Ranger Supply Company is a large manufacturer and distributor of office supplies. It is based in New York but sends supplies to firms throughout the United States. It markets its supplies through periodic mass mailings of catalogues to those firms. Its clients can make orders over the phone, and Ranger ships the supplies upon demand. Ranger has had very high production efficiency in the past. This is attributed partly to low employee turnover and high morale, as employees are guaranteed job security until retirement. Ranger already holds a large proportion of the market share in distributing office supplies in the United States. Its main competition in the United States comes from one U.S. firm and one Canadian firm. A British firm has a small share of the U.S. market but is at a disadvantage because of its distance. The British firm’s marketing and transportation costs in the U.S. market are relatively high. Although Ranger’s office supplies are similar to those of its competitors, it has been able to capture most of the U.S. market because its high efficiency enables it to charge low prices to retail stores. It expects a decline in the aggregate demand for office supplies in the United States in future years. However, it anticipates strong demand for office supplies in Canada and in Eastern Europe over the next several years. Ranger’s executives have begun to consider exporting as a method of offsetting the possible decline in domestic demand for its products. Required a. Ranger Supply Company plans to attempt penetrating either the Canadian market or the Eastern European market through exporting. What factors deserve to be considered in deciding which market is more feasible? b. One financial manager has been responsible for developing a contingency plan in case whichever market is chosen imposes export barriers over time. This manager proposed that Ranger should establish a subsidiary in the country of concern under such conditions. Is this a reasonable strategy? Are there any obvious reasons why this strategy could fail?
Ranger Supply Company is a large manufacturer and distributor of office supplies.
It is based in New York but sends supplies to firms throughout the United States.
It markets its supplies through periodic mass mailings of catalogues to those firms.
Its clients can make orders over the phone, and Ranger ships the supplies upon
demand. Ranger has had very high production efficiency in the past. This is
attributed partly to low employee turnover and high morale, as employees are
guaranteed job security until retirement. Ranger already holds a large proportion
of the market share in distributing office supplies in the United States. Its main
competition in the United States comes from one U.S. firm and one Canadian firm.
A British firm has a small share of the U.S. market but is at a disadvantage because
of its distance. The British firm’s marketing and transportation costs in the U.S.
market are relatively high.
Although Ranger’s office supplies are similar to those of its competitors, it has been
able to capture most of the U.S. market because its high efficiency enables it to
charge low prices to retail stores. It expects a decline in the aggregate demand for
office supplies in the United States in future years. However, it anticipates strong
demand for office supplies in Canada and in Eastern Europe over the next several
years. Ranger’s executives have begun to consider exporting as a method of
offsetting the possible decline in domestic demand for its products.
Required
a. Ranger Supply Company plans to attempt penetrating either the Canadian
market or the Eastern European market through exporting. What factors deserve
to be considered in deciding which market is more feasible?
b. One
case whichever market is chosen imposes export barriers over time. This
manager proposed that Ranger should establish a subsidiary in the country of
concern under such conditions. Is this a reasonable strategy? Are there any
obvious reasons why this strategy could fail?
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