Issues for Discussion
1. James Johnson, vice president of marketing for a major manufacturer of fiberglass
home insulation aimed at the DIY market, was elated after reading an
article in the Wall Street Journal about the recent steep rise in energy prices.
“This will be great for us—our sales could double next season,” he exclaimed
to his general sales manager, Bill Allan, who had just walked into the office.
“Tell your district sales managers to instruct their field salespeople to push home
center retailers to double their inventory and floor space for home insulation,”
continued Jackson. Bill Allan dutifully responded, “I’ll do it right away, but the
last thing the home centers are going to want is to stock up heavily on inventory
when this energy price spiral might cause a recession.”
Comment on this situation in terms of the different perspectives of the manufacturer
and the retailers about this environmental development.
2. Home Depot, Toys “R” Us, Staples, CompUSA, Circuit City, and many other giant
retailers (often referred to as “category killers” or “big box” retailers because
of their dominance in particular merchandise categories and the sheer physical
size of the stores) are fierce competitors and are frequently accused of driving
small retailers out of business. Indeed, the very reason the small retailers go
out of business is that they “can’t compete” with these giants, say observers
who have watched this competitive struggle take place over the past decade.
The verdict in most cases has been “no contest” between the retail giants and