Value Drugs has created contingency plans to deal with the risks outlined above, in the event they should materialize:

>  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 Value Drugs is the highest quality product among all other pharmaceuticals 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 emphasizes it’s position as a market leader.

>  Cycles.   Value Drugs chose 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 in areas 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.  Value Drugs knows that rapid growth will require him to increasingly delegate responsibility -- 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 $12,000.00 in outside services to hire a consultant who is a regionally recognized expert in entrepreneurial management decision-making.