Bananas 11/1/12 Palladium Door, Inc. Case Palladium Door, Inc. is a privately owned producer of residential and commercial garage doors. Among its production line, it manufactures insulated and non-insulated steel garage doors, supplies, cables, springs, rollers and side roller tracts. Robert Hawly, director of sales and marketing, came up with a renewed plan of corporate sales goals of $12. million for the upcoming year, and a new distribution strategy as well. Along with Hawly’s new plan, many of the company executives believe the company needed to attain a larger mass of sales volume in order to preserve its position with suppliers and thus provided some alternatives. The first alternative opted for increasing the number of independent dealers in the markets, currently served by the company. The executives believed it would be necessary to add another 100 dealers in order to meet the increase in sales of at least 2. %, according to industry trends. However, Hawly believed that adding another 100 dealers over the next year would be challenging and furthermore would affect the sales force for the serviced nonexclusive deals already in place, which would inevitably have a need to increase that sales force. It seemed that this alternative would provide a potential gain in the long run, but would incur immediate increase in costs.
The second alternative was to develop a franchise program, which was presented the previous year in which 27 non-exclusive dealers would represent a different market and each of these markets would potentially have a high potential and be a contender for the new advertising and promotion market. When taken into consideration, the executives believed that this alternative allowed for the 27 dealers and their markets to be protected or secured, in terms of costs, by the advertising and promotion program.
However as a consequence, they did realize that some of the remaining markets would be affected by the increase in advertising due to high-potential markets, even though most of the remaining markets that were served by exclusive dealers would be unaffected. The third alternative basically required a reduction in the number of dealerships of independent dealers. Upon the analysis of the company’s sales, it seemed that 70% of ompany sales were represented by just 50 of the company’s dealers, which consequently made it obvious that any reduction in number of dealers would inevitably affect sales negatively. It would seem reasonable for me to implement alternative 2 of developing the franchise program. The addition of 27 exclusive dealers would definitely increase sales and out of the 3 alternatives, it provides the least increase in cost and/or the largest increase in sales. So in order for Hawly to meet his goal of $12. 5 million, I would recommend opting for alternative 2, implementing the franchise program.