Case Study: Fe’nix del Sur, LLC I. Problem Statement If Fe’nix del Sur, LLC accepts the contract they might make a potential profit of $4 million in additional sales and above the annual growth and be able to broaden the firms current position, but it might not be worth it due to the fact of possible loss of current dealers and customers, and the companies authentic-ness. II. Industry Analysis Fe’nix del Sur, LLC competes in the authentic artifact business. They collect authentic artifacts and replicas and sell them to two main groups; artifact collectors and gift buyers.
They currently do not have a full line of replicas due to the fact that they are a ‘specialty’ store. II. Organizational Analysis Business: Fe’nix del Sur, LLC is a limited liability company that sources and sells South American and African artifacts. They are one of the most respected sources of artifacts for collectors. New Business: Fe’nix del Sur, LLC has a full line of replicas they sell to gift buyers. They have an extra $4 million due to the addition to the full line of replicas.
Distinctive Competency: Fe’nix uses their authentic artifacts to set them apart from places such as department stores that sell all replicas. The relationship Fe’nix del Sur, LLC has between the company and retailers that sell their product is very close. Fe’nix del Sur, LLC only distributes through specialty dealers and some exclusive department stores. If the company accepted the contract these retailers might drop them due to the fact of not having the reputation of authentic. The ‘specialty’ dealers only want to deal with ‘specialty’ companies. IV. Alternatives Accept Contract
Advantages 1. If they accepted the contract there would be a potential $4 million in additional sales over and above annual growth. 2. If they accepted the contract they would be broadening their firms current position into replicas. 3. If they accepted the contract they would have a larger audience reaching to department store shoppers and a larger audience then just the gift buyers. Disadvantage 1. If they accepted the contract they could potentially loose their current dealers. This could happen due to the fact that their current dealers only deal with authentic. . If they accepted the contact they could potentially loose their current customers. This is due to the fact that some of their current customers only buy from special sellers. 3. If they accepted the contract they would loose their current reputation as authentic artifact sellers. 4. If they accepted the contract they would have to cut the prices down. Reject Contract Advantage 1. If they reject the contract they will keep their current dealers. 2. If they reject the contract they will keep their current customers happy.
The customers will stay loyal to them due to the fact of their authentic-ness. 3. If they reject the contract they will keep their authentic name and originality. Disadvantage 1. If they reject the contract they will not have the potential to earn an additional $4 million in sales. 2. If they reject the contract their product line will stay the same and they will not have a new larger audience to reach to. 3. If they reject the contract they will not broaden their consumer market. V. Recommendation Fe’nix del Sur, LLC should not sign the contract.
The company’s current gross margin is $25 million and the current gross increases by 20% every year. If Fe’nix del Sur, LLC broadens their company with a full line of replicas, current customers might not stay with them due to their potential decrease in the reputation of a specialty store. As a loyal customer, I would expect the company I am with to be loyal to their authentic products they are offering. Fe’nix del Sur, LLC staying as they are will keep their customer, dealers, and background of the company in a good position. There are a lot of risks the company would take if they accepted the deal.