Should Phil Fang accept Wang Meng’s offer to use his vend carts to increase wholesale sales?
What will be an ideal response?
On strictly economic grounds, Phil Fang should accept the offer. The imported vendcarts cost ¥50,000 per cart while the Chinese-made vendcarts cost ¥4,000 per cart. With expected return of ¥30,000 per month per cart, it will really help in increasing the cash flow. However, Demadis has a point that selling Carvel alongside New Continent ice cream will tarnish the former’s image. Thus, the answer to this question depends on the offer made by Wang Meng.
A related question on which the case does not throw light is why the company is unable to buy its vendcarts in China and use them solely for Carvel products. Perhaps they can work with a Chinese cart supplier to make them a little fancier while keeping them less expensive than the imported ones.
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