XIBMS – APEX ELECTRICAL COMPANY LTD.

XIBMS – APEX ELECTRICAL COMPANY LTD.

Mr. Nathan, Sales Manager of Apex Electrical Co. Ltd. had just received a proposal from his Regional Manager at Bangalore for opening a sub-office in Madras and was considering what would be the best decision in the company\’s short run as well as long run interest.

The company was in the business of manufacturing and marketing electric motors of a wide range of horse power that could be used as a prime mover in numerous applications. The company\’s factory and head office were situated in Bombay and it had its branch offices at New Delhi, Calcutta and Bangalore, each headed by a Regional Manager.

 

The Regional Office at Bangalore was responsible for sales in Kar­nataka, Tamil Nadu and Kerala. The company also maintained a godown at Bangalore which was used as the stocking centre for feeding sales in the complete region. The company\’s distribution network had grown over several years and as such there was no one rule by which the arrangements could be explained. In Karnataka, due to the proximity of the Regional Headquarters, the distribution, network was closely controlled by the Regional Office. Company had several dealers covering the State and they all purchased goods directly from the Regional Office. All the dealers got a fixed percentage of discounts. The ultimate prices to the consumers were fixed by the company. Each dealer covered a specific area which was generally one to several districts and the company discouraged one dealer interfering in other\’s territory. However, in main cities of Bangalore and Mysore, there was more than one dealer who collectively covered the sales in the city. The company salesmen regularly contacted the dealers and the office maintained good marketing information.

Questions:

1. What decision would you take if you were in place of Mr. Nathan?
2. Do you feel the proposal of a new sub-office is economically justified against the stated policy of the company? If yes, why? If no, then how could it be made justifiable?

XIBMS – APEX ELECTRICAL COMPANY LTD.

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