Question

Milwaukee is a famous name in industrial quality power tools. Its products are renowned for their rugged design and reliability. Most of its products are sold through wholesalers (industrial distributors) to a wide variety of power tool users including factories, contractors, mechanics, schools, government agencies and many others. Milwaukee claims that almost 80% of its distributors have been associated with it for 25 years or more. Milwaukee describes itself as a consistent and reliable partner to distributors. The company says, “Our business succeeds when your business succeeds.”

    Comment on this statement in terms of its possible implications for ''evaluation strategies''. Please explain in more detail.

Answer 1

Their business succeeds when distributors business succeeds, implications for evaluation strategies are that the firm can measure their performance based on that of the distributor. When distributor demands more, the firms business grows. Thus the firm can evaluate itself based on how the distributor performs, when there is increase in profitability of the distributor and the firm is not earning enough, it could be that the firm is not the preferred one for the distributor and that the customers are demanding other goods from the distributor. Thus ultimately the firm's business will succeed only when the distributor's business succeeds because the firm has no other choice to reach the consumers, it could opt for online sales but even there they would have to rely on distributors as distributors have a set warehouse and contacts.

The company says that it is reliable and a consistent partner to its distributors. Thus the firm will have to evaluate in terms of how much business has each distributor partner provided to the firm.

The company could measure performance with other competitors by comparing the share of the market it serves. It could be that the several power tools which the users buy are just as a form of necessity and they might be opting for other companies products for the main machinery tasks. Thus even though it claims to be reliable, one can check on it based on the fact that how long the tools last and how much they are efficient.

It claims that 80% of its distributors have been associated with it for 25 years or more. But how much business have they provided the firm, it could be that they have contributed only 20% of its business, whereas the other distributors might have provided the rest which are no longer associated with the firm in the long run, or deal with another firm in the market.