"Fe Nix Del Sur" Case Analysis
STRATEGIC ISSUES AND PROBLEMS
Myron Rangard, national sales manager, and David Olsen, Director of Procurement at Fe nix Del Sur LLC have been assigned the task of reviewing a pending contract with a mass-merchandising department store that would entail the tripling of replica production, and more particularly a full assortment of authentic items. Rangard and Olsen must first consider the long-standing reputation that Fe nix del Sur has built as being one of the most reputable sources of genuine and authentic artifacts. Presently, replica production represents only a small portion of total sales and increasing their replica production could jeopardize their reputation. In addition, acquiring authentic artifacts is more difficult due political issues within countries, increased competition, and governmental issues concerning the exportation of artifacts that they refer to as having “national significance”. Supply and bargaining position has been stifled, as well as, the decline in Fe nix del Sur’s gross margin. This is attributed to the dramatic increase of competitor’s in the supply market over the past decade. Retail competition has proven to be a formidable factor. This is a result of those retailers sending out their own buyers to deal directly with Fe nix del Sur’s sources. Fly-by-night competitors also pose a problem by “dumping” low quality, overpriced items, which in turn sheds a bad light on the industry as a whole. Moreover, the Internet offers high-quality, authentic items. Dist If Fe nix del Sur signs, as two of their competitors already have, the price point for their items would be retail and much lower than what the company’s dealers charge. Finally, the initial purchase made by the purchasing company would be at a 10% discount off of current prices with no less than a $750,000 initial purchase.
INSIGHTS
The replica market has shown a sharp increase in demand due to peaked interest from gift buyers and consumer’s looking for decorative items,
Myron Rangard, national sales manager, and David Olsen, Director of Procurement at Fe nix Del Sur LLC have been assigned the task of reviewing a pending contract with a mass-merchandising department store that would entail the tripling of replica production, and more particularly a full assortment of authentic items. Rangard and Olsen must first consider the long-standing reputation that Fe nix del Sur has built as being one of the most reputable sources of genuine and authentic artifacts. Presently, replica production represents only a small portion of total sales and increasing their replica production could jeopardize their reputation. In addition, acquiring authentic artifacts is more difficult due political issues within countries, increased competition, and governmental issues concerning the exportation of artifacts that they refer to as having “national significance”. Supply and bargaining position has been stifled, as well as, the decline in Fe nix del Sur’s gross margin. This is attributed to the dramatic increase of competitor’s in the supply market over the past decade. Retail competition has proven to be a formidable factor. This is a result of those retailers sending out their own buyers to deal directly with Fe nix del Sur’s sources. Fly-by-night competitors also pose a problem by “dumping” low quality, overpriced items, which in turn sheds a bad light on the industry as a whole. Moreover, the Internet offers high-quality, authentic items. Dist If Fe nix del Sur signs, as two of their competitors already have, the price point for their items would be retail and much lower than what the company’s dealers charge. Finally, the initial purchase made by the purchasing company would be at a 10% discount off of current prices with no less than a $750,000 initial purchase.
INSIGHTS
The replica market has shown a sharp increase in demand due to peaked interest from gift buyers and consumer’s looking for decorative items,