What advantages might Central experience in the proposed new venture?

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What advantages might Central experience in the proposed new venture?

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Central Transport, Inc.

Jamie Corman, the new president and CEO of Central Transport, recently met with Susan Weber, the current president and CEO of SAB Distribution. Jaime was promoted from CMO at Central Transport to CEO. Her predecessor had worked closely with the former CEO of SAB Distribution when SAB had transformed its operations about 10 years earlier to respond to changes in its competitive marketplace. Now, Ms. Weber was faced with new challenges and again needed the collaboration of Jaime and Central Transport to meet some new challenges.

Susan has met extensively with the members of her executive team to develop a tentative plan for modifying the strategic direction of SAB and thwart the buyout of the company by a private investment firm.

Susan was convinced that SAB could attract additional retailers in the mid-Atlantic states if it added to and improved its logistics services, namely, warehousing, transportation delivery, and inventory management. However, Susan felt that she needed a major collaborator with experience in these areas. She also felt that it would be better if the collaborator was a company SAB had worked with previously on a successful basis and was willing to take on some new challenges.

Susan had decided to approach Wegman’s Food Markets, Inc. as a customer for these new services. Wegman’s was a very successful company in the Northeast that was privately owned and had expanded carefully into new market areas over the last 15 years. It offered more value services to its customers, including an in-store bakery, a restaurant and deli, more take-out options, and in-store cooking demonstrations.

Wegman’s primary distribution point for their stores was located in a distribution park in Rochester, New York near their corporate headquarters. With their store expansion into the Washington, D.C. area and points further south into Virginia, they are developing a new distribution park in northwestern Pennsylvania to lower their cost and improve their service. Wegman’s was feeling the pressure to be more price competitive with Walmart and other food chains but also wanted to maintain their unique value added in store services for customers.

Susan was also convinced that Wegman’s could be price competitive and to continue to increase their in-store services and expand their market opportunities. She felt that they would listen to her proposal to offer expanded services to help their company be more competitive. Now, she wanted Central to join with SAB in making Wegman’s a proposal.

Jaime needs your help in developing a response to Susan.

CASE QUESTIONS

What advantages might Central experience in the proposed new venture?

Explanation & AnswerSolution by a verified expert

Explanation
Company C is a logistics provider and Company S is a distribution company. Company S faces certain challenges in their business and is thinking about collaborating with Company C to face their challenges effectively and serve a common customer in the form of Company W.

The advantages enjoyed by Company C in the new venture would be as follows:

Company C's revenue may increase due to the collaboration between Company S and Company W. It will be responsible for providing logistics support to operations of Company S. This support will involve receiving huge amounts in return for their services.
Since Company W is planning to be as price-competitive as giant retailer Company W, it can outsource its logistics activities to third parties to cut down on operating costs. Company C could use this opportunity to offer its services to Company W and increase its list of clients.
Sample Response
The advantages enjoyed by Company C in the new venture would be as follows:

Company C's revenue may increase in the near future.
The operating costs of Company C may be reduced, providing them with more opportunities to grow.

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