case study 1.2

Central Transport, Inc.

Jamie C orman, t he n ew p resident a nd CEO o f C entral Transport, r ecently m et w ith

Susan Weber, t he c urrent president and CEO o f SAB D istribution. Jaime was promoted

from CM O at C entral Transport t o CEO. Her p redecessor h ad w orked c losely w ith t he

former CEO of SAB Distribution when SAB had transformed its operations about 10 years

earlier to respond to changes in i ts competitive marketplace. Now, Ms. Weber was faced

with new challenges and again needed the collaboration of Jaime and Central Transport to

meet some new challenges.

Susan has met extensively with the members of her executive team to develop a tentative

plan for modifying the strategic direction of SAB and thwart the buyout of the company by

a private investment firm.

Susan wa s c onvinced t hat SAB c ould a ttract a dditional r etailers in t he m id-Atlantic

states if it added to and improved its logistics services, namely, warehousing, transportation

delivery, and inventory management. However, Susan felt that she needed a major collaborator with experience in these areas. She also felt that it would be better if the collaborator

was a company SAB had worked with previously on a successful basis and was willing to

take on some new challenges.

Susan had decided to approach Wegman’s Food Markets, Inc. as a c ustomer for these

new services. Wegman’s was a very successful company in the Northeast that was privately

owned and had expanded carefully into new market areas over the last 15 years. It offered

more value services to its customers, including an in-store bakery, a r estaurant and deli,

more take-out options, and in-store cooking demonstrations.

Wegman’s primary distribution point for their stores was located in a distribution park

in Rochester, New York near their corporate headquarters. With their store expansion into

the Washington, D.C. area and points further south into Virginia, they are developing a

new distribution park in northwestern Pennsylvania to lower their cost and improve their

service. Wegman’s was feeling the pressure to be more price competitive with Walmart and

other food chains but also wanted to maintain their unique value added in store services

for customers.

Susan was also convinced that Wegman’s could be price competitive and to continue to

increase their in-store services and expand their market opportunities. She felt that they

would li sten t o h er proposal t o offer e xpanded s ervices t o h elp t heir c ompany b e m ore

competitive. Now, she wanted Central to join with SAB in making Wegman’s a proposal.

Jaime needs your help in developing a response to Susan.

CASE QUESTIONS

1. Why and how has the competitive market place for SAB changed in the last five to

seven years?

2. What advantages might Central experience in the proposed new venture?

3. What issues would SAB and Central face in the proposed new approach?