...Tom Sloane, marketing manager of USPK, would prefer to make about 90 percent of the company's sales directly to retailers and the remaining 10 percent directly to high-voulume users. He believes, however, that this strategy is not possible because there are so many small retailers. Not only is the sales volume per retailer small, there is also a risk involved in extending them credit. USPK tends to deal directly withe large urban retailers and leaves most of the nonurban retailers to the wholesalers. However, the use of wholesalers bothers Sloane for two reasons: (1) He has to give them larger discounts than he gives retailers that buy directly from the firm, and (2) because of the intense competition (300 pharmaceutical manufacturers in Korea), his wholesalers frequently demand larger discounts as the price for remaining loyal to USPK. This interse competition affects another aspect of USPK's operations-collecting receivables. USPK has found that many wholesalers collect quickly from retailers but delay paying USPK. Instead , they invest in ventures that offer high short-term returns. For example, lending to individuals can bring them interest rates of up to 3 percent a month. The company's receivabels, meanwhile, range from 75 to 130 days. Wholesalers are also the cause of another probelm. Many are understaffed and have to rely on "drug peddlers" for sales. The drug peddlers (there are perhaps 4,000 just in Seoul) make most of their nibet either by cutting the wholesalers'...
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...U.S. Pharmaceutical of Korea* U.S. Pharmaceutical of Korea (USPK) was formed in 1969. Its one manufacturing plant is located just outside Seoul, the capital. Although the company distributes its products throughout South Korea, 40 percent of its total sales of $5 million were made in the capital last year. There are no governmental restrictions on whom the company can sell to. The only requirement is that the wholesaler, retailer, or end user have a business license and a taxation number. Of the 400 wholesalers in the country, 130 are customers of Ball-McCulloch-Frantz- Geringer-Minor: The Swiss pharmaceutical global corporation Hoffman-La Roche has made a major breakthrough in the relief of a serious disabling disease that affects 3 percent of the world’s population. Its new product Tigason is the first product that effectively controls severe cases of psoriasis and dyskeratoses, skin disorders that cause severe flaking of the skin. Sufferers from this disease frequently retreat from society because of fear of rejection, thus losing their families and jobs. Tigason does not cure the disease, but it causes the symptoms to disappear. There is one potential problem. Because of the risk of damage to unborn babies, women should not take the drug for one year before conception or during pregnancy. Hoffman-La Roche is well aware of the potential for harm to the company if the product is misused. It has seen the problems of another Swiss firm, Nestlé. After much discussion, the...
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...‘‘U.S. Pharmaceutical of Korea” Case Study 3 Abstract: This case is about US Pharmaceuticals of Korea (USPK). US Pharmaceuticals of Korea sells throughout Korea because there are no selling restrictions, only that the sellers they use have a business license and a tax ID. A wholesaler has created a drug that helps to control sever cases of a debilitating disease. They were reluctant to market it, but because the drug could help those afflicted with it, they decided to market it anyway. Due to this, the marketing department is looking for a distributing strategy. Tom Sloane is the marketing manager for USPK and he would like to improve the percentage of the company sales by majority being company direct sales to retailers with the remaining small percentage to high volume users. One of his dilemmas are to make this happen with the large volume of small retailers involved, also, the competition that USPK has also effects its receivables. Another problem is that many wholesalers are understaffed and have to rely on “drug peddlers” for sales; this affects their bottom line selling price. These issues lead to wholesaler/retailer price lists. Sloan believes that the industry can help in solving the price competition. 1. What should Tom Sloane and U.S. Pharmaceutical of Korea do to improve collections from wholesalers? I think the best thing that Tom and U.S. Pharmaceutical of Korea could do, would be to have sales agreement and policies that are laid out and agreed...
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