(A) General Motors has announced plans to open 75 regional distribution centers across the United States with large inventories of cars and light trucks. Some of the centers will carry as many as 2,000 vehicles. This plan will move some of the dealer’s inventory, which GM subsidizes to the new regional centers. With 75 new regional distribution centers, GM’s inventory interest charges will increase. (a) How will the new centers help the retail dealers? (b) How will they help GM? (c) Evaluate GM move from a strategic point of view, and (d) What type of distribution intensity strategy is used by G.M.? Explain. (12 pts)
(B) Avon Products Inc. is one of the largest direct sellers of cosmetics and other products in the world. It has a corps of over 450,000 sales representatives who sell to customers in their homes and workplaces. The company has announced plans to open its first ever retail outlet in the United States. Why is Avon making this move? Would such move affect members of their channel of distribution? How? What you suggest to do in this situation?