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RMHC Analysis

 

            
            
             Rocky Mountain House Co-op is a co-operative-type business located in Rocky Mountain House. As a co-operative-type business, RMHC is owned by its users and earns "savings" for returning to customers through "patronage dividends." It is involved in three retail businesses: home center, shopping center, and petroleum. Although RMHC was one of the major petroleum suppliers in the area, it was still tough to run the business because of intense competition. Fortunately, its performance is successful due to the excellent service and high quality products. However, "the word is out that United Farmers of Alberta is planning to open a new petroleum outlet in Rocky Mountain House." UFA is also a member-owned co-operative and has newer facility for petroleum products. Therefore, it was considered a big impact on the sales and profits of RMHC. The managers made five plans to counteract this aggressive marketer.
             II. Issue identified.
             This case is talking about how could Rocky Mountain House Co-op retain its existing customers in petroleum market when they were facing a challenge that United Farmers of Alberta was planning develop a new petroleum outlet in Rocky Mountain House. Because UFA has been a great development in recent years, it might form a strong threat on attracting the customers of RMHC. In order to avoid the happening of the situation, the managers of RMHC drew some strategies to defend it.
             III. Reasoning for decision.
             .
             The five plans and analysis are as followed:.
             1. To pursue a pre-emptive pricing strategy. It means RMHC would intense the relationship with the existing customers through cutting prices and margins. .
             It will not be an effective strategy to retain customers. On one hand, "the prices established by RMHC are very similar to other petroleum suppliers in the area." Thus, the price is not the key reason why the customers prefer to its product, in contrast, the service and the quality products are attracting the customers; on the other hand, UFA also can cut prices to react its action.


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