LDFL Case Solution

8/12/23, 3:22 PM [Solved] LDFL INDIA LIMITED: ADAPTING A MULTI-CHANNEL DISTRIBUTION SYSTEM...
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level business operating plan for market share growth and faster decision-making
regarding the resolution of channel conflict, supply reallocation, and so on.

Handa believed LDFL would prosper in the long term and win against the competition
if it managed to adapt to the emerging channels and the omnichannel consumer better
than its competitors. He felt that LDFL channels would be optimally managed if
consumers and retailers could pick the best product offer from the channel of their
choice. He had to decide on a plan that could be reasonably implemented in the
market in a time-bound manner. Though his immediate focus was on achieving 2019
sales objectives, he wanted his decision to contribute to the long term growth of LDFL
in India.
BUSINESS BUSINESS - OTHER MKTG 112
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Answer & Explanation

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Answered by maricelcabusca
How to reduce channel conflict? Pros and cons of recommendations provided by the
team

How to reduce channel conflict?

1. Demonstrate that you care about your customers.
2.Plan an effective communication strategy.
3.Construct a strong but flexible deal registration mechanism.
4.Keep your attention on the customer.
5.To avoid disagreement, keep the number of channel customers to a minimum.
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8/12/23, 3:22 PM [Solved] LDFL INDIA LIMITED: ADAPTING A MULTI-CHANNEL DISTRIBUTION SYSTEM... | Course Hero

Pros and cons of recommendations provided by the team

Pros: Customers have better access to products
When a customer has the option to buy a product anywhere, they'll have a better
experience with more than one option. In fact, 54% of shoppers claim they're more
likely to do business with a brand that uses multiple channels to sell products. Having a
physical and online presence enhances brand recognition and loyalty. Customer
retention is easier, cheaper and more efficient than attracting new customers.

Cons: More channels opens the door to online competition
Competition with other stores or brands is always going to be an uphill battle. When
you offer multiple sales channels, you have more competitors. If customers like
something in a showroom, they can pull out their phone and comparison shop.
There aren't many ways to circumvent this problem except to incentivize customers to
choose you. Offering discounts for loyal customers or providing a certain percentage
off for online purchases/in-store pickup could increase your number of buyers
.
Pros: Customers spend more time and money in your store
Being an omnichannel business is already an incentive for consumers to choose you.
Offering your inventory on multiple channels can lead to more web traffic, which could
produce more in-store sales. Shoppers who only focus on physical or online stores, not
both at once, will still be drawn in with the omnichannel offering. More incentives to
shop in-store, online or both at once can create more omnichannel shoppers from your
pool of customers.
Urban Outfitters is a prime example of a successful omnichannel strategy. Urban
Outfitters' omnichannel shoppers spent 3.5 times more money than their regular
customers. However, success may be due in large part to their many store locations.
Having so many brick-and-mortar stores allows shoppers from almost anywhere to
take full advantage of the business' strategy.

Cons: Multiple channels leads to weaker margins
Omnichannel seems like it should command higher profit margins. However, each
channel comes with expense. Storage, packaging and delivery of inventory from
multiple sites costs money.
One such solution involves company vehicles. In 2016, small work van sales in the U.S.
went up by 8%, but large van sales grew 18% in just a single quarter. Other businesses
have already sought out solutions to increase their margins. Adding extra storage
space and faster delivery also helps.

Pros: More flexibility saves time
An omnichannel distribution strategy means keeping track of everything across

multiple platforms. If customers can pick up an online purchase from a store, they
should also be able to return that same product even to a different location. The
flexibility of options boosts customer satisfaction and sales. According to
Accenture, 75% of B2B customers are more likely to make additional purchases from
the same companies if their omnichannel strategy works well. Additionally, 72% of B2B
companies in the same survey said they value their omnichannel customers more,
primarily because they quickly become loyal and are more easily pleased.

Cons: Omnichannel relies on open communication
Direct lines of open communication is good for business, but it's also complicated. If
different systems don't talk to each other, then an omnichannel system won't work.
Creating a communication plan is vital, such as implementing a common IT system
across all channels. While initially working out the kinks might be stressful, the effort
will be worth the trouble as the process gets simpler with time and experience. The
start of an omnichannel system may be easier with the proper back-office technology
in all areas of the company. If every sector has a different priority and vision of the end
product, then the organization will most likely fail. Keeping the expectations
of omnichannel systems in manufacturing aligned business goals increases revenue
and service continuity. Technology such as automation and RFID can also keep
communication flowing.

SWOT analysis for CASH and CARRY

The strengths of Metro Cash and Carry

•Highly skilled workforce through successful training and learning programs - Metro
Cash and Carry is investing huge resources in training and development of its
employees resulting in a workforce that is not only highly skilled but also motivated to
achieve more.

•Reliable suppliers - It has a strong base of reliable supplier of raw material thus
enabling the company to overcome any supply chain bottlenecks.

•Strong Brand Portfolio - Over the years Metro Cash and Carry has invested in building
a strong brand portfolio. The SWOT analysis of Metro Cash and Carry just underlines
this fact. This brand portfolio can be extremely useful if the organization wants to
expand into new product categories.

•Superb Performance in New Markets - Metro Cash and Carry has built expertise at
entering new markets and making success of them. The expansion has helped the
organization to build new revenue stream and diversify the economic cycle risk in the
markets it operates in.

•Strong dealer community - It has built a culture among distributor & dealers where the
dealers not only promote company's products but also invest in training the sales team
to explain to the customer how he/she can extract the maximum benefits out of the
products.

•Strong Free Cash Flow - Metro Cash and Carry has strong free cash flows that
provide resources in the hand of the company to expand into new projects.

•Successful track record of developing new products - product innovation automation
of activities brought consistency of quality to Metro Cash and Carry products and has
enabled the company to scale up and scale down based on the demand conditions in
the market.

Weakness of Metro Cash and Carry

•Limited success outside core business - Even though Metro Cash and Carry is one of
the leading organizations in its industry it has faced challenges in moving to other
product segments with its present culture.
The profitability ratio and Net Contribution % of Metro Cash and Carry are below the
industry average.

•Days inventory is high compare to the competitors - making the company raise more
capital to invest in the channel. This can impact the long term growth of Metro Cash
and Carry Not very good at product demand forecasting leading to higher rate of
missed opportunities compare to its competitors. One of the reason why the days
inventory is high compare to its competitors is that Metro Cash and Carry is not very
good at demand forecasting thus end up keeping higher inventory both in-house and in
channel. There are gaps in the product range sold by the company. This lack of choice
can give a new competitor a foothold in the market.Need more investment in new
technologies. Given the scale of expansion and different geographies the company is
planning to expand into, Metro Cash and Carry needs to put more money in
technology to integrate the processes across the board. Right now the investment in
technologies is not at par with the vision of the company. Organization structure is only
compatible with present business model thus limiting expansion in adjacent product
segments.

Opportunities for Metro Cash and Carry

Economic uptick and increase in customer spending, after years of recession and slow
growth rate in the industry, is an opportunity for Metro Cash and Carry to capture new
customers and increase its market share.

•New environmental policies - The new opportunities will create a level playing field for
all the players in the industry. It represent a great opportunity for Metro Cash and
Carry to drive home its advantage in new technology and gain market share in the new
product category.

•New customers from online channel - Over the past few years the company has
invested vast sum of money into the online platform. This investment has opened new
sales channel for Metro Cash and Carry. In the next few years the company can
leverage this opportunity by knowing its customer better and serving their needs using
big data analytics. The new taxation policy can significantly impact the way of doing
business and can open new opportunity for established players such as Metro Cash
and Carry to increase its profitability.

•Decreasing cost of transportation because of lower shipping prices can also bring
down the cost of Metro Cash and Carry's products thus providing an opportunity to
the company - either to boost its profitability or pass on the benefits to the customers
to gain market share.

•Lower inflation rate - The low inflation rate bring more stability in the market, enable
credit at lower interest rate to the customers of Metro Cash and Carry.
The market development will lead to dilution of competitor's advantage and enable
Metro Cash and Carry to increase its competitiveness compare to the other
competitors.
Government green drive also opens an opportunity for procurement of Metro Cash
and Carry products by the state as well as federal government contractors.

Threats Metro Cash and Carry

Rising pay level especially movements such as $15 an hour and increasing prices in the
China can lead to serious pressure on profitability of Metro Cash and Carry Liability
laws in different countries are different and Metro Cash and Carry may be exposed to
various liability claims given change in policies in those markets. As the company is
operating in numerous countries it is exposed to currency fluctuations especially given
the volatile political climate in number of markets across the world.

•No regular supply of innovative products - Over the years the company has
developed numerous products but those are often response to the development by
other players. Secondly the supply of new products is not regular thus leading to high
and low swings in the sales number over period of time.

•Intense competition - Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only profitability
but also on overall sales.

•The company can face lawsuits in various markets given - different laws and
continuous fluctuations regarding product standards in those markets.Shortage of
skilled workforce in certain global market represents a threat to steady growth of
profits for Metro Cash and Carry in those markets. Rising raw material can pose a
threat to the Metro Cash and Carry profitability.
REFERENCE:

http://fernfortuniversity.com/term-papers/swot/1433/1349-metro-cash-and-
carry.php#:~:text=SWOT%20analysis%20is%20a%20strategic,in%20its%20current%
20business%20environment.
https://www.google.com/url?
sa=t&source=web&rct=j&url=https://www.allbound.com/resource-center/5-tips-to-
prevent-channel-
conflict/&ved=2ahUKEwiOo9zLg8HxAhUOLJQKHRuMDecQFnoECAQQBQ&usg=AOv
Vaw02T0LdAe8s7OioADM4EkfH
https://epsnews.com/2020/03/04/6-pros-and-cons-of-an-omnichannel-distribution-
strategy/

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8/12/23, 3:22 PM [Solved] LDFL INDIA LIMITED: ADAPTING A MULTI-CHANNEL DISTRIBUTION SYSTEM...

BUSINESS BUSINESS - OTHER MKTG 112

Answer & Explanation

An omnichannel distribution strategy means keeping track of everything across

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