West Coast Unlimited is a wholesaler that carries close to 20 000 products. The company has close to 3000 suppliers and sells its products mostly to business and institutional customers. The company markets its products by relying mainly on sales promotion and advertising. Faced with increasing costs, the company is looking at various ways to reduce expenses. West Coast Unlimited's vice-president feels that the company should shift one of its major distribution centres to a low-rent, low-tax area. A critic claimed that a business that neither manufactures nor sells directly is doomed because it is forced to compete exclusively on price. Which of the following is the best criticism of this argument?
A) It ignores the fact that improvements in wholesaler efficiency are relatively easy to duplicate.
B) It fails to demonstrate that traditional retailing businesses are also in jeopardy.
C) It fails to recognize the possibility that wholesalers can add value to different partners in the supply chain.
D) It does not specify how wholesalers can reduce costs most effectively.
E) It does not account for the fact that wholesalers need to be large in order to take advantage of economies of scale.

Question

Quizplus · Accepted Answer

The criticism of the argument that a wholesaler is doomed to compete on price ignores the possibility that wholesalers can add value to different partners in the supply chain. Wholesalers can provide value by offering a wide selection of products, efficient logistics, and expertise in product knowledge and market trends. Therefore, the critic's argument is not entirely valid as it overlooks the potential value-added services that wholesalers can provide.

West Coast Unlimited Is a Wholesaler That Carries Close to 20