Marketing Channel

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Marketing Channel

Chapter 7

Sonic, a franchise business venture, was undergoing a turbulent crisis that was tremendously threatening its continuation. This crisis was highly attributed to channel conflict that almost resulted to rebellion by the franchisees. The franchisees no longer had faith on the franchise. It was experiencing a conundrum affecting both internal and external operations of the organization. This called for drastic measures, and Sonic hired a new CEO, Cliff Hudson, in an attempt to combat this crisis. As a long serving company executive, Hudson was well informed on the current predicament and acted promptly and ambitiously to rescue Sonic from financial ruin. The eventual success of Sonic franchise was because of Cliff Hudson’s pinpoint decisions and a marvelous strategy to resolve this impending conflict.

Hudson started by sacking majority of the management team replacing them with well-established competent executives poached from other prosperous firms. He focused his new line up on market research investments, brand building and increasing the market budget threefold. The team came up with new products that raised the franchising revenue and amortized fixed costs. They also set on a remodeling campaign aimed at improving the brand identity on an approved template. The company stores were utilized as campaign sites for persuading the franchisees to take over the new identity. Hudson himself set on a communications campaign attempting to win over the franchisees. The new brand identity resulted in an average sales gain of 8 percent on average. Hudson emphasized on co-operative purchasing and efficient marketing. He raised the fees from 7,500 dollars to 30, 000 and increased the royalties by 1 percent on high volume restaurants.

Sonic amended the internal operations through implementation of purchasing coups, development, rolling out and reducing the costs of operation. Using quick, efficient and precise accounting systems, Sonic found that it was possible to reduce expensive menu varieties without denting sales. These modifications reduced franchisee-operating expenditures from 79 percent to 73 percent. Sonic also put into use the suggestions put forward by the franchisees on new product development. The previous management had no room for this. Sonic made pledges to the franchisees of not building any new stores where franchisees existed. It accepted 20-year contracts with room to renew for other 10-years, much to the delight of franchisees. In the long-term, franchisees became profitable with a rise of average unit sales of up to 5 percent per annum. Hudson achieved his goal, co-operation with the franchisees was restored, and standardization was accomplished. Cliff Hudson proved to be an expert in conflict management.

Chapter 8

Upstream and downstream motives are not similar. An upstream motive is a motive that entails a negative action with a justifiable reason. A downstream motive is a motive that entails a positive action with a justifiable reason. The ability to make profound analysis, judgment, and decision-making is a motive to ally. As witnessed, the company was able to identify the overlying problem as with the management and moved to hire new recruits who brought good results. Determination is also a motive to ally as Hudson worked tirelessly to achieve his goals with sheer determination. On the other hand, the inability to act accordingly in case of a crisis serves as a motive not to ally. The management prior to that of Hudson was not competent. It was fully aware of the turmoil surrounding the company but did not make any move to settle the matter.

Chapter 9

A retail outlet is a store that deals in the sale of products in small quantities to the public in general. It acquires those goods from manufacturers at a trade discount. I would consider owning my own retail shop when the manufacturing company grows significantly and is in need of cutting down on costs. Having my own retail shops means I get to acquire the goods from my own company with no charges as compared to purchasing them from other existing companies. I would consider the start up costs required. A good location is essential for the retail shop to flourish. This calls for a site with high visibility and accessibility. The formulation of a business plan is necessary to act as a guideline when starting the business. I would also consider marketing the new retail outlet to the target market.

Reference:

Hitt, Michael A, R D. Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization Cases. Australia: Thomson/South-Western, 2005. Print.