Problem: After specializing in ancient artifacts as well as replicas from countries like Peru, Venezuela and Africa, business is beginning to subside due to the competition in the market and similar replicas being sold at lower prices. The market has added new competitors which have weakened the bargaining power of this company. The market is shifting from antique authentic items to cheaper replicas. Another huge problem in this market is that people are producing a large amount of fakes which are intended to be authentic. They are made to look very old. Fe’nix del Sur has had authentic products at departments stores which competing companies have replicas at the same one.
Opportunity: A department store chain wants Fe’nix del Sur to add an exclusive product line for their store. The contract stated it would buy at 10 percent below the company’s existing price and its initial purchase would be no less than $750,000. Based on customer approval, purchases could go up to $4 million annually. A clause in the contract states that Fe’nix would have to triple its replica production to satisfy the contract.
1. Decide to accept the contract and start shifting business to create more replicas and not have as many authentic pieces. If you accept this contract, you will be known primarily as a replica dealer and possibly lose your reputation as an authentic seller because the majority of your business in now in replicas. This may cost you future authentic contracts or your current consumers who buy your authentic goods. Only accept this contract if you know the market is shifting towards cheaper replicas and not authentic pieces. 2. Decline the contract. You are known as a company that specializes in authentic artifacts but have certain replicas that are of tremendous quality. Declining this contract will emphasize your stance to your customer base as well as the industry that you are committed to providing...