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 upon before business transactions take place in reference to collections. This agreement should lay out the specific payment terms. Most payments are due in 30 days and they should be sure to explain that payments not paid on time will result with a late fee and this fee will continue to go up the later it is. For example, the payment isn’t received in 30 day then a 15% fee will be added…...