Toucon is currently in a position of being pushed out of the marketplace if the company does not begin to compete more aggressively. Originally, the company was considered a reputable marketplace leader in the jewelry and pottery industry for South American- and African-style artifacts. The company has currently identified eleven major competitors while a decade ago there were only 5. Due to the uniqueness of Toucon’s products, the company faces several obstacles in obtaining authentic jewelry and pottery. First, limited distribution of the product line hindered the company’s potential growth. Next, since many of these artifacats are made in Africa, the country’s political climate as inhibited Toucon from obtaining appropriate supply. Another critical factor is that the market has been flooded with replicas, which means Toucon must search deeper for authentic pieces and also convey that message to the consumer. Finally, Toucon must deal with government interference when attempting to export its product out of the home country and into the United States.
Toucon must make the decision on whether to accept the proposal from the major department chain to carry the company’s product line. However, there is one caveat - Toucon must triple its current reproduction line (replicas). This presents an issue for Toucon’s president, Andrew Smythe, as he is not sure if the company should dedicate such a large portion of the company’s product line toward replicas.
Alternative Courses of Action
An alternative solution might be to counter the contract and propose that Toucon will produce only double its production of replicas and sell the replicas at 15% below the current selling price, but the authentic artifacts will remain at 10% below existing prices. This would offer a compromise for the mass-merchandise department store and, hopefully, would not disrupt the company’s built-in dealers and customers.
A second alternative might be to forego the entire deal and...