The distributorship program: Understanding and evaluating the indirect distribution method of a multinational company

Date of Publication

2005

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Commerce Major in Business Management with Applied Corporate Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Business Management

Abstract/Summary

For most companies today, distribution has become an integral factor in revenue generation and income. Therefore, efficient distribution is necessary for every player in the industry. This study evaluates a relatively new distribution program adapted by Centinel, Inc., a multinational company engaged in the consumer goods industry in the Philippines. Centinel, Inc. has so long been implementing the more common type of distribution – direct distribution. However, there are external factors that affected the needed change in the current distribution system of Centinel, Inc. One of which is the political and economic factor, whereby the Philippines was experiencing government instability and economic depression. The said factor affected the current distribution system of Centinel, Inc. increasing its production costs and lowering the company’s profit. In addition to this, the legal environment with the passing of the Retail Trade Liberalization Act also affected Centinel, Inc.’s distribution program. The industry distribution practice, which proved to be inclining towards the indirect way of distribution, caused Centinel, Inc. to explore its opportunities and developed their distributorship program. Lastly, the internal environment of Centinel, Inc., reflected by the peso devaluation and higher costs of living, effected a decision to organize a new distribution system because its costs of production increased, both in the importation of raw materials and the labor costs for production. After pointing out external factors that effected the creation of a new distribution system, this study documented the entire process of the relatively new distributorship program through several interviews from representatives of Centinel, Inc. itself. Included in these interviewees were the head of the distributorship program, distributor specialists, area sales managers, and direct account executives. The entire process was sub-divided into three major stages namely pre-operational (selection process and distributor set-up), operational (stock booking, delivery, payment collection, evaluation), and post-operational (contract renewal or termination, equipment maintenance or pull-out) respectively. In order to evaluate Centinel, Inc.’s relatively new distributorship program this study implored a SWOT Analysis both in the distributorship program itself and the different process elements of each stage. The results of such analysis in the view of the entire distributorship program was confirmed through a company representative in the form if its distributor specialist. Each factor in the SWOT Analysis was either held true or not by the said 2 specialist. For the SWOT Analysis in the different process elements, three important factors such as people, information, and technology, were considered. In addition, this study compared and contrasts the two distribution methods of Centinel, Inc. – the relatively new distributorship program and its established direct accounts distribution program, in terms of their process elements. Further more, the two distribution methods were also compared with regards Centinel, Inc.’s key performance indicators namely reach, sales volume, and net profit margin. The company’s growth in assets upon the implementation of the distributorship program was limitedly discussed. The comparison of which, were based in different data sheets containing sales figures, provided for by the representatives of Centinel, Inc. The results gathered in this study were consistent with the hypothesis established earlier, that the relatively new distributorship program has a significant advantage over the more established direct accounts program in terms of the company’s key performance indicators. On a further note, this study proves that Centinel, Inc.’s distribution program is efficiently handled, although other measures can still be implemented for the betterment of the program. Going further, the study points out different measures as to how Centinel, Inc. can better improve its distributorship program. One of which is by improving its current inventory management and evaluation system (IMES), by linking such to the company’s main office for the distributor group to have immediate access to critical data that they need. This procedure will not only prevent delays and improve data collection, it will also help Centinel, Inc. serve it distributors better. Other than this, measures such as additional motivational factors, being pro-active, and extending the company’s services to reach its tertiary accounts were also cited.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU13337; CDTU013337

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

1 computer disc ; 4 3/4 in.

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