Fenix Del Sur Case Analysis Essay

I. Problem Definition Should Fenix accept the contract to broaden its point and potentially add $4million in additional gross revenue, given the constraints of dedicating a large percent of their business to replicas which may mystify an effect on their race with flowing dealers?II. Industry AnalysisAccording to the product-market matrix above, and after reading about the industry, it is apparent that Fenix del tire competes in selling authentic artifacts to collectors. later some of their clients insisted on an expanded product line, Fenix del Sur started producing replicas of their authentic artifacts. The replicas, in return, have broadened the compeverys market to include present buyers and individuals looking for decorative items.III. Organizational AnalysisFenix del Sur is a reput qualified importer of authentic Southwestern jewelry and pottery for collectors. They originally sourced Hopi and Navajo artifacts, and in novel years have expanded their product line to incl ude pre-Columbian artifacts from Peru and Venezuela, along with tribal and burial artifacts from Africa.If Fenix del Sur accepts the contract, their business definition would change. Since the societys main focus in shortly on dealing authentic artifacts to collectors (exclusively through specialty dealers, firm-sponsored showings and a few exclusive department stores), the loyal collectors who continually purchase their products may start to look elsewhere if the company fully expands their product line to include many an other(a)(prenominal) replicas. The company would no longer be in just the authentic jewelry and pottery business, but rather also in the replica business. Therefore, their unseasoned business definition would be altered to include being a producer of replicas for gift buyers.Through careful verification, Fenix del Sur is qualified to successfully determine the authenticity of South American and African artifacts. This skill has enab take Fenix del Sur to devel op a national reputation as one of the most prize sources of these types of artifacts. Fenix del Surs distinctive competency, which sets them apart from department stores that sell only replicas, allows them to sell through suppliers with super limited distribution.The company had originally established a solid kindred with the retailers that sold their products, often being the sole supplier to its clients. However, in more recent years, due to the increase in competition, Fenix Del Surs products are not the only products being sold at some of these retailers. In fact, some of the retailers are now sending out their own buyers to deal flat with some of the Hopi, Navajo and African sources completely stepping past Fenix. Therefore, the companys relationship with those retailers is not as strong due to an increase in consumer demand for both authentic artifacts and replicas.By accepting the contract, I recover that the relationship between Fenix del Sur and the retailers they ongoingly deal with would change. Most of the larger specialty and exclusive department stores are now dealing directly themselves or with other suppliers. Forming this new relationship with the mass merchandiser chain, allowing them to buy at 10% below the companys existing charges, would spell misadventure for Fenixs current business relationships. Once the other businesses that Fenix currently deals with find out about this 10% wrong cut, they provide either find another importer of authentic artifacts and jewelry or they will demand the 10% price cut as well. If all businesses that they currently deal with demanded a 10% price cut, Fenix del Surs income statement would drastically change probably not for the better.IV. AlternativesA. Accept rationalise a. Advantages i. Fenix Del Sur can broaden their position in the replica segment ii. They can potentially add $4million in additional gross sales over and above their annual growth. iii. Fenix could become a competitor in t he replica business b. Disadvantagesiv. Fenix could lose their current clientele such as the collectors they currently target v. Accepting the contract may affect their relationship with their current dealers by causing them to seek other importers that sell only authentic pieces vi. Being acquainted with a mass merchandiser could ruin the companys image so loyal customers who a great deal purchase Fenixs items may start searching for artifacts that are imported through dealers that only sell authentic pieces vii. The 10% price cut for the mass merchandiser could hurt their reputation with all of their current suppliers. Cutting the price 10% for one type of retail tone ending will cause all other stores to want the same treatment. This would be a disruptive change to Fenixs business and their overall profit. viii. Fenix would have to increase their replica production almost three timesB. Reject Contract c. Advantages ix. The company will maintain their current relationship with dealers and customers. x. Their current sales growth per year would more than likely remain constant. xi. They would not have to worry about a price cut for any retail outlet since they already have a solid clientele of suppliers who are buying their artifacts regularly. xii. Their production could remain constant with no increase in the amount of replicas being produced.d. Disadvantages xiii. Fenix could lose the large increase in additional sales revenue that the mass merchandiser chain could service of procedure them achieve. xiv. The company could lose potential sales due to competition in the replica business if they dont accept the contract. xv. They would not be able to capture a broader target market.V. RecommendationAfter careful analysis and consideration of Fenix del Surs business foundations, I feel that it would be best to reject the contract at this point in time. Reviewing the advantages and disadvantages above, along with assessing Fenixs current business definiti on led me to this conclusion. The companys current sales revenue is about $25million, and has had steady sales growth for the past ten years with an annual increase of 20%. This large annual increase in sales can be greatly attributed to their core competency of being able to accurately verify the authenticity of South American and African artifacts. Over time, Fenix del Sur has established a national reputation as one of the most respected sources of these types of artifacts.Aside from their solid sales growth, Fenix has established great relationships with the specialty dealers and exclusive department stores that sell their products. Building solid relationships with clients is a process that takes a lot of time and attention. Without these relationships, Fenixs sales would drastically decrease, possibly causing them to go out of business. Because the company has been selling to selective types of retail outlets, the end consumers (collectors) are very loyal to continually purcha sing Fenixs products.If Fenix del Sur accepted the contract, they would have to completely reposition their brand and business definition to include both replicas and authentic items. Because they are not in any danger of losing sales at this point in time, it would be wise for the company to continue business as they normally do. Just because an external opportunity exists does not mean that Fenix should take advantage of it. It seems as though the sales manager is very focused on the potential to add $4million in additional sales revenue. Although this may sound good at first thought, it is always wise to consider where the business stands at the present.Overall, the contract is too demanding on Fenix. The companys prices seem to already be accepted by the specialty dealers and exclusive department stores therefore, cutting their prices by 10% for one retail outlet will lead to relationship issues down the line. These long-term relationships that have taken years to nurture could be gone in a matter of months. Also, because Fenix is known for authentic artifacts, increasing their production of replicas three times would create a disruption in their normal way of doing business. Again, this would force Fenix del Sur to reposition its brand possibly losing a lot of clientele in the process.