Case Analysis on San Fabian Supply Company

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Case Analysis on San Fabian Supply Company (Philippines)

The San Fabian Supply Company is a building materials distributor which supplies the materials to the Philippine construction industry mainly on an exclusive-only basis. Now one of its suppliers MacDowell Corporation notified San Fabian Supply Company that the exclusive-distributor agreement would be terminated in four months. So the company has to make a decision whether to handle MacDowell Corporation’s products on a nonexclusive basis or to drop the line completely. As discussed in our group, we think San Fabian Supply Company and MacDowell Corporation should find a way to accomplish win-win, and selective distribution may be a good way.

The San
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The San Fabian Supply Company was an aggressive building supply outfit, but did not have a roofing line. So the MacDowell Corporation’s product line was needed by San Fabian Supply Company. At the same time, MacDowell did not know the market and lacked relationship in construction industry in the Philippines. As the exclusive distributor of MacDowell Corporation’s products, San Fabian Supply Company was stimulated to make great efforts to push the sales. In 1986, the total sales volume of MacDowell Products was 44,051,000 pesos, which accounted for 13.74% of the total sales of San Fabian Supply Company.

However, MacDowell Corporation believes that changing the relationship with San Fabian Supply Company will make it benefit more. On one hand, MacDowell has been marketing its products through an exclusive distributor only in the Philippines and the parent company wants to market the products same as in other countries. On the other hand, the demand for construction materials has decreased since the expansion of its plant in the Philippines before. MacDowell Philippines’ plant operating rate was very low, at only about 45% capacity, and the overcapacity plagued the company a lot. To get rid of this situation, MacDowell Philippines wants to increase sales and its new president believes that having more dealers can lead to more sales. So MacDowell wants to change the relationship with San Fabian Company in the

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