Lada, Inc. produces office supplies and used to sell them to wholesalers. The wh
ID: 1201669 • Letter: L
Question
Lada, Inc. produces office supplies and used to sell them to wholesalers. The wholesalers would then sell the supplies to retailers at a price of about 40 percent more than what they paid Lada for the supplies. This year, Lada created a website so that it could receive orders directly from the retail stores that sell office supplies. It now ships the office supplies directly to the retail stores. It is able to offer the stores a lower price for its supplies than what these stores were paying when a wholesaler was involved. Consequently, the demand for its supplies has increased substantially. By eliminating the intermediary. Lada lias been able to generate more sales and improve its performance. 1. Disadvantage of Eliminating Wholesalers. What is the disadvantage to Lada. Inc. of dealing directly with retailers? 2. Advantage of Eliminating Wholesalers. What is the advantage to Lada of dealing directly with retailers? 3. Market Coverage. Why might Lada be able to reach more retail stores across the United States with its new distribution system?Explanation / Answer
1. The disadvantages of eliminating the middlemen and trading directly with the retalors have following disadvantages.
a. The middlemen knows the taste and prefernces of the consumer in a better way. He keeps updating the company about the changing preferences of the consumer.
b. The absence of wholesalers create a instability in prices.
c. Without the wholesalers the link between the company and retailors may not be very smooth.
2. Advantages of eliminating the wholesalers are the following.
a. Increased profits due to reduced costs.
b. Improved trade relations with retailors.
3. Due to the online selling, the accessibility to the producers highly improves. Also, middlemen give preferential treatment to some retailors. With the absence of middlemen and easy accesibility to the producers, the retailors cn noe easily place orders at a reduced cost. Therefore, the sales have been improved.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.