During the case, you found three ways in which products can be replenished to the stores. These ways are as follows:

Way 1: The retail company is itself handling the distribution of the products to its stores. Seven-Eleven Japan collects the food items from its suppliers in its DCs. These food items are then immediately distributed by Seven-Eleven to its stores through its transportation fleet provided by Transfleet Ltd.

Way 2: The retail company is not handling the distribution of the products to its stores. Instead, it is outsourcing the distribution part through the following mechanisms:

Some stores in the United States were replenished directly by the suppliers through the mechanism of direct store delivery (DSD).

Some stores in the United States were also replenished by exclusive foodservice distributors such as McLane.

Determine which of the aforementioned two ways would be more suitable in the following scenarios.

In the scenarios given below, you would be given the situation of two states having 12 districts each. The population density, socio-economic condition of the people, and everything else is the same across all the scenarios.

State A:This state has only two players competing with each other in the convenience store industry. The first player follows a market-dominance strategy in 6 districts, having ten to twelve stores in each of these districts, while the other player follows the same strategy in the remaining 6 districts of the state,i.e., the density of stores in each district is very high. (3 marks)

State B:This state has only two players competing with each other in the convenience store industry. Rather than following a market-dominance strategy, both players are focussing on covering all the five districts of the state through their stores. Each district has only two to three stores of both the brands, i.e., the density of stores in each district is very low. (3 marks)

Note: Please give your answer as 'Way 1' or 'Way 2' only.