Bolster Electronics: Dealing With Dealer Demands
SITUATION ANALYSIS
Northern Alberta, the oil sands development area surrounding Fort McMurray, is the fastest growing economic area in Canada for several years. Obviously Bolster’s total market share in this area was the highest with one third of the total market share it held national wide. Vickers based in Edmonton, Alberta covered 50% of the local market share and 75% of servicing in that area in spite having a national distributor, National Electronics (National). Also local firms preferred to do business with Vickers than National which has their nearest warehouse in Calgary, Sothern Alberta around 750 Km from Fort McMurray. (Exhibit 1)
Neither Bolster nor National had a video
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Fortunately, last time National’s dissatisfaction disappeared in a long run since they are not competing for the same market. National doesn’t take any leap in past 5 years in doing business in northern Alberta though it was informed about the huge potential of increasing market share. It seems National is not interested in increasing his presence in northern Alberta.
Because of technological advancement and increased competition from three other major players it was difficult for Bolster to maintain an overall gross margin of 40% of factory price. In the current scenario if Bolster gives a distributorship to Vickers, it will further affect the financial stability of the company. Though it has a potential to increasing the market share over 90%, if they got distributor’s discount. It will also change the entire distribution channel (a network through which goods moves from the manufacturer to end-users). The distribution cost of each channel plays a major role in selecting the options (Financial Analysis if possible)
Customer service is a major issue since industrial video equipment are normally used in harsh environments. So the distributors or dealers should work faster if there was a production stoppage because of
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The market in the oil sands area of Fort McMurray is developing fast and it is imperative for Bolster to have an increasing presence there, to tap the market potential. Vickers has a sales experience of 20 years in the Northern Alberta region which is essential for increasing Bolster’s market share in this region. Bolster’s national distributors Albright Industries (Albright) and National Electronic (National) are unlikely to expand in this region in the near future because the former has no presence in western Canada whereas the latter has not shown any keen interest despite repeated requests. The warehouse of National is located in southern Alberta which makes it further difficult to source their products in northern part of the province. As
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