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Presentation on
CASE
A tale of two wholesalers
Presenters
Sampada karpate
Pradeep sahu
Amit maithil
Harshita jain
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1966 situation
MANUFACTURER WHOLESALER
RETAILER
Wholesalers performed Sorting, Assorting, Breaking Bulk
Retailers depended on Principle wholesaler and onsecond Back-up
for stock out situation
Discount stores were new and growing fast
Banding of retailers in Cooperative Chains
Market environment for full line wholesalers changing
dramatically
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TWO WHOLESALERS:
In 1966 Belknap Hardware and Mfg Co as wholesaler
completed 126 Years Its sales were 57.3 million IN 1983 tripled
its sales to $170 million and remained
regional player In 1985 it filed for bankruptcy and closed on
Feb 4,1986
In 1966 Bergen drug was a ten year old wholesaler of
ethicaldrugs, medicines, toiletries and personal health
products
Sales were 24.3 millionIn 1983 sales were $1.4 billion sixty
times of 1966 and a
national playerIn 1989 became second largest drug wholesaler in
US with
sales of $3.9 billion
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BERGEN BRUNSWIG STRATEGIC DECISIONS
Filling the competitive void
In 1968 , intensive expansion through mergers andacquistions
Acquired New Jersey wholesale drug Co ,a competitor and
other major players like kny-scheerer Co, Crown Surgical
Mfg.
In 1969 Engineered a merger with Brunswig Drug Co thus anational
distribution network was created
Acquisitions in 1970 to broaden product line and
customerbase
Value added services to retail customers viz inventory
management,shelf labeling, pricing, coupon redemption
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BELKNAP HARDWARE STRATEGICDECISIONS
Acquisition of small and regional hardware wholesalers
withinSouth eastern states
Appointing former of a small wholesale firm as president
Trimmed overhead costs by eliminating head office positions
Study by management consulting firm not having knowledge
Installed Managers from outside wholesale industry
Aggressive nationwide expansion program
Changing Merchandising strategy to include more name brands
Employees dissatisfaction and leaving of the firm
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CHALLENGES FOR THEM
Discount stores
Banding of retailers as cooperatives
Promotion ofconservative traditional Management
Constant profit inspite of rising sales
Increase in specialized retailing and mass merchandising
Defection ofcustomers
under valuation and danger of failure
Erosion ofconfidence in Management team
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REASONS FOR FAILURE NOT expanding nationally was not a wise
decision by BELKANAP
Frequent changes in Management results in lowering
performances
Conservative Employees opposed the Expansion Plans
Acquistion and mergers led to increased unmanaged assets
Sales force orientation was ofproblem solvers not of order
takers
Ignored competitive forces and rapidly squeezing profits
Not resorting to specialization- keeping double of the SKUs
tocompetitors
Layoff of 300 employees deterioration of employee Morale
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SUGGESTIONS
Should have maintained the rapid growth when inventory turned
3.6
times a year
Selling decision not to Manager leveraged group led to
downfall
In no growth times acquisitions and expansions to new
territories
must have been avoided
Exhausting trade credits must have been dealt wisely
Implementation of decisions in lesser span of time
Continued with strategy of merchandising its successful brand
Blue grass
Kept track ofcompetitive forces
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THANK YOU
