In it’s plans for expansion, Value Drugs has made plans to deal with the risks outlined above:

>  Competitive Response.   Value Drugs plans to make a quick and effective market entrance as the quality leader among discount pharmaceuticals.  Traditionally, the first company to introduce and land an in-store display has priority on it’s space -- stores typically do not want too many displays (especially of competing products) cluttering their aisles.  Thus, a quick strike on the retail chain market will be especially effective at locking out competitors who have yet to use this promotional tool.  As well, a quick entrance is designed to ingrain the notion that it is the quality product among the variety of similar pharmaceutical products on the shelf.  Finally, if other brands switch their labels and otherwise follow the company’s promotional strategy, the company plans to respond with an advertising theme that emphasized it’s position as the quality leader in the market.

>  Cycles.   Value Drugs has chosen it’s product mix to offset the cyclical effect of cough syrup sales.  The company’s market research has shown that sales of stomach-relief medicine peak in the summer (especially where active recreation, summer barbecues and picnics are common) .  It is anticipated that this will, to some extent, counteract the effect of diminished sales during slow periods in the sales cycle for cough syrup.  As well, the company plans to position itself from a capital perspective to be able to ride out the slower months.  The inventory planning system will reduce the amount of variable costs (chemicals) ordered during that period of time to help keep costs down.

>  Growing pains.   Joe Formulary understands the difficulties that managing a quickly growing enterprise can pose.  He received his M.B.A. in what is widely regarded as one of the best entrepreneurship programs in the country at Massive State University.  There, he was exposed to many situations where successful entrepreneurial enterprises had decisions to make that would determine their viability in a period of high growth. He knows that rapid growth will require him to increasingly delegate responsibility -- a characteristic he mastered in his successful management career at Pharmico.  He also is committed to a semi-annual personal assessment  and evaluation of his management skills and the company’s direction.  For this, he has budgeted $15,000.00 in outside services for next year to hire a consultant who is a regionally recognized expert in entrepreneurial management decision making.