationships with other dealers.

3. What is the major problem facing the company? Illustrate your answer with two examples.

In the current scenario, the biggest problem facing Rossiter is its supply chain structure. On one hand, Rossiter is aiming to improve the contribution margins and, on the other hand, it is not creating the possible ‘environment’ where the national level distributors can root themselves in the local environment. The instance of Milbridge is a clear example where the two national distributors have not formulated a clear market penetration strategy. Their warehouses are situated 240 km from an industrial town and any prompt delivery of Rossiter’s equipment from a distributor is impossible. Secondly, even though the overlapping distribution channels will yield a competitive landscape, they tend to deface the strategy of Rossiter. The presence of two authorized distributors in one geographical area is not good for the company in the sense that the cannibalization of sales may take place.

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