SOSLP

Flame School Of Business – 1st

Year

Written Analysis and

Communication 1

Assignment – 2

Decision Report on Matworks

Regarding Sponsorship

Submitted to Prof. Mukul

Vasavada

DATE : 14/10/2009
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Southwestern Ohio Steel LP

Hamilton, Ohio

March 24th, 1994

To Dan Wilson
Vice President (Sales)
Southwestern Ohio Steel

From Jack
Deputy Vice President (Sales)
Southwestern Ohio Steel

Subject: Decision report on letter from Matworks which

requests sponsorship

Please find attached the decision report on Matworks. I have

prepared a detailed report highlighting the implications for
each possible course of action. The report consists of industry
analysis, Matworks request by keeping in mind various factors
like customer relationship, company’s image, customer
expectations, etc. I have tried to address both the short term &
long term problem. This is followed by an analysis of options &
recommendations based on the evaluation of options.
I am submitting this report for your consideration and
necessary action. I hope you find the report satisfactory & in
tune with your requirements.
I will be glad to seek any further clarification regarding the
analysis.

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Executive Summary
We, Southwestern Ohio Steel is faced with a request from
Matworks , one of our oldest & most valued customers
requesting us to sponsor any event of their annual sales meet.
This request comes as a total surprise for us, as our company
doesn’t spend large amount on any type of promotional
activity. After analysing various
factors such as cost, company policy, customer relationship &
corporate image & also keeping in mind the short & long term
point of view it is recommended that SOSLP should sponsor the
event with minimum sponsorship as our long term relationship
with Matworks can be well maintained.

Word Count: 105

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TABLE OF CONTENTS
Topics Page No

1. Situation Analysis 5

2. Problem Statement 6

3. Criteria For Evaluation 6

4. Options 6

5. Evaluation of Options 6-8

6. Recommendations 8

7. Action Plan 9

8. Exhibits 9-10

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Situation Analysis:
SOSLP has a history of developing strong relationships with
mills and customers, and prided itself on providing state-of-the-
art services to add value to the channel. The company generally
doesn’t spend large amounts on any type of promotional activity and especially
not on individual customers. For the company, the concept of partnership with
customers is very important. We have recently received a letter
from a large and long-time customer asking that, as a major
supplier, Southwestern Ohio Steel contribute to the Matworks
annual sales meeting by sponsoring an event. The cost of the
sponsorship would be anywhere from $5,000 to $30,000. The
customer was large and serious about Southwestern's
participation, but as a supplier, the company had never done
business in this way.
Now, SOSLP has to decide whether to sponsor or not to sponsor an event of
Matworks. Various factors like the company policy, the long standing
relationship etc. has been considered to arrive at the decision.
We should also evolve a strategy to take care of potential
problems that can arise in the future, in addition to deploying a
tactical solution to the present situation.

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Problem Statement:
Should we sponsor the event at Matworks Annual sales meet or not?

Criteria for Evaluation:

• Cost to the company
• Company’s policy
• Business relationships
• Future sponsorship
• Corporate image

Options:
A. To sponsor an event

B. Not to sponsor an event

Evaluation of Options:
1. To sponsor the event
a. Cost to the Company: The annual expenditure of our company for
advertising and other promotional activity is $25000 annually
(refer exhibit 1). Therefore if we decide to sponsor an event we

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will have to incur a minimum expense of $5000(Golf tournament).

As our company earns a profit of $20160(refer exhibit 2) from
Matworks annually, sponsoring an event with minimum amount
should be feasible

b. Company’s Policy: The Company doesn’t spend large amount on

any type of advertising or promotional activity. We are considered
as industry leader. To increase our sales and promote ourselves
against our competitors certain promotional activity will be needed.
Therefore altering the company policy in the interest of the
company will be beneficial. Thus sponsoring an event with
minimum of $5000 is preferable

c. Business Relationships: By sponsoring an event in Matworks

annual sales meet we get an opportunity to improve our
relationship bond with Matworks and it also shows the way we
value one of our oldest and long term customers. In a way we can
also maintain a view that, for us relationship with customer matters
the most rather taking advantage of the situation to make quick
bucks.

d. Future Sponsorships: If we sponsor an event for Matworks there

are good chances of other companies asking for sponsorship in
future. There two main reasons for sponsoring an event in
Matworks.Firstly, if Matworks is actually facing problems, then by
sponsoring the event we can show the company and other
customers that we stand by our customers when they are facing
hard times.Secondly,There are chances of Matworks planning for
future reformations hence they have arranged such a grand event to
enhance their corporate image. Therefore, by sponsoring their
event, we could have a possible share in their future prospects
thereby we could earn future benefits. By doing this we let our
customers know that we are not only sponsoring an event but we
see a business opportunity as well.

e. Corporate Image: If we sponsor the event in Matworks we get to

improve our business relationships with them and it shows that we
support their morale in there bad times. There won’t be any chance

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of bad publicity if we don’t sponsor the event, but there are

chances that our competitors might use the opportunity to break
into our account. Hence the Corporate Image will be maintained
and our goodwill will increase.

2. Not to Sponsor the Event:

a. Cost to the Company: If we don’t sponsor any event in matworks
annual sales meet then we would be saving a minimum amount of
$5000 which can be used by the company for future purpose.

b. Company’s Policy: The Company’s policy will not be altered if

we don’t sponsor. We can stick to our earlier policy of low
advertising expenses.

c. Business Relationships: Matworks being our important customer,

there are good chances of our relationship getting hampered with
the company. We may lose a very important customer in future.

d. Future Sponsorships: If we don’t sponsor the event now there are

very less chances of other customers asking for sponsorship in
future.

e. Corporate Image: Company may face difficulty in forecasting the

future demand as there could be a possibility of losing Matworks
as our customer. So indirectly it will be affecting our company’s
image in the market.

Recommendation:
It is recommended that SOSLP sponsor the event with minimum sponsorship of
$5000(golf tournament).The amount can be paid from the company’s profits. If
we sponsor this event we see a bright future with Matworks and there are great
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chances of our sales getting increased. If we practise our usual advertising

policy like giving tickets for basketball game, we reach out very limited number
of people, but by sponsoring this event we can reach out large number of people
and also improve our corporate image. Also our company executives will get an
opportunity to have a dialogue with executives of Matworks.

Action Plan:
• Sponsor the event by paying a minimum amount of $5000.

• We need to change our advertising policy so that we can spend more on

advertising to increase our customers and improve the brand image.

• We can invite the executives of four subsidiaries to attend the event.

There by creating awareness of their product as well.

• We should look to improve our sales after the event as we will be having
improved brand image in the market.

Word Count: 976 words.

Exhibit 1- Calculation of advertising expenses annually

Particulars Explanation Amount

Sales (Annual) $ 250 Million

Percentage 1 one hundredth i.e.

(Advertisement of
sales) 1/100=0.01% i.e.

0.01/100 * 250 million $ 25,000

Exhibit 2- Calculation of Profit from Sales to Matworks

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Particulars Explanations Amount

Sales(for 1993) $ 672000

Profit Margin(3% of 3/100*672000

sales)
$20,160

Exhibit 3 – Sample Letter to Linda Lewis

From,
Southwestern Ohio Steel LP (SOSLP)
Hamilton, Ohio
March 25th, 1994.

To,
Ms. Linda Lewis,
Director of Communications,
Matworks, Inc.
Cincinnati

Dear Ms Linda,
Subject: Regarding Sponsorship at Matworks annual sales meeting
This is with reference to the letter we had received on 18th march
from Joseph P.Pendleton regarding the sponsorship in the annual sales meeting
of Matworks.The idea of organising such a grand event is greatly appreciated
and sponsorship offer really came as a surprise to us. I would be pleased to
inform you that we are ready to take this surprise and sponsor the Golf
Tournament by changing our company’s policy. We are sponsoring the Golf
Tournament, just to assure that SOSLP is committed to its customers and the
SOSLP-Matworks business relationship will improve and is beneficial for both
of us.

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Yours Faithfully,
Dan Wilson
Vice President (sales)
SOSLP

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