Compare the components chosen pertaining to the organization with other organizations

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I submitted this paper last semester and i need to submit it again this semester , so I want to edit to go through the BlackBoard without plagiarism

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The Leitch Quality Drug Company Business Policy Case 2 Spring2017 Summary The Leitch Quality Drug Company is a well establish drugstore, located in Orlando, Florida and is owned by partners named Carl Leitch, Richard Leitch, Walter Neds and Norman Henry. Each partners own equal shares and have the same decision making power. The company was previously named Quality Drug Store and was established in 1926. Quality Drug Store was bought by the Leitch brothers and their partners when its started loosing on its profits and was going through difficult times. Leitch Drug Company Store currently owns three drugstores located in different parts of the city. The first store is located in the downtown area and caters mainly people working downtown and people who go to shopping centers downtown, store two is located in a shopping center at a fringe of a well-to-do residential area and is the largest store LQDC owns. Finally, store three is located directly across the street from one of the city’s hospital which, is located in a predominantly low income are. All the store are managed independently by their managers who run the stores independently and make their own decisions. The firm is not planning any current expansion and is currently doing bad due to the growing competition from discount stores. Mr. Henry and Mr. Neds have proposed incorporating the company but, the Leitch brothers opposed that idea over fear to lose control of the firm. A national food store chain proposed a merger to the LQDC which, is creating a conflict between amount the partners because they Leitch brothers want to take the deal but Mr. Neds is opposed to the merger because he sees potential in the company and the market and Mr. Henry might go along with the merger. Case Objectives • Identify problem associated with partnership ownership • Find a way to compete with the two large discount drugstores that have been build around them • Examine critical issues that have arisen and to develop a strategy plan to ensure future success • To illustrate how power relationships within a partnership of multiple partners may impede the decision making and strategic planning processes • To analyze the methods of recruitment of personnel used Leitch quality drug company • Analyze strategies that Leitch quality drug company can use to be more competitive against discount stores • To understand and analyze the operations of the Leitch Quality Drug Company, that has enjoyed a significant success through moderate growth with a large number of competitors • To understand the advertising methods used by Leitch Quality Drug Company and their target market • Understand advantages and disadvantages of a merger Key Issues • Manage disagreement between partners • Understand how partners can participate in the organizational functioning of a business • Manage all stores dependently instead of independently • Remain price competitive while maintaining profit margins • Whether the firm should incorporate, remodel and expand or sell the company • How to set themselves apart from discount stores • Expansion of stores into areas where there are not any drugstores to increase revenue • Lack of standardization • Lead the market in product by making Rexall one of the its preferred product • Improve decision making within the company • Improve promotions in the firm • No future long term plans • Compete against discount stores External Threats • Growing industry translating into increased competition • Rexall doesn’t mention independent franchise names of where their products can be found in their advertisement • Third store is located in predominantly low-income area • Competitors offering lower prices and promotional discounts • Two stores, the store number one downtown and store number three “southside” are oldfashioned in design and appearance. These stores need remodeling or renovation in order to attract more customers. • Parking problem in store one has being a big issue which, caused people to just drive away and looked for another spots at an other drug store • Leitch has competition from two larger stores owned by O’shea Drug Company, located very close to the Leitch stores one and two and which, sell the same products Leitch Quality Drug Company in addition to small appliances, school supplies, toys and began offering discount prices on some proprietary drugs and other items • Larger super discount pharmacy stores are opening in the area. Those discount pharmacy store sell in addition to drugs, groceries which, means customers can shop while they wait for their prescriptions. • Two large discount drugstores have been built and are competing with the company. These stores carry full line of merchandise such as appliances, clothing, households goods, and hardware items. The drugs and cosmetics are sold at substantially lower prices than those of Leitch or most of the other drug companies. They generally also have more merchandising experience. External Opportunities • Increase targeted market through effective advertising with the help of Rexall Company and products who runs nationwide ads on many leading magazines. • In response to the rapid growth during the 1950s Leitch bought out a drug company in 1958 then expanded in 1961 when the owner of a small drugstore in the southern part of the town died. • To sell the Leitch Company drugstore products to a national food store chain • LQDC has an agreement with Rexall, the national drug manufacturer to sell Rexall products within a 25 miles radius. That agreement helped the business grow, profits rose and sales exceeded $3 million in1967 • Credit is given to customers. Most of them do business at Leitch stores on credit and the availability of credit was popular among the “old-timers” • Store 2 is the largest store LQDC has which is located in a shopping mall and accounts for 60% of total sales • Has a change to merge with another company • They are a well known company with a good reputation • The three stores serve different areas of the city Internal Weaknesses • In the early 1940s, the store experienced difficulties because of declining profits • Each store major decisions including decisions to buy major equipment or redecorate the store are made by each store manager • Anyone working at the store could order when a salesman visits • No further expansions have been considered in other areas of Florida • Inadequate and ineffective marketing and advertising strategies because advertising is done independently by the three stores • Rexall do not name individual franchises in their adverts • The company does not own its property, so costs for leasing are not fixed and there are no tax savings • The Leitch company does not follow a discount policy. Customers are attracted when they know they can make deals which will make them come more frequently to the drugstore. They also do not plan to reduce their prices anytime soon • The Leitch brothers opposed Mr. Henry and Mr. Neds’ proposal to incorporate the firm. There could be possible tax savings and advantages as a limited liability company. The Leitch bothers would prefer to maintain all control of the company instead of letting others have shares in the company • Credit allowing customers to establish credit accounts at multiple locations • Inefficient inventory and ordering processes • All three stores are functioning independently of one another • Relying on their “name” for stability and growth • Pricing is done on a cost-plus basis. This strategy does not take into account that the demand and the customers are not guaranteed to purchase the products at the calculated price and the Leitch Company has a lot of competition • One of the partners is not really “silent” • The Leitch brothers are over 60 years old and want to retire • One of the partners is opposed to sell the company to a national food chain and Henry has not made a decision yet Internal Strengths • The company is a well-known and well-established firm • Carl Leitch is an assistant pharmacist and has experience in in the pharmaceutical industry • Richard Leitch attended pharmacy school which means he also has experience in the pharmaceutical industry • Majority of the partners have significant experience and knowledge because three out of the four partners are registered pharmacists and each of them manage one store • Partners created a trust worthy brand • All partners share equally the ownership of the firm • Delivery services is offered by all three stores • All three facilities are leased which means it is less costly than owning a facility • Care of customer relations and experience • Enjoyment of low unit cost and high markup on Rexall brand • Even though Mr. Henry is a “not-so-silent” financial partner, he frequently offers his advice and helps make major policy or planning decisions while others mange the stores • Mr. Neds proposed plans to help the company expand and continue to make revenue in order to reduce losses and competition • Stores are run independently which means it is easier to hold someone accountable when problems occur. • Major decisions involving such as store expansion for example require the joint approval of all partners Alternative Strategies Stability: Leitch Quality Drug Company can continue in their current business sector where they have an industry knowledge base and have loyal customers. While staying in the same business sector which is only providing drugs they can make some improvements on becoming more efficient in their daily operations. The partners should think about unifying the operations of the three stores by increasing efficiency in its current facilities and try reducing cost. The company should also try to standardize their products. Introduction of new products should also be considered in order to increase the volume of sales. A new marketing strategy would be beneficial in several ways, it would increase sales by strengthening the company’s image instead of them relying on their name and past reputation. Such will also help them reach out to potential new customers in the city, the campaign can also be used to target new potential markets. Once the company has seen improvements to their operations, it would be better for the partners to develop and outline, specific and clear objectives to ensure business continuity and success. Growth Strategy: This is characterized by raising the speed of increase in sales, profits and market share of current product-service line to increase the demand and encourage users of its products. This will increase the demand and encourage new customers of Leitch Drug Company. They can implement a new pricing strategy by examining their profit margins to see where prices can be reduced and also apply discount prices. The drugstore can expand into other geographic areas since they are only located in Orlando, Florida in order to help them obtain an even bigger target market. A primary research can be conducted in other popular cities of Florida to see how people will react to a new drug store in the region. The partners can change the current form of ownership to incorporate and bring in outside shareholders which will bring in more capital and more ideas to help the firm grow. New offerings at the fountain bar to appeal to a wider range of customers should be introduced. Merging with one of their top competitors or even one of the smaller competitors is an option that can really eliminate the competition that they face and face and help increase their revenue. Retrenchment: LQDC should consider stopping to operate the less profitable stores and focus on the most successful one which is store two which, can help the company avoid unnecessary spending and save some money. They can also combine each stores marketing expenses and establish a unified, integrated marketing approach to cover all the locations as well as exploring new mediums which can help the company reduce the amount usually spent on advertising per store. They can also use a new pricing strategy or use price cutting as a tool to increase sales because of cost reduction need to be reduced to have a larger profit margin. Combination: The Leitch Quality Drug Company using more than one strategic approach would enable them to tailor their strategic plan to their specific needs. Implementing a combination of stability, growth and retrenchment would allow LQDC to target specific areas which need improvement, while areas that are functioning efficiently remain the same. Choice of strategy • In order for Leitch Quality to compete in an expanding and competitive market they will have to employ a competition of stability, growth and retrenchment to improve business operation, marketing and increase sales because LQDC is currently declining and more discount stores and more pharmacies will be entering the market in future years which can create more issues for the company • The partners at LQDC can also decide to improve their operations to become more efficient meaning the store managers should stop managing their stores independently but rather, manage all the stores together where when a decision is made by the partners it will affect all the stores. • The Leitch Quality Drug Company may eliminate some alternative choices and incorporate their business and bring in outside shareholders who will bring in more money within the organization. Also, having shareholders will mean that more ideas will be able to be generated to make the company more competitive on market • The partners can also expand LQDC to other areas outside Orlando. They partners can think about expanding to Miami which is one of the most popular cities in Florida. Expanding will also help reaching out to a new market, new customers and can help generate revenue • LQDC should get out of certain lines of business that do not generate profits • LQDC should expand, renovate and improve their existing facilities and renovate the old fashioned stores and apply discounts to some of their current products to attract new customers. They should also improve the parking at store one • They should also improve how their marketing is done because we now live in a world where social media can be used to reach out to a bigger market. • LQCD should also think about reaching out to the younger generations rather than focusing on the “old-timer” Implementation The LQDC partners need to make to make a definitive decision on whether or not to sell their stores to a national food chain store. If they decide to sell their firm they will need to outline specific goals with clear objectives in order to develop long-term strategies that will ensure the business continuity. The partners also need to come up with an agreement on the direction of the company before looking forward because they need to unify the firm and establish a new management of the company and evaluate what didn’t work in the past and improve it for the future. The partners should implement a new policy which can help the business be more successful. This new policy should involve all the team members which means the stores need to be unify for a better result. In order for Leitch to be effective and function efficiently the company will need to improve the business operations and reduce cost before they can move into the growth aspect of their strategic plan. They can develop an integrated inventory and purchasing process to be conducted by one person for all three stores because common problems that will be addressed will include prescriptions not being ready for customers at pickup and inventory control. So the company needs to be able to determine the best individual to fill in for the positions in ordering products so that inventories are kept at fixed levels and also that not anyone is able to order new drugs. All promotional methods need to be for all three stores. The Leitch Quality Drug Company needs to improve their advertisement which it is only based on local newspaper, they can change through TV or radio if necessary and also promote their firm on the internet specially on social media. With the changes already implemented in key areas such as marketing and pricing, the partners can expand existing product line and incorporate new offerings that appeal to their new targeted market. The business growth can be implemented through a long-term contingency strategy that will be ideal, and the company may then explore incorporation and provide stock options to retiring partners as part of their compensation. As suggestion of cost reduction, the partners should remove fountain bar from store 3 and remodel to carry more medical equipment since the location is in a low income area which is directly across the street from a hospital. The Leitch Drug Company should also think about merging with the national food chain if implementation of the different strategies still does not obtain greater revenue because there is a greater chance that with a merger more revenues will be made.
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The Leitch Quality Drug Company
Business Policy Case 2
Spring2017

Summary
Leitch Drug Company was bought by Leitch brothers back in 1926 and was previously
referred as Quality Drugstore. It is among the most established stores located in Orlando,
Florida. The company is a partnership between Carl Leitch, Richard Leitch, Walter Neds and
Norman Henry, each having equal decision powers and shares. Currently, the company has been
able to establish three operating drugstores located in shopping centres at a fridge well-to-do
residential area which is the largest, downtown and store three located directly across the street
from one of the city's hospital which, is located in a predominantly low income are. Each store,
however, is run by a manager independently. The economic status of the company on the hand is
not doing because of stiff competition from discount stores. More conflict seems to be emerging
from M. Henry and Mr Neds who are willing to incorporate other partners but the Leitch
brothers opposed the idea over the fear to lose control of the firm.

Case Objectives


Spot partnership ownership problems



Find a way to enhance their sales due to the competing stores around them



Come up with a strategic plan by first scrutinizing the emerging issues to enhance the
company success



Demonstrate how multiple power-sharing in partnership business hold back smooth
running of a company and decision making



Analyze the method used recruiting staffs into the company



Explore on new strategy to help the company compete with the near discount store



Analyze the success rate and scrutinize on the moderate growth over the period
regardless being faced by stiff competition



Analyze the marketing method used by the company to their customer satisfaction



Know the advantage and disadvantages of a merger

Key Issues


How to deal with the partner's disagreement



Value of comprehensive partner participation in running of a business



Importance of stores managed dependently instead of independently



How to remain competitive by reducing price margins



Whether or not the firm should incorporate other partners



How to set themselves from discount stores



Need to venture into new areas where there are few competition



Lack of consistency



Strategies to improve decision making



Company advertisement plans



Long-term and short-term plans



Strategies to compete on the emerging stores

External Threats


The industry facing stiff competition



Location of the third store in a low-income area



Low pricing from competing firms and time to time discounts



The stores in downtown and Southside are old fashioned branded thus not attracting more
customers



Lack of parking lot near the loc...


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