Sab Distribution Case
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SAB Distribution, which was established in 1949 in Harrisburg, Pennsylvania, purchased products from large manufacturers and earned profits from selling them to smaller distributors, wholesalers, and retailers. However, an increased competitive market environment has put SAB into challenging situations. Although old CEO – Sue Purdum improved warehouse efficiency, order fulfillment, and carrier collaboration to successfully help SAB adjust to the new circumstance, the current CEO – Susan Weber believed SAB need more than that. With the growing in-store sales and expanding its market opportunities, Wegmans Food Market is a potential customer for SABs new services. Moreover, Susan wants Central Transport to join SAB for making Wegmans a proposal.
The major external forces that the competitive market place for SAB has changed in the last five to seven years are globalization, technology, the empowered consumer, and government policy and regulation, a typical example is the thread from large retailers like Walmart. Walmart could buy direct from the manufacturer and sell cheaper to customers due to cost savings from no middleman needs. Globalization with an increase in imported products for the more diverse population of the U.S. and the ongoing search for lower-priced alternatives poses a challenge to SABs future existence. To adjust to this competitive market, Susan Weber initially continued to improve warehouse efficiency, make order fulfillment quicker with fewer errors, and arrange carrier collaboration with lower rates and better services, besides that, she still believed SAB needs to transform the company by attracting larger retailers as customers like Wegmans Food Markets, Inc. and having the collaboration of Central Transport.
The advantages that Central might experience in the proposed new venture are the synergies lead to better mutual outcomes by attracting different customers; the opportunities to expand the markets and build tremendous performance; the sharing information used for marketing management and business decisions; the combination and assistance in business perspectives, organization structures, and future visions in industry, etc.
However, the issues that SAB and Central would face in the proposed new approach might be the conflict of interest, redundant management positions, different views in business development and decision makings, different goals, etc.