DuPont Agricultural Chemicals - Assignment Example

Title: Name: University: Date Due: Question 2: The satisfaction of consumers abounds, and market rationality states that consumers are willing to replace outlets. This happens arbitrary or where there exists a gap in the channel of distribution. For instance in the banking and money payment systems many consumers are at dissonance and in markets segments which are not satisfied with the service delivery. Demand side gaps occurs in a market situation when consumers get dissatisfied buying what is available because the level of product or services provided may be of low value or inadequate or when the services offered are too expensive that they cannot afford. The direct channel design will affect the coverage of currency for the manufacturer. It will also lead to least selectivity, meaning less money and non exclusive distribution of goods by the manufacturer. Demand-side gap analysis occurs when customers are dissatisfied with suppliers which provide them with goods and services. It shows business shortcomings since the manufacturers use money to pay channel members hence limiting their coverage of brand product category hence, gaining exclusive dealings which are more expensive. The suppliers will lack the opportunity to support the premium positioning of their brands hence getting a narrow target market. The channel members will coordinate less closely with the manufacturers. Situations will arise that will hinder supplier specific investments with minimized new products emerging in the market; in addition, few markets will emerge in the market. In payment of my e-bills there was an assortment of payment methods. But a one stop bill payments site wasn’t available. I chose to use the most expensive payment site and it took 2 days to process. Some Payment channels took up to 5 days to process the payment. In this, there was high SOD as compared to the SOS. It was during rush hour and everyone was working to beat deadline. There existed inefficiently high flow costs and thus there were high costs. I couldn’t use the 5 day e-bills payment outlet as this could cause my untimely payment. Other consumers preferred the long waiting time of up to a week for the processing of their bills. I didn’t prefer this due to the poor information provision thus more risky: high uncertainty. Those who used these outlets said that they were less costly as compared to they shorter timed one, that they relied on them and had used them for long besides all driving to the same thing: satisfaction-bill payment. Question 5 DuPont Agricultural Chemicals is an extremely large and diversified supplier of herbicides and pesticides to farmers. It has several competitors, also large and diversified (such as Monsanto and Dow).Imagine a dealer selling a full line of whatever a corporate or individual farmer would use, including agricultural chemicals. Is it possible to imagine a scenario in which the dealer is more powerful than DuPont? What factors might make this possible? An important measure of the profitability of an activity is its return on capital- the profit expressed as a percentage of land, equipment and cash used in the activity. This measure shows the productivity of an investment. Neo-classical Economic Theory states that return on capital from an activity is determined by the competitiveness of the industry of which the activity is part. In a perfectly efficient market there is no return on capital in excess of what the capital providers need in order to provide to it, and as markets become less efficient, the return on capital steadily increases. When returns on capital increases new firms may enter the market and this lowers prices, but when returns on capital reduces then firms leave the market and thus price increase. Market efficiencies also stabilize the return on capital at equilibrium. Porter has documented five forces determining the competitiveness of an industry and thus bridged the gap between theory of competitive market s and the reality of business and industry strategy. The first force to determine competitiveness of a firm is the Rivalry in the market. The more the number of firms in the market the stiffer the competition like i9n the case of DuPont and the other two companies. The two companies offer stiff competition and could easily dislodge DuPont out of market. This rivalry increases with the increase rate of market growth that is as market becomes mature and this could have been the case with Monsanto or Dow as it entered the market. If the firms had a high level of fixed costs then they needed higher minimum levels of trade in order to profitable, and thus must compete more and this could have made one of the companies more powerful than DuPont. Since their products are perishable and storage costs become expensive then there is a strong incentive for them to sell quickly and either Dow or Monsanto could have employed this to achieve the power status. With similar products on sale, it is easier for one firm to take up the customers of the other thereby killing it in market. The levels of innovation and change may also affect thee competitiveness of a firm as to DuPont could be too conservative to the changes in the market and thus could drive them out of market. The second force is the threat of substitutes. A firm can carefully arrange the switching of cost to consumers into a new product very systematically that the buyers won’t feel the pinch of switching to the new product. For example offsetting the cost of finding the new supplier and of learning how to use the new product such that the buyer does not feel anything. This can be used by either of the firms to frustrate DuPont. The buyers irrespective of price difference may be willing to switch to the other supplier or not and this work to thee advantage of the other two firms if they are willing to switch; but to the advantage of DuPont if they are unwilling to switch at all. Since there are different firms offering complementary products, the competition would and this leads to lowering of prices by some of the firms like Dow to favor them in the field. Degree of co modification is another factor in the substitute threat. The greater the mass of production of a commodity minus differentiation, the higher the competition. If a firm ventures into producing bulk goods without breaking them down into pieces, then the company would certainly carry the day due to low costs of production; By practicing this the other two companies could drive the dominant one out poof the market and thus become more powerful. The third is the Buyer power. Their number would dictate the competitiveness of the firms. Their power increases with better information about price and market conditions. When faced with price increases or differences then their love for the other company that has a lower price and this could be used by either of the companies to become powerful than the dominant one. Forward integration also comes in handy as buyers could decide to produce for themselves the some alternatives like the use of organic herbicides could interfere with the sales of the chemicals and thus drive the company out of market. The fourth force that could determine the power of as firm is the supplier power. The concentration of the suppliers to the firms raises the power of the suppliers themselves and thus more competition. When a firm gets its supplies in undifferentiated form then the costs are reduced and much profit making it more powerful. The concept backward integration where the supplier decides to produce use their produce top make what the firm produces, instead of selling it to them also brings in another competitor into the market thus reduced sales. The last force is the level of Barriers to Entry. Since the market for the chemicals is less differentiated, then most firms could come in very easily to take up the competition and this could jeopardize DuPont’s activities. The other two firms could as well be much accessible to the inputs there knock down the dominant company. Since it is easier to distribute the chemicals other firms could enter the market and stiffen the competition. The other two companies could be having advanced technology than the dominant company; they could also be in a position to gain skills needed for production and thus makes it easier for them to enter the market and then topple the existing company. It is indeed very possible for the dealer to be powerful than DuPont if they possibly put into practice the five laws of competition as put forward by Porter and then outshine them at their own game. The five forces Framework can be used to help assess the likely returns on livelihood systems and also to design initiatives to increase their returns, not only at the micro-level but at the regional or national level. It should be a key part of the development experts and policy makers’ conceptual and analytical techniques. References Coughlan, A., Anderson, E., Stern, L.W., and El-Ansary, A, ( 2006). Marketing Channels, 7e, . London: Pearson. Read More