Distributor Business Model by the Pepperidge Farm Bread Company - Case Study Example

The president of Pepperidge Bread Company is considering purchasing Wonder White Bread from Hostess who owns the rights to such a name. There is a tough decision making problem that the President of Pepperidge has to undertake. This is because they not actually aware of the actual information as to why Hostess has decided to wind up operations apart from the sole idea that they are bankrupt. They would purchase Wonder white Bread name in case they reach such a decision and the other decision they will be faced with is whether to infuse the company with its departments in there system at Pepperidge. On the other hand bring it with the organization structure of Hostess and this will depend on the Human Resource department exhibited by the firm, the teams owned by the firm verses the individual behavior of the individual members of the original company. This will go hand in hand with the communication models of the companies and the employee handling skills used by the employees. This may not be actually relevant for the firm since the firm will decide on whether to use distributorship, which operates through contracts. Therefore, the task that is left for this individual is to gunner all the information with regards to the form of distribution they would wish to use and land on the form that is appropriate for Worde white Bread name(See the attachments). A business mode to be employed by a company is quite a formal plan for earning a profit for the company, a business model is otherwise called a profit model and if the right procedure and channel were used in formulating and implementing it then the business would earn a profit out of it (Hoque). This is because the business model employed by for example by the Pepperidge Farm Bread Company would set the bread products and services to be offered to the customers and the way the company will offer such products and services. The distribution model implemented depending on how it is adopted will consider the cost structure and the manner to improve on the sales for the company to bring in more money to widen the gap for profitability while minimizing costs hence expanded profitability. The distribution model if enacted through a good model has always ensured that a wide range of costs as those on employees are negated hence they come in below the sales revenue widening the probability of increasing sales to improve on the profitability. For the distributor model to work as opposed to the employees’ model a series of steps as defined below must be followed in formulating a competitive model (Hoque). One, Pepperidge Farm Bread Company will have to determine the type of distribution services they will offer to the consumers through the distributor model. This has to be a variety to ensure they cover a wide margin of the available consumers. This is likely to affect the costs structure, the pricing structure and finally the profit margin to be achieved. Depending on the forms of bread products the company will be engaged in they will determine those they will transport to the customers and whether they will offer the same customers specialized services like storage and it will further impact on the transport model to be used which should be cost effective. Secondly, Pepperidge Farm bread Company must take some time to understand its cost structure after they have highlighted all the services they will offer. Alongside this to help in the cost determination they will lay down the equipment they will use in manufacturing the bread products they will provide and whether they conform to the modern technology. It has to be remembered that the distributor business model to be put in place is made so to maximize on the sales while reducing costs hence to maximize the profitability. Therefore, the equipment in terms of the number of vehicles to be used has to be quantified to enable the setting up of the right prices. The third step is the creation of the right pricing structure and the mode in which the bread company will be accepting their payments. This is because it is pricing and sales, which are at the heart of the distributor, model to be implemented. Therefore, the third step in implementing the model will determine whether Pepperidge Farm Bread Company will accept either o cash, credit, checks as the mode of their payments and a decision on the payment terms will then follow. Lastly, the firm will put the plan in place in order to leverage the economies of scale so that profitability can steadily increase over time. This is given the fact that economies of scale are an integral part of any distribution business model and the model to be implemented must be in a position of operating in large numbers. This will reduce the costs involved while widening the profitability gap. Alongside this due to economies of scale, the prices can steadily increase due to the growing size and the reliability of the services offered if this is the case (Hoque). In accepting the distributor business model by the Pepperidge Farm Bread Company, the president of the company will integrate its human resource by monitoring the behavior of the individuals and applying the appropriate motivation through effective communication in appropriate teams. This has the impact of making an effective decision while getting into such engagements to steer them at quite steady paths. This is because a business is normally established of which explicitly or implicitly it will employ a business model, which is subject to change depending on the faces of structuring and restructuring faced by the company. The model will describe the architecture of the value creation, capture and mechanisms employed by the business in place. The decision made on which distributor business model to put in place will determine the way in which the bread company will deliver value to the customers while enticing the same customers to pay for the value created while the management converts the value created through the enacted model into profits. Effective implementation of the Distributor business model will describe the rationale used by the business to create value to their customers, deliver and capture the same value economically, culturally and socially by creation of products and services that are acceptable by the society hence a path towards profitability (Hoque). When Pepperidge Farm Bread Company decides to distribute its products for profitability, it is wise if they used the traditional distribution model as a starting point. This model has three levels that is the products or service moving from the producer who is Pepperidge, through to the wholesalers who are determined by the firm as a team and finally to the retailers. This traditional model as compared to the modern model is quite short and less costly. The only setback, which would enable a shift, is that this conventional distribution model makes the parties in the model to guard their individual interests hence creating a conflict, which would threaten the system. This can though be minimized by the President of Pepperidge through enacting effective and efficient communication systems among the parties to minimize the chances of such occurring. An even shorter distributor model is the direct distributor model that has even been used successfully by Dell, Avon and other successful companies. This is where the company will manufacture and distribute the bread they using the salespeople that they already have and doing the storage in their own warehouses. This is a way of modifying the traditional distributor channel to negate the conflicts that are likely to be created (Hoque). In the most likely event, the choice of Pepperidge Farm Bread Company of a distribution channel will be defined by factors of decision making such as the customers and how they would like to use the bread and the bread products and services. If the farm produces highly perishable bread and bread products from the newly acquired firm, they will be forced to offer services like those for refrigeration, which will further limit the firm’s choices of a distribution plan. Another determinant will be the manner in which the customers will accept the products or services as this will determine how the manufactures offers the services and the products(Hoque). Based on the distributor’s model as defined by the company, I think the profitability will increase. This is due to the clear fact that in the employee model there are quite a number of overheads that will require being taken care of in terms of the costs they involve. They are tediously longer models as compared to the moderated traditional model, which will enable the transmission of the products directly to the customers. In the moderated traditional model, the costs will also be highly reduced while exercising the consistent increase in the sizes of the delivered products and this eventually impacts on the increase in the profits. This is as compared to the employees’ business model, which is highly costly with the impact of reducing the profitability, which is the sole aim of any business as they put in place their strategies (Hoque). Works Cited Hoque, Faisal. E-enterprise business models, architecture, and components. Cambridge, U.K.: Cambridge University Press; 2000. Print. 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