Sorzal Case Study

Topics: Department store, Retailing, Marketing Pages: 8 (2732 words) Published: September 29, 2007
Case Summary
Sorzal is an importer and distributor of artifacts mainly from South America and South Africa, and of jewellery/pottery mainly from South-western India. The company has developed a reputation of being one of the most respected importers of these rare and authentic items. The company's annual sales are $12 million and have been increasing at a constant rate of 20 percent per year over the last ten years. However, due to high levels of increased competition, gross margins have been deteriorating. Distribution is limited, as most of it is done by Sorzal itself in the form of firm-sponsored showings, and some specialty shops and exclusive department stores. Sorzal acts as a middle man, insofar as it imports from suppliers and distributes to dealers. Dealers are beginning to alter their purchasing strategy and have begun buying directly from suppliers, removing Sorzal from the process. Sorzal has been offered a contract by a mass-merchandise department store that obligates Sorzal to triple replica production, but would result in add an estimated $1 million in sales. The dilemma is whether to accept the offer, considering external competitive factors in the market and any potential negative effect on Sorzal's reputation. Decision Areas

Limited distributionNature of product line and supply shortagesWhether or not to expand current distribution to mass-market stores with replicas and/or authentic items Limited supplyPolitical situation in Africa, more competition, government and nationalistic views towards artifactsDetermine whether more emphasis needs to be placed on products other than difficult to acquire authentic line in order to hedge risks Increasing SalesHigher demand and acceptance for expanded distribution of South American and African artifactsDecide whether to increase market penetration for high end department stores to purchase Sorzal's South American and African Artifacts, as the end purchaser, the consumer who shops at department stores, demands such products. Increasing presence of inauthentic and replica artifacts at retail store level (some claim this gives the industry a bad name).Apparent demand for such items, more players tapping into the replica marketDecide whether to stay in authentic business, already have the reputation, sales increases are due to higher demand for authentic south American and African artifacts, or to enter the replica market since market may be moving that way (but may be risking authentic image). Problem Statement

After analysing the decision areas the major problem that Sorzal needs to address is that it must adapt to changing market conditions and increase its presence in the replica market, while maintaining its current reputation to its high end customers. SWOT Analysis

In order to diagnose Sorzal's current situation and determine the decision criteria of this case, it is essential to perform a SWOT analysis. This will allow us to evaluate both the internal and external environment of the organization and provide a recommendation that will enable Sorzal to capitalize on its opportunities and minimize threats. Strengths

A company's strengths can be considered the controllable elements that influence how well the organization operates as a whole. Sorzal's strengths lie within their products, as the company prides itself in providing its customers with authentic artifacts and replicas that are produced meticulously in order to ensure that only an expert buyer, such as a collector, would be able to recognize their in-authenticity. Sorzal is able to produce such high-quality products through their talented craftspeople, who obviously have a great degree of technical skills and talent. The company's products have recently gained greater acceptance in the market, allowing Sorzal to expand their distribution to specialty shops and exclusive department stores. The company's commitment to quality and its emphasis on providing...
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