Published on March 12, 2014
Ace Brokerage Com. Case Analysis SDM, NMP Term IV Group 5 Abhijeet Tomar - 03 Argha Ray - 15 Khushal Malik - 28 Vipin Kathuria– 59
Context • Ace is a large food broker operating in Steel City, Alabama • Partnership with Morreaux Sugar has clocked 70% retail market share. • Morreaux wants Ace to penetrate institutional business. • Ace President Kline contemplating on Morreaux proposal. • Morreaux VP Bob weighing between Ace and new wholesale distribution.
Ace Profile: • Comfortable in the Retail Market. • Offers several kinds of services to its principals. • Reasonable Market Power in Steel City due to predominance of local chains. • Ready to sever ties on account of quality issues. • Seeks to protect its reputation. • Wants counterpart to be compatible in terms of goals. • Satisfied with reasonable profits. Lacks urge to scale up. • Reluctant to venture into new institutional business.
Morreaux Profile: • Wants to capture both retail and institutional market. • Bob is worried on tapering retail sales. • Constantly engages in boundary scanning through market research. • Ready to sever ties on account of goal incompatibility with channel members. • Considerable market power as retail sugar behemoth. • Wants counterpart to be compatible in terms of goals. • Ready to promote products and scale up. • Wants to venture into new territory of institutional business.
The Structural Conflict: • Divergence in goals between both firms. • Bob can exercise reasonable authority as retail sales are tapering off. • Kline will have to invest on new salesforce as existing field personnel may not have necessary expertize to serve institutional business. • Kline is complacent and Bob is raring to conquer new territories.
Bob’s Channel Offering: • A tick is affirmative and a cross is negative. • Bob may not have explained market research data to Kline on shifting customer preferences on eating out. • Bob may not be providing technical assistance as Kline’s salesforce is competent. • Kline thinking of hiring new salesforce as Bob may not be willing to provide training to existing or new salesforce on institutional selling. • Incentives to Kline’s salesforce may not be forthcoming from Bob. Only firm incentive is evident. Core Elements Financial Retruns √ Quality Products √ Competitive Price √ Reliable Delivery √ National Reputation √ Capability Building Market Research × Company Policy √ Technical Assistance × Responsiveness √ Promption √ Training × Incentive Distributor Sales × Manufacturer Sales × Distributor Firm √
Channel Influence: • Kline’s attitude needs to be changed. • Recommendation and Modelling using Market Data will help reenergize Kline. • Bob should be ready to share Kline’s burden on new salesforce. • Bob must point out that shifting customer preference may lead to slump in Kline’s business in the long run. Negative Attitude Positive Negative Behaviour Reinceforcement Moderate Rationalization Moderate ConfrontrationInducement Radical Confrontation Radical Rationalization NeutralPositive
Decision: • For Kline, tomorrow his other large Tuna client may also ask him to venture in other areas. • Severing ties with Bob will shave a clean 16% from Kline’s topline. • Bob’s request shows rapport and relational exchange. • Kline would be won by direct unmediated recommendation by pointing out market data. • Collaborative negotiation will help extend relationship between compatible partners. • Bob will have to start from scratch to nurture institutional wholesalers. Kline obviously a better choice without going into multiple channels. • Help Kline reconfigure for his own good.
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