The definition of the company as an open system that interacts with the social environment in which it operates requires - as part of the administrative process - the inclusion of the analysis of the environment, both in the evaluation of the management carried out, and in the definition of objectives. and in projecting goals. The environment itself can be considered from different angles: cultural, political, legal, economic, etc.
The company to analyze is the Polar or Polar Group, one of the largest groups in our country. This company has an established vision already with an estimated time and everything “to be a leading corporation in food and beverages, both in Venezuela and in the Latin American markets, where it participates through acquisitions and strategic alliances that ensure the generation of value for our shareholders.. They are market oriented with a predominant presence at the point of sale and a complete portfolio of products and brands of recognized quality.
The mission of Empresas Polar. "Satisfy the needs of consumers, customers, sales companies, dealers, distributors, shareholders, workers and suppliers, through their products and the management of our businesses, guaranteeing the highest standards of quality, efficiency and competitiveness, with the best price / value ratio, high profitability and sustained growth, contributing to the improvement of the community's quality of life and the country's development.
As a consequence of fluctuations and economic circumstances, the company begins to review the extent to which its organizational aspects were related to the external situation and contributed to the deficiency in the performance of its activities.
In this sense, the present study contemplates analyzing the current situation of the Venezuelan market. Case: Polar food distribution system, in order to determine the process of assigning routes, the objectives and the effects of its application in the local and national market, as well as the presence of the polar brand in final consumers.
The subject matter under study is structured as follows: Chapter I. The Problem. The object of study, the contextual situation, as well as the delimitation and reconstruction of the object of study thereof are referred to.
Chapter II. Theoretical framework. The research background, theoretical bases and legal bases are presented.
Chapter III. Methodological framework. It presents the design of the research, population and sample, and techniques and instruments for data collection.
Chapter IV. The analysis and discussion of the research results are expressed.
Chapter V. Conclusions and Recommendations related to the subject under study.
CHAPTER I. THE PROBLEM
PROBLEM STATEMENT
Empresas Polar ventured into the food business area in 1954. Currently, after the strategic merger of the sales forces of Mavesa and Primor, since 2003, Alimentos Polar operates as an umbrella company for industrial and commercial activities spanning 17 production centers in Venezuela (apart from 1 flexible packaging plant) and 3 plants in Colombia.
In Venezuela there is a distribution network with more than 45,000 points of sale, almost 1,000 distribution units, 75 warehouses and 27 distribution companies. In addition, it has a distribution network in Colombia with almost 70 thousand points of sale, and 59 distributors. With a total production capacity of 2.1 million metric tons per year, Alimentos Polar today has the most complete portfolio of leading brands in various food categories.
At present a complex situation is presented in the market for the distribution of food products at a national level, this results in shortages and loss of the markets traditionally occupied by the company. For this reason, the need to analyze the current situation of the Venezuelan market arises. Case polar food distribution system in Barcelona Anzoátegui state, in order to publicize the mission and vision of this company, situation of the current business environment of the consortium, assignment of trade routes, objectives and effects.
JUSTIFICATION AND IMPORTANCE
The purpose of this study is to present the current Venezuelan market quote, due to its complexity, the distribution system of the company called Alimentos Polar in Barcelona, Anzoátegui State, was chosen.
This work allows to visualize the local panorama regarding the polar food distribution networks, as well as to understand the conjunctural problems that affect said distribution and the measures applied by the company to optimize its merchandise distribution process.
It will also serve as a basis for subsequent researchers who seek to further investigate the situation of the Venezuelan market.
DELIMITATION
An analysis of the current situation in the Venezuelan market was carried out. Case: polar food distribution system. Barcelona been Anzoátegui for the Year 2008.
RESEARCH OBJECTIVES.
OVERALL OBJECTIVE:
- Analyze the current situation in the Venezuelan market. Case: process of distribution of polar beer in the Anzoátegui state.
SPECIFIC OBJECTIVES:
- Describe the vision, mission and organizational structure of the company Polar. Determine the factors that affect the environment of the company Alimentos Polar. Explain the process of assigning the routes of owner drivers Synthesize the objectives of the polar exclusivity contracts with the owner drivers and their effects.
CHAPTER II. THEORETICAL FRAMEWORK
Research Background
Jenny Betancourt. In his work entitled: Analysis of the business environment. Grupo Polar case. 2008. Concludes the following:
“The Polar company adopted a new organization scheme, the product of a careful analysis of existing external factors. This means that the effects of the transformation that the organization is experiencing today are profound and long-term, because they involve very important components of corporate culture and identity. It contains a new self-concept of Empresas Polar and a different approach to the role that its people will have to play in management; in other words, we are witnessing the renewal of the paradigms that will serve as a guide for this corporation to move smoothly through the beginning of the next millennium. ”
Gonzalez Porras, Enrique R. in his work titled: Vertical Retrictions, Claimant Residual and Vertical Predation: Some Considerations on the Distribution of Beer in Venezuela. 2007. Holds:
“That the role of distribution in any sector or economic activity is very important. "As the company grows and, saturated its local market, it must expand it to other areas, increasingly distant from the production center, the problems of bringing the product closer to the final consumer become more acute. A sales force so numerous that it will take the offer, close the sale and purchase operation and deliver the product would be so expensive that it would hardly be profitable. Thus appears the figure of the intermediary, with its varied typology, which gives substance to the variable distribution. ”
Key Ochoa, Rodolfo. Vertical restrictions on beer distribution in Venezuela. 2006. Concludes the following:
“The beer is produced in four (4) plants, from where it is transported by eight (8) distribution companies owned by Polar to eighty (80) warehouses that it owns throughout the country. In these warehouses the beer is sold to independent wholesalers. These are drivers who own their own trucks (hereinafter CP), who in turn transport the beer to the points of sale where it is sold to retailers, and these finally sell to the final consumer. As mentioned at the beginning, the part of the channel that ranges from the sale of beer in warehouses to drivers-owners, to the transactions they carry out with retailers will be studied here. ”
THEORETICAL BASES.
Definitions and concept of distribution channel:
According to William J. Stanton (2003). It is the design of the necessary arrangements to transfer ownership of a product and transport it from where it is made to where it is finally consumed.
In this regard Torres Virgilio (1999). It indicates that: It is a system that physically moves the products from where they are produced to the place where they can be taken and used.
CHANNEL DEFINITION: The aforementioned author highlights: Conduit through which products move from their point of production to consumers.
For his part, William M. Pride. (1999) maintains that they are: groups of individuals and organizations that direct the flow of products to consumers.
In this sense, it can be pointed out that the distribution channel consists of a series of interdependent organizations involved in the process of getting the product to the consumer or end user.
Basic elements in the definition of distribution channel:
Links; Media; Trajectory; Placement; Displacement; Intermediaries; Final consumer; Product / Service.
Channel classification:
Consumer goods distribution channel. It is to get perishable products through various distribution channels into the hands of consumers easily and quickly. Example: Farmers can get their products through a supply center or through sales agents.
Distribution channel for industrial goods. It is when you have various channels to reach organizations that incorporate products into their manufacturing process or operations. Example: Companies that manufacture parts for the production of a car, provide them to assembly companies to carry out their production.
Service distribution channel. The nature of the services gives rise to special needs in their distribution. And they can be given in two ways:
- One is that the service is applied to the plaintiff at the time it occurs. Example: A person requesting a massage service; This is applied at the same time it is produced. Another way may be that the claimant receives the service until he wishes to use it. Example: When a person makes a hotel reservation, it could be said that the service is already purchased and produced. But it will be used until the plaintiff decides.
"The distribution channel is made up of a group of related intermediaries."
Companies need the support of a distribution channel that facilitates the arrival of products faster and as close as possible to the hands of the applicants.
Intermediary levels:
Each product requires special handling by the distribution channel so that it reaches the consumer in good condition. Example: Fish needs to reach the point of sale quickly, therefore it is better to use a quick distribution channel so that the product does not lose its color, freshness and flavor.
Each company will have to identify alternatives to reach its target markets, ranging from direct sales to the use of channels with one, two, three or more levels of intermediaries.
Levels of intermediaries are understood as the number of intermediaries that will intervene in the transportation of products to the consumer.
Producer - Consumer. It is the shortest level, the items are sold directly from the manufacturer to the consumer.
Producer - Retailer - Consumer. At this level an intermediary (retailer) buys the products from the manufacturer to later sell them to the final consumer.
Producer - Wholesaler - Retailer - Consumer. This channel is the most feasible and traditional, the wholesaler buys the products from the manufacturer, later the wholesaler can sell them either wholesale or retail, in case it is wholesale, retailers buy the products in those stores to finally sell them to the consumer.
Producer - Agent - Wholesaler - Retailer - Consumer. Manufacturers turn to agents, who in turn use wholesalers who sell to large chain stores or small stores.
INDUSTRIAL GOODS PRODUCERS:
Producer - User. Represents direct distribution, highest income entry. In this distribution time, for example, aircraft or machinery manufacturers prefer direct sales.
Producer - Industrial Distributor - User. At this level, producers of small parts or construction materials sell their products to a distributor so that they reach users faster.
Producer - Agent - User. This level is used in factories that do not have a sales department and they have to find an agent to help place their product on the market, distribute it and make the contacts so that it is exposed and reaches the consumer.
Service producers:
Producer - Consumer. Due to their nature that the services are not tangible, they often require personal contact with the client that requires advice on the service we offer (lawyers, doctors, teachers, transportation, aesthetics).
Producer - Agent - Consumer. Although in most cases of services the contact is direct, it can have its exceptions, a sales agent in an example on this level since they are responsible for carrying out the transaction between the service manufacturer and consumers.
TYPES OF FLOWS
Channel flow is the movement of products and services through the distribution network between 2 or more channel participants.
Physical flow. It is the most visible of all, since it is the actual transportation of the product from one place to another.
Property flow. Some channel participants do not own the product. A person in order to distribute the product does not necessarily have to be the manufacturer, but someone who is tasked with distributing the product like the agents who transfer the products to a wholesaler or retailer.
Financial flow. It is necessary to carry out the movements of money or credit so that a product reaches a certain place. This flow goes from the user to the manufacturer.
Information flow. It is the most important, since if there is no communication between all the elements of the channel, there will not be good coordination, but there will be poor distribution. If there is a bad transfer of information, the distribution system can be blocked.
Risk flow. It is the least convenient to exist since it increases the chances of uncertainty. It is a factor that cannot be defined but must be predicted.
Promotion flow. This is where information is collected about the benefits that a product offers the consumer. This is influenced by the factors that will help the product to be known and to be accepted by the consumer.
Insofar as the objective of the distribution is to place the products in the right place, quantity and time, it implies a set of very complex functions, which we list below:
1.- Storage function. Since the rhythm of production does not usually coincide with that of consumption, it is necessary to store the products, create the necessary stocks to regulate the differences between the inflows and outflows.
2.- Diversification function. Manufacturing lots are not the same as sales lots; the last stages of the distribution must have varied assortments of the products of different manufacturers or, in other words, offer a varied offer from different original offers.
3.- Transport function. Corresponds to the physical transfer of the products from the production center to the places of sale to the final consumer.
4.- Financing function. When buying large lots, intermediaries assume this function, since the company enters the amount of the sale of its products before they have been purchased by consumers, either by generating accounting credits with their supplier.
Likewise, the costs of distribution, transportation, market penetration and transaction costs in general constitute clear barriers to entry and competition, not always easy to overcome. In many cases, a new product without a prior commercial presence requires the distributor to be the market maker.
This is where it is necessary to specify a concept of what a vertical constraint is:
"Vertical restrictions such as agreements between companies operating at different levels of the production or distribution chain restrict the conditions under which companies can buy, sell or resell goods. The most common is to find them in the producer / wholesaler or retailer relationship, since in these cases a varied range of conditions is negotiated that should characterize the performance of the latter (discounts, royalties, ties, participation in expenses, related or unrelated prices). to the volume, location of the distributors, etc.). ”
Furthermore, this text states that vertical restraints are a partial substitute for vertical integration.
"Such business practices can be pro-competitive when they generate greater efficiency or tend to correct market failures (externalities generated by business policy at each link in the chain); however, they can also be contrary to fair competition when they are aimed at improperly excluding existing or potential competitors from the market. ”
For its part, the Green Paper on Vertical Restrictions in Community Competition Policy states, regarding the practice of this type of restrictions in the Beer sector, the following:
“The beer production structure varies enormously from one Member State to another, and goes from a great atomization to a narrow oligopoly and even to absolute domination. Local producers tend to control most sales, although there has been an increase in market interpenetration, which is being carried out in various ways: direct import, through its own subsidiary, licensed production, the acquisition or joint venture with local producers, acquisition of retail establishments, through wholesalers, through the construction of new production facilities or through distribution agreements with local producers.
The World Bank in its publication entitled: Managing the Regulatory Process: Design, Concepts, Issues, and The Latin America and Caribbean Story (1999), states: “All companies have to resort to distribution, and the level of services provided and its efficiency are very important elements in the competitive process of consumer access. Very few producers directly distribute their products to the final consumer; rather, they usually entrust this task to specialized distributors. In some sectors, considerable savings can be achieved through cooperation in the supply chain, a practice that has been facilitated and accelerated by the introduction of information technology and modern "just-in-time" techniques. This means that, within the supply chain,Now it is the final consumers who request the products, and the distribution is imposed from above by the manufacturers based on the production needs. This phenomenon has led to significant savings in stocks and a significant reduction in the volume of unwanted goods. Supply chain competition is becoming increasingly important. ”
The following conclusions can be drawn from the different bibliographical and theoretical details:
- The specific clauses of an agreement or the different types of vertical restrictions cannot, in themselves, be considered positive or negative for competition and integration.
- The combination of different vertical restrictions does not necessarily increase the possibility of reaching an anti-competitive result, but in precise circumstances such a result may be favored.
- The analysis should focus, rather than on the form of the agreement, on its impact on the market. For example, if access is impeded by a network of agreements or if the vertical agreement coupled with market power allows producers or distributors to practice price discrimination between Member States.
- Taking into account the risk associated with both penetrating new markets and significantly expanding into one (the creation of new trade flows that make up the market), it would be necessary to accord more favorable treatment to vertical restrictions when they involve an investment. material or immaterial material. This treatment must have a limited duration.
- The nature of the products, the need for services and investment to carry out an efficient distribution, as well as the need to know consumers can be important elements in determining the objective benefits derived from vertical restrictions, as well like its anti-competitive effects.
The Polar Food company with the new distribution and organization system between the different constituent levels of the chain of production and marketing of Polar beer is carried out through vertical restrictions.
Even though this document has been published for some time, it expresses ideas worthy of being highlighted. This document acknowledging and describing this relationship of vertical restrictions between Polar and its distributors, states:
The specialized bibliography and the document in particular recognizes that this type of practice seeks to establish brand loyalty and guarantee wide geographic coverage. In this sense, the document "Vertical restrictions on beer distribution in Venezuela" states:
“A producer may want to make sure that the goods he produces are available wherever there are consumers who want and can buy his product. For example, by selling on unprofitable sites, the producer can prevent buyers from trying to purchase competing products, and thus develop brand loyalty. This strategy can increase profits at any other sites and, therefore, the total profits of the producer. ”
Other advantages that justify the existence of vertical restrictions is the reduction in transactional costs that this type of organization allows. On the above, the document mentioned above comments:
“The specific case of transporting beer from warehouses, the use of centralized information by the Polar Sales Department regarding which areas of the country are already being served and which are not, how many retailers are in each, how much they buy, etc., to coordinate distribution by assigning routes - thus avoiding the aforementioned negative externality - seems to be more efficient than the use of partial and decentralized information by each independent carrier in the market to carry out such coordination. ”
On the other hand, the document published by Procompetencia recognizes as an objective of the imposition of exclusive territories by producers towards their distributors, that the former act as freerider or what is the same, take advantage of the effort and costs incurred by distributors and retailers to build loyalty to your product. In this sense, the document delimits:
"… It has often been pointed out that the goal of a company that imposes territories on its distributors is to encourage retailers who sell their product to incur customer service costs that increase the demand for their brand."
LEGAL BASES
TITLE VI
OF THE SOCIO-ECONOMIC SYSTEM
Chapter I
Of the Socio-economic Regime and the Role of the State in the Economy
Article 299. The socioeconomic regime of the Bolivarian Republic of Venezuela is based on the principles of social justice, democracy, efficiency, free competition, protection of the environment, productivity and solidarity, in order to ensure comprehensive human development and a dignified existence and profitable for the community. The State together with private initiative will promote the harmonious development of the national economy in order to generate jobs, high national added value, raise the standard of living of the population and strengthen the economic sovereignty of the country, guaranteeing legal security, solidity, dynamism, sustainability, permanence and equity of the growth of the economy,to achieve a fair distribution of wealth through participatory democratic strategic planning and open consultation.
Article 300. National law will establish the conditions for the creation of functionally decentralized entities for the performance of social or business activities, in order to ensure the reasonable economic and social productivity of the public resources that are invested in them.
Article 301. The State reserves the use of commercial policy to defend the economic activities of national public and private companies. No more beneficial regimes may be granted to foreign persons, companies or organizations than those established for nationals. Foreign investment is subject to the same conditions as national investment.
Law to Promote and Protect the Exercise of Free Competition
Official Gazette No. 34,880 of January 13, 1992
Chapter II
Of its Powers
Article 29. The Superintendency will be in charge of the surveillance and control of practices that impede or restrict free competition. Among others, it will have the following powers:
1) Resolve the matters assigned to it by this Law;
2) Carry out the necessary investigations to verify the existence of restrictive practices of competition and instruct the files related to said practices;
3) Determine the existence or not of prohibited practices or conducts, take the measures to stop them and impose the sanctions provided for in this Law;
4) Dictate preventive measures, ex officio or at the request of interested parties, to avoid the detrimental effects of prohibited practices;
5) Grant the corresponding authorizations in those cases of exception referred to in Article 18 of this Law, always within the limits of the regulations issued for this purpose;
6) Propose to the National Executive the regulations that are necessary for the application of this Law;
7) Dictate its internal regulations and the norms necessary for its operation;
8) Issue an opinion on matters within its competence when required by the judicial or administrative authorities;
9) Create and maintain the Registry of the Superintendency; and
10) Any others indicated by laws and regulations.
COMMERCIAL CODE
THE CONGRESS OF THE REPUBLIC OF VENEZUELA
EXTRAORDINARY GAZETTE N ° 475 OF DECEMBER 21, 1955
OF TRANSPORTATION BY LAND, LAKES, CHANNELS AND NAVIGABLE RIVERS
Article 154.- The transport contract takes place between the shipper or sender, who gives the transport order, and the entrepreneur who is responsible for making it carried out on their behalf and on behalf of another, or between one of them and the carrier which is responsible for carrying them out.
It is designated with the name of carrier who is responsible, in any way whatsoever, to carry out or have the transport carried out.
Article 155.- Those who habitually occupy commissions or transport companies will have a book with the conditions required in article 32, in which they will copy, without leaving blanks and in order of dates, contracts or consignment notes; and when they do not exist, they will at least express the nature and quantity of the objects and, if required, their value as well.
METHODOLOGICAL FRAMEWORK
This research work is inscribed within field research, in order to have a better perception of the object of study, in a qualitative context.
The knowledge production process that guides this study is based on a moment that aims to apprehend the object, within the space that it moves, in order to capture the most important contradictions that give rise to the historical origin of its problems.
The qualitative character as regards the way of perceiving a concrete reality can provide cognitive elements that describe, explain and interpret the behavior of that reality that is being attempted to address.
The qualitative moment is based on an epistemological profile, which makes possible the consolidation of the analysis and criticism of those conceptual elements imposed by the presence of critical theory, whose rationality itself imposes to reveal contradictions, drives and tensions to which the object of study. That is why the research falls within the field modality. It is a field work due to how Ramírez (1988) refers to it
"In this type of research, the natural object of study, man and his actions are perfectly pertinent to study these phenomena in the very reality where they occur, and it also allows us to investigate in situ the effects of the interrelation between different types of sociological variables, psychological and educational ”(p.68).
Field research, as announced in this quote, has the importance of allowing the establishment of empathetic relationships between the research subject and the investigated subject. This situation opens up a range of possibilities to learn about the customs and life experiences of the social actors involved in the study of the problem in question.
The sample was chosen intentionally, using twenty proprietary drivers as the source of information.
Among the techniques and instruments for data collection, in addition to that provided by bibliography related to the topic, the survey techniques, dialogue interviews, testimonies, participant observations, and the instruments: field notes and anecdotal records were used. The application of the techniques and instruments that were applied allowed to speed up the obtaining of the data objectively for the best development of the investigation.
TECHNIQUES AND INSTRUMENTS OF DATA COLLECTION
(According to Sabino Carlos 1992)
The techniques and instruments that were used in the data collection for the investigation were based on direct observation and unstructured interviews.
DIRECT AND PARTICIPATORY OBSERVATION
It is the fundamental research technique that helps us perceive external reality by guiding the collection of data. "
UNSTRUCTURED INTERVIEW
It was used to have a greater contact with the drivers who own the company in order to inquire about the subject under study.
INSTRUMENTS
(According to DORRA, Raúl 1998)
"They are clear tools to be used in the techniques, the elaboration of which must meet certain characteristics regarding ease of application, low cost, validity and reliability."
OBSERVATION SCRIPT
This instrument was used in order to record all the information from the observation of the activities carried out by the secretaries and the procedures applied for their execution in order to determine the failures and establish measures to optimize them.
INTERVIEW SCRIPT
This information gathering instrument allowed direct contact with the drivers who owned the Alimentos Polar company.
PROCEDURE FOR THE COLLECTION AND PRESENTATION OF DATA
The collection, analysis and integration of the data for its subsequent generalization was carried out methodically and especially qualitatively, therefore the research was validated and articulated within the theme and based on the objectives set, following a logical order in the presentation of the results.
CHAPTER IV. ANALYSIS AND DEMONSTRATION OF RESULTS
Description of the vision, mission and organizational structure of the company Alimentos Polar.
The polar company is a leading corporation in the food and beverage markets whose fundamental orientation is to provide well-being to consumers, customers, distributors, suppliers, workers, shareholders and society in general. For 65 years, its business history has advanced hand in hand with its deep social commitment, which has made it a paradigm of the socially responsible organization in Venezuela. This work has been accomplished through the various actions undertaken by the company based in each region of the country and the valuable contribution of its polar companies foundation. Under a modern focus of concentration, the focus where you have basic skills, polar company groups more than forty sister companies. The significance of this corporation in the national economy is supported by strong indicators:It generates 19,000 direct jobs and more than 150,000 indirect jobs, which is equivalent to 1.4% of the national labor force. It contributes 2.82% of the non-oil gross domestic product to the country. Contributes 2.90% of non-oil tax revenue, for taxes applicable to the corporation and the products it manufactures.
The production, marketing and services infrastructure, highly technified and capable of developing optimal manufacturing functions, advance according to the dimensions of the operations: more than 30 production plants located in strategic places in the national geography and the most commercialized network important from Venezuela guaranteeing the presence of its products in more than 150,000 points of sale.
Empresas Polar conducts business in the beer, malt (Cervecerías Polar), Food (Polar Food), soft drinks and non-carbonated (Pepsi-Cola Venezuela) businesses.
Empresas Polar ventured into the food business area in 1954. Currently, after the strategic merger of the sales forces of Mavesa and Primor, since 2003, Alimentos Polar operates as an umbrella company for industrial and commercial activities spanning 17 production centers in Venezuela (apart from 1 flexible packaging plant) and 3 plants in Colombia.
In Venezuela we have a distribution network with more than 45,000 points of sale, almost 1,000 distribution units, 75 warehouses and 27 distribution companies. In addition, we have a distribution network in Colombia with almost 70 thousand points of sale, and 59 distributors. With a total production capacity of 2.1 million metric tons per year, Alimentos Polar today has the most complete portfolio of leading brands in various food categories.
Mission of the Polar Food Company:
Satisfy the needs of consumers, clients, sales companies, dealers, distributors, shareholders, workers and suppliers, through our products and the management of our businesses, guaranteeing the highest standards of quality, efficiency and competitiveness, with the best relationship price / value, high profitability and sustained growth, contributing to the improvement of the community's quality of life and the development of the country.
VISION OF THE FOOD COMPANY POLAR
We will be a leading food and beverage corporation, both in Venezuela and in the Latin American markets, where we will participate through acquisitions and strategic alliances that ensure the generation of value for our shareholders. We will be market oriented with a predominant presence at the point of sale and a complex portfolio of products and brands of recognized quality.
We will promote the generation and dissemination of knowledge in the commercial, technology and managerial areas. We will select and train our staff in order to achieve the required profiles, we will achieve their full commitment to the values of Empresas Polar and we will offer them the best development opportunities.
ORGANIZATIONAL STRUCTURE OF THE POLAR FOOD COMPANY.
Determination of the factors that affect the environment of the Polar Food company.
Surrounding analysis.
- Political factors:
The current situation in the country affects any type of production and beer is not exempt from this situation. It is considered that the government does not intervene directly in the private company but it does regulate advertising positions (laws), hours of sales establishments and liquor sales licenses, etc.
On the other hand, regarding export restrictions, government treaties have reduced the marketing of the product in the country. This measure directly affects the benefits obtained; like interest rates, taxes and others.
- Legal factors:
Fiscal trends: There are regulations since the public to whom this product is addressed are of legal age, therefore, it should not be advertised through the mass media, such as Television in Venezuela. There is also a law that does not allow the liquor store to be close to primary and secondary education institutions.
Labor trends: The Polar company is one of the most prestigious in the country, it has an excellent work team, with highly qualified personnel for each of the existing areas, offering personnel high benefits that oscillate above those established by law. Venezuelan.
- Economic factors:
Due to the high inflation that Venezuela currently has, we observe that the incidence is proportional to the production of the bottle and this in turn affects the suggested final price, but we must take into account that the product is leader and in high demand even when that purchasing power has decreased, for this reason the income of the population received by the company continues to be stable.
- Social:
Regarding social factors, we observe that the trends are as follows:
- Demographic distribution: It is the only beer that has a complete presence at the national level. Population mobility: The points are strategically located throughout the length and breadth of the national territory. Infrastructure: Generates good jobs for the country, has its own and spacious buildings to ensure the employee welfare with hygiene and industrial safety standards. Additional benefits such as medical services, pension and retirement plan, box of products and beers and malts.
- Technicians:
La Polar is a company that is characterized by being at the forefront, keeping up to date with technological advances due to the fact that its product is of high quality and must maintain it as such.
The speed of the bear image change was very fast because the company has a high economic power and it tried to do it as soon as possible in order to satisfy its consumers.
DOFA matrix.
Weaknesses:
- Currently there is strong competition (Mercal).
Opportunities:
- Thanks to the recognition of the brand in international markets, this guarantees the success of the product by introducing it in places that have not yet been explored. Because it is a brand of tradition in our country, the change of image and new products, if applicable, are well received. consumers with the new image and there is a great potential market for being a country where the young population prevails
Strengths:
- Product of great trajectory, recognition and acceptance in the country Drink of massive consumption and preference for Venezuelans Extensive market segmentation due to product diversification
Threats:
- Chain of government low-cost product supply establishments (Mercal, PEDEVAL).
Assignment process of the routes of proprietary drivers.
As its name implies, it consists of the allocation of exclusive distribution routes to CPs by the Food Polar sales department. This company undertakes to sell on each route only to the CP to whom it has assigned the respective route.
| Route allocation process. | # | Percentage |
| Sales department. | twenty | 100% |
| twenty | 100% |
| Reasons why routing is enhanced | # | Percentage |
| Avoid lack of coordination between distributors.
Cover a larger sector of the market. |
fifteen
5 |
75%
25% |
| twenty | 100% |
The objectives of the Sales Department with the assignment of routes are:
Avoid negative externalities due to lack of coordination between distributors. The optimal geographic distribution of polar food products may differ from that freely emerging from competition among distributors.
A producer may want to ensure that the goods he produces are available wherever there are consumers who want and can buy his product. For example, by selling on unprofitable sites, the producer can prevent buyers from trying to purchase competing products, and thus develop brand loyalty. This strategy can increase the profits at any other sites and, therefore, the total profits of the producer. On the other hand, since the distributors seek to sell in places where the benefits are greater than zero, a conflict arises between producers and distributors in relation to the places where the product is to be distributed.
Polar's distribution strategy has been largely aimed at eliminating various negative externalities that can be generated in the channel, such as the one mentioned in the previous paragraph and others related to managing product perishability, which also affect loyalty branded. Therefore, it was expected that this company would take some action that would try to correct market failures that affect the efficient performance of some of the functions of the distribution channel.
The specific case of transporting food from warehouses, the use of centralized information by the Polar Sales Department regarding which areas of the country are already being served and which are not, how many retailers are in each, how much they buy, etc.., to coordinate distribution by assigning routes - thus avoiding the aforementioned negative externality - seems to be more efficient than the use of partial and decentralized information by each independent carrier in the market to carry out such coordination.
This stimulus is achieved by assigning territories, since each retailer can absorb the entire increase in demand in their respective area caused by their customer service expenses. Precisely, these customer services and the increased competition that they produce with respect to other brands are some of the most important reasons for the granting of an exception prohibiting making agreements that restrict competition.
| Routing effects. | # | Percentage |
| Decrease in intra-brand competition
Consumer benefits for better distribution. |
13
7 |
65%
35% |
| twenty | 100% |
Effects
- Decrease in intra-brand competition at this level of the distribution channel, since this restriction creates a spatial monopoly for each CP in its respective territory.
This in turn generates a negative externality to Polar known as double marginalization. Double marginalization occurs when both production and downstream intermediation are monopolized, which results in the restriction of production by the distributor to a quantity less than the level of production that maximizes the producer's profit. The reason this happens is that the distributor's marginal cost (CM) is greater than that of the producer and, therefore, the quantity of product that maximizes the latter's profit is less than that which maximizes the latter's profit. This difference of CMs is due to the fact that the CM of the distributor is equal to the price at which the producer sells him, which sells him at a higher price than his own CM. As a result,the producer will not be able to optimize his profits when the distributor sells the level of production that maximizes his. On the other hand, a greater restriction of the production caused by the distributors causes a higher price at the level of final consumer, compared to the situation of a downstream integrated producer, or of free competition between distributors.
- Benefit to consumers for a better coordinated distribution. This results in a regular supply of the product in all the places where it is sold.
Objectives of the polar exclusivity contracts with the proprietary drivers and their effects.
These are contracts concluded between Polar and the CPs whereby they undertake to buy and distribute only Polar beer in their exclusive territory.
goals
| Objectives of the exclusivity contracts. | # | Percentage |
| Avoid free riding from other providers.
Decrease in sales expenses Creation of barriers to the entry of other products. |
12
5 3 |
60%
25% fifteen% |
| twenty | 100% |
- Avoid Free Riding from other providers.
Until the 1960s Polar was integrated forward to the CP level. However, due to the opportunistic behavior of the truckers within the company, and to the moral risk that it ran regarding the performance of those in their work, Polar decided to sell to the CP's the trucks that were used to transport the retailers. The objective was that the drivers themselves continue to provide their services to the company not as employees, but as independent entrepreneurs with the incentives that this entails. It is important to note that Polar financed the purchase of the trucks from the CPs at lower interests than those of the financial market. This generates a positive externality for the current and potential competitors of this company,since they could hire said wholesalers to transport their product without financially collaborating in the development of that part of the channel. Due to the above, Polar entered into exclusive contracts with the new independent distributors as a way to establish Property Rights over the efforts promoting your product.
- Obtain substantial decreases in selling expenses, enjoy the possibility of having a predictable market and, especially, establish a foothold against the actions of well-established competitors in the market.
This last objective was very important for Polar in the mid-1960s, when he decided to sell the company's trucks due to the problems mentioned in the previous point. At that time, both Polar and Nacional had 40% of the market (currently Polar has approximately 80%) and, within its marketing strategy, it was extremely important for the former to maintain control of the distribution channel in order to eliminate externalities negatives that could affect their image and brand loyalty, in such a way as to avoid the loss of customers due to this cause in favor of the other leading company in the market at that time.
- Create barriers to entry.
Given its high market power, it is quite possible that Polar is charging a super-competitive price for its product, and therefore, try to create structures that protect its extraordinary benefits, such as long-term exclusivity contracts or with high Liquidated Damages.
The long-term exclusivity contracts with the CPs constitute a barrier to entering the beer market, since they force new entrants to develop their own distribution network - at least up to the level of the CPs´ s-, which discourages potential competitors from entering this market. This is because the existence of imperfections in the financial market makes the cost of capital for a company that carries out a productive activity similar to that of beer, to become more expensive when it tries to simultaneously enter production and distribution. Indeed,the asymmetry of information between the bank and the company regarding the possibilities that the latter has of successfully performing in a new activity (distribution) leads to rationing and excessive cost of financing from the perspective of the new entrant, a phenomenon known as adverse selection.
On the other hand, when exclusivity contracts establish very high producer compensation in the event of a breach of the contract by distributors (Liquidated Damages), the possibility of entry of potential competitors is greatly reduced. This is because, in order to convince distributors to buy from them, new entrants would have to incur much lower marginal costs than the company that imposes exclusivity contracts, in order to be able to offer distributors prices Low enough that, once the Liquidated Damages are canceled, it is profitable for them to change providers.
Effects
| Effects of exclusivity contracts. | # | Percentage |
| Development of the distribution channel part.
Obstacle to market access. |
12
8 |
60%
40% |
| twenty | 100% |
- Development of the part of the distribution channel studied here.
This probably would not have happened if Polar had not been able to internalize the benefits of its investment in this activity through exclusive contracts.
It is important to point out that the provision of facilities or financing for their purchase by beer producers to retailers, in exchange for them selling their product exclusively, constitutes an improvement in the efficiency of the distribution channel beneficial to Consumers who, according to the EEC, justify granting an exception to beer supply exclusivity contracts from the prohibition of concluding agreements that restrict competition. There is even a special title for exclusive beer supply contracts within the EEC Exceptions Regulation to exclusive purchase contracts.
Although the relationship between wholesalers and Polar is being studied here, what is stated in the previous paragraph is perfectly applicable to this case.
- Obstacle to market access.
Another important effect of exclusivity contracts in the beer market is hindering access in a large part of the market to both current and potential competitors.
The extent to which exclusive contracts hinder market access depends on the duration of the contracts, the Liquidated Damages included in them and the market share of the company that imposes them. As these variables are greater, the market obstacle will also be greater.
CONCLUSIONS
In summary, the combination of territory allocation and maximum price setting for CPs is positive for social welfare in a deterministic environment. However, if the CPs are risk averse, and there is also uncertainty regarding distribution costs and demand in the final market, a situation of competition between the CPs produces greater social welfare than the combination of restrictions. already mentioned. Finally, regarding exclusivity contracts, it seems that this restriction has had the greatest influence on social welfare, since it has had two very important effects on it, one positive and the other negative.
The positive effect consists in the great development outside the Polar hierarchy of the part of the distribution channel studied here. This was partially caused by the possibility offered by the exclusivity contracts to this company, to appropriate the benefits of the investments made by it in the development of the distribution channel.
As for the negative effect, this refers to hindering access to a considerable part of the market to current competitors (Regional, several brands of imported beer) and potential. This obstacle will depend on the high market share that Polar has, on the term of the contracts concluded with the CP's and on the Liquidated Damages stipulated in them.
In order for the quantity of product that maximizes the profit of both to be the same, the price imposed by Polar in the retail-retail transactions must be equal to the price that she sells to the retail agents, thus the CM and the Marginal of the CP's will be the same in the level of production that maximizes the benefit of Polar.
BIBLIOGRAPHIC REFERENCES
- ACEVEDO ACUÑA, Rolando. Documentation and Research Techniques. Volume I, National Open University. I989.ARIAS, Fidias G. Research Project Guide. Editorial Episteme, Third Edition. 1999. CONSTITUTION OF THE BOLIVARIAN REPUBLIC OF VENEZUELA, Official Gazette Number 36,860, Editors Distribuidora Escolar, SAFISHER, L. and NAVARRO V. Introduction to Market Research. Mexico. Third Edition., Mc Graw Hill. 1994GIL MENDOZA, José I. Modern Administration. MacGraw-Hill. Business Practice Library. D´Vinni Editorial Ltda. Colombia 1998. UNIVERSIDAD NACIONAL ABIERTA. Documentation and Research Techniques.Caracas - Venezuela 1989. Caldentey, P. and Morales, A. (1996a): «Interpretation of the changes experienced by the European Agri-Food System, Magazine of Social Development. Vol. 51, No. 204 (Oct-Dec.). Córdoba (Spain).Jhan, HH. (1991), «Strategic adjustments of agri-food companies», Magazine of Agro-social Studies, Nº157. Ministry of Agriculture, Fisheries and Food. Madrid, (March). Morales, A. (2001). "Neoinstitutionalism and the Agri-Food Question in Venezuela" in Héctor Valecillos and Omar Bello, The Contemporary Economy of Venezuela, Central Bank of Venezuela, Economic and Financial Collection, Caracas
