【正文】 s. It might lose some customers who want the variety of products that USCo has, but it may be able to retain the customer who is buying a limited array of items and is just looking for the best price. All of your suggestions are interesting, and you would want to analyze the advantages and disadvantages of each in more detail before making any remendations to the CEO. View Other Practice Cases Step 1: Actively listen to the c。s, and they seem to be well managed. However, as consumers get used to seeing prices that are consistently seven to eight percent less at USCo, they will realize that shopping at USCo means significant savings over the course of the year. Although some consumers will remain loyal out of habit or because of your high level of service, it is reasonable to expect the discount shopper to shop where prices are lowest. Moreover, over time your brandname advantage will erode as USCo bees more familiar to Canadian consumers. You certainly have to worry about losing significant share to USCo stores in the long term. You should probably do something about it now, before it39。s Canadian operations that would not be incurred by CanadaCo? USCo might incur higher distribution costs than CanadaCo because it will have to ship product from its . warehouses up to Canada. You are partially right. CanadaCo has the advantage in distribution costs, since its work spans less geographic area and it gets more products from Canadian suppliers. However, since CanadaCo continues to get a good deal of product from the ., the actual advantage to CanadaCo is not greatonly about two percent of overall costs. All this suggests that USCo will be able to retain a significant price advantage over CanadaCo39。m not sure about the costs of leasing space. What are you driving at? I was thinking that if there were a higher cost of doing business in Canada, perhaps USCo would have to charge higher prices than it does in the . to cover its costs. That39。s existence. Does CanadaCo carry products similar to USCo39。d like to ask a few questions about USCo39。t plan to expand the Canadian stores beyond their current size. OK. I think I39。t think we need to go into that here. Well, I thought it might be relevant in terms of predicting what it will do with the 300 stores that it bought in Canada. Let39。s. What criteria does USCo use in deciding whether it should physically expand a store it39。s sales are approximately $5 billion, whereas the nearest petitor sells about $1 billion worth of merchandise. I would think that sales of that size give USCo significant clout with suppliers. Does it have a lower cost of goods than the petition? In fact, its cost of goods is approximately 15 percent less than that of the petition. So it probably has lower prices. Right again. Its prices are on average about ten percent lower than those of the petition. So it seems that USCo has been so successful primarily because it has lower prices than its petitors. That39。ve sufficiently covered the Canadian marketlet39。s stores are centrally owned by the pany, while CanadaCo uses a franchise model in which each individual store is owned and managed by a franchisee who has invested in the store and retains part of the profit. In that case, I would guess that the CanadaCo stores are probably better managed, since the individual storeowners have a greater incentive to maximize profit. You are exactly right. It turns out that CanadaCo39。s your job to figure that out! Is CanadaCo better managed than the petition? I don39。s perstore sales higher than the petition39。s average store size is approximately the same as that of the petition. If they39。t any lower than the petition39。s or the result of higher perstore sales? CanadaCo39。s prices significantly lower than the petition39。s 300 stores, or do they serve different geographic areas? The stores are located in similar geographic regions. In fact, you might even see a CanadaCo store on one corner, and the petition on the very next corner. Do CanadaCo and the petition sell a similar product mix? Yes. CanadaCo39。s start, then, with the Canadian discount retail market. What would you like to know? Step 4: Evaluate the case using the frameworkAre CanadaCo39。s look at the . to understand how USCo has achieved its position. At the end, we can merge the two discussions to understand whether USCo39。m not sure I understand what a discount retailer is! A discount retailer sells a large variety of consumer goods at discounted prices, generally carrying everything from housewares and appliances to clothing. Kmart, Woolworth, and WalMart are prime examples in the . Step 3: Set up the frameworkOh, I see. Then I think it makes sense to structure the problem this way: First, let39。s call it CanadaCo. For several years running, CanadaCo has surpassed the secondlargest Canadian retailer (300 stores) in both relative market share and profitability. However, the largest discount retailer in the United States, USCo, has just bought out CanadaCo39。s warehouses, which, in turn, is responsible for stocking the shelves. We currently have no direct knowledge of when our items are out of stock at the individual stores, but there is evidence that this does happen with some frequency. That is a good summary of the major issues. What would you remend our client do? The sales through Big M Mart appear to have a negative impact on the bottom line, as they have lower margins. The client could work with grocery stores to ensure that they are able to pete effectively in the sugar cereal market. Perhaps they should also investigate whether Foods Inc. should leverage its other divisions to help the grocery store channel pete. To defend its current position, the client should move toward a partnership with Big M Mart and dedicate more resources to the relationship. The customer and petitor d