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QL 1
QL 1
Q4:-
Atlas-Copco was having sales of $50 Million for its industrial compressor
business from which $37 million was coming from its distributors.
Distributors of Atlas worked very well and let Atlas to capture market
share. Now Atlas comes up with new four-level franchising policy as a
result of distributors’ audit and development program.
During the start of Atlas-Copco’s operations in USA, its distributors had
shown the level of trust and commitment. The success of Atlas-Copco is not
only by its sales team but with the collective collaboration of its
distributors. The new four-level franchising policy will lead Atlas-Copco
to failure.
Atlas-Copco is willing to form new relationship with its distributors by
adopting. In the past there was strategic alliance between both parties but
it was inclined towards more informal structure. From Phase 1 to Phase 4
Atlas-Copco was flexible in operations and distributors were happy too and
the success can be seen by viewing the growth of Atlas’s market share. If
Atlas implements the four-level franchising policy then it will cause
conflicts between both the parties.
Distributors are not ready and not expecting from Atlas to become so
formal. Atlas-Copco will show its opportunistic behavior by adopting four-
level franchising policy which will bring the element of uncertainty and
propensity to leave for distributors.
If four-level policy applied then Distributors have to follow a path in
order to sell the big compressors; they have to move from 1 st level to
3rd level, then what about those distributors who are all ready selling the
big compressors? They again have to start from the scratch and it will take
their plenty of time, their existing customers will also have to wait for
somebody to serve them. The implementation process will take a lot of time
for distributors to move up and during that time frame the competitors can
take the lead.
Q5:-