Assignment 1:Southwestern Ohio Steel LP
Letter of Transmittal
From:South western Ohio Steel LP
XYZ16th Jan ,2009
Vice President , Sales
Subject: Decision report on letter from Matworks which requests sponsorship Please find attached the decision report on Matworks. I have prepared a detailed report outlining the implications for each possible course of action. The report consists of industry analysis, Matworks’s request by keeping in mind various factors like customer relationship, company’s image, customer expectations, etc. I have tried to address both the short term & long term problem. This is followed by an analysis of options & recommendations based on the evaluation of options. I am submitting this report for your consideration and necessary action. I hope you find the report satisfactory & in tune with your requirements.
We, Southwestern Ohio Steel LP is faced with a request from Matworks Inc, one of our oldest & most valued customers requesting to sponsor any event of their annual sales meet. MI is fully aware of our promotional policy and budget allocation so this request comes as a total surprise. We must manage customer expectations without hurting long term sales, customer relations & also take care of our corporate image. We should also evolve a strategy to take care of potential problems like this that can arise in the future, in addition to deploying a tactical solution to the present situation. The short term & long term problem inherent in the situation is identified & properly addressed by evaluating the various options under consideration on several criteria. It is recommended that SOSLP should refuse to sponsor the event. This needs to be done in phases—first tactfully communicating the decision to MI & carrying out a customer relations exercise with MI. It should be followed by formulating CRM practices—loyalty programs, concessions other than sponsorships, etc which are in line with company policies. This can be considered as one step towards building relationship with customers. This will ensure loyalty from the regular customers & put an to end to future requests for sponsorships.
South-western Ohio steel was founded in 1945. They are considered to be the industry leaders in technology & services. Though it is known for maintaining long standing customer relations, they generally did not spend large amounts on advertising or promotional activity. Industry Analysis
In steel service industry, competition is limited to local suppliers due to high transportation costs. Suppliers are essentially homogenous & are highly competitive. Customer’s loyalty is based on price or service with the latter being more loyal. Profit margins are low-around 3% for the industry as a whole. As increasing market size is cost-prohibitive, we can’t afford to lose the existing business & we must compete on quality, service levels to increase/ even maintain the current customer base. Scenario- Proposal from Matworks
Matworks Inc(MI) one of our oldest clients (since 1945) has sent a letter to Dan Wilson, VP-Sales requesting to sponsor (some of )their events organized as part of their annual sales meeting. The letter mentions the various events for sponsorship where the amount varies from $5000 to $30,000. MI is fully aware of SOSLP’s promotional policies & budget. So, the letter comes as a total surprise. Recession has affected MI badly & they had reduced their buying. Now they are our 90th customer. It seems MI is in financial trouble & their request comes as a plea for help. Many competitors will be glad to sponsor the events & break into MI’s account if we declined to support them. How our decision will affect the customer expectations needs to be given the highest priority. SOSLP’s image built on performance measures, our...