A large-scale manufacturing enterprise producing fast-moving consumer goods decides to eliminate merchant wholesalers from its channel of distribution and supply directly to thousands of small-scale retailers scattered across rural regions. Which of the following is the most direct operational consequence of this decision on the manufacturer?
- The manufacturer must absorb the warehousing, credit financing, and risk-bearing functions previously undertaken by the wholesaler.Cevap
- BThe manufacturer automatically reduces its working capital requirements by transferring product holding costs to small retailers.
- CThe total economic cost of distribution is eliminated because commercial auxiliaries are no longer needed in direct sales.
- DThe manufacturer must issue debit notes to rural retailers prior to dispatch to legally transfer risk of loss during transit.
Cevap
The manufacturer must absorb the warehousing, credit financing, and risk-bearing functions previously undertaken by the wholesaler.
Middlemen can be eliminated from a distribution channel, but their underlying functions cannot. When a manufacturer bypasses merchant wholesalers to sell directly to scattered small retailers, the manufacturer must set up its own storage facilities, bear the risk of price fluctuations and damage, and extend credit lines directly to retailers.
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Anahtar Kavram
Channel Elimination and Retaining Wholesale Functions