Case Study Of Departmental Stores

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Company background
ACME, producer of telecommunication equipment and subcomponents (telephone answering machine and peripherals) was devising new strategies to improve the business and therefore gain a competitive advantage over its rivals.
The telecommunication industry, as other industry as well, has changed over the years and due to changes in customer’s preferences, ACME had established line of consumer goods sold through large chain department stores and mass merchants. The current business state was seeing ACME responding to the increased competition by engaging in promotional campaigns. Specifically, competitors were offering the same quality at lower prices. Besides, it was observed increased imports of products that were leading to
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In order to make them profitable, ACME should adopt a dual approach strategy, by increasing sales and simultaneously decreasing costs. To increase sales, ACME should renegotiate and increase the prices on old agreements which have been agreed since the beginning.
Also, ACME should put in place a differential price strategy, which entails different prices based on different lead times. This leads to a significant reduction in order cycle lead time variance. For instance, orders where Departmental Stores will agree to one-month lead time instead of two weeks, discounts will be offered. This state of facts undoubtedly leads to a win-win strategy for both parties, in other words, Dep. Stores will receive discounts and ACME will reduce pressure on its logistics system and as argued by Chopra & Meindl, (2007) this will lead to revenue maximization.
As discussed above, to reduce costs it would be reasonably advisable having closer partnerships with third-party logistics so as to understand each other’s needs and devise the best logistics

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