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Facts: We have most reputable woolen yarn producer, using world's best wool from Australia. Our yarn is high demanded, matches with Japanese quality but sells 5% less. We book orders averaging 200000 kgs and go to Australia to buy the yarn personally. The dealing in Pakistan is on word of mouth i.e., an oral agreement. An order got based on a wool purchase price of Rs.55/kg which is having a reasonable profit. After your return to Pakistan we are intimated by the Chairman of the company that a major drought killed several hundred thousand sheep in Australia and wool price has been raised to Rs.75/kg. We are asked to re-consider the oral commitments to gain 30 to 40% more profit by the rate revision. Many End Product Manufacturers (EPM) are coming to your office with heavy offers for the yarn.
Problem Statement:
How to get more profit without breaching oral agreement and breaking market hierarchy.
Situation Analysis and Assumption:
By this we will save our self from a temptation of earning easy profit. If we dont do above mentioned action we will damage our market repute badly and the customers reliance will also be decreased. It would be a breach of contract (oral agreement) which will relegate morality. We will lose the customers confidence. We may lose our old customers where as old is gold. Dealing directly with End Product Manufacture (EPM) would damage the business spirit and market decorum. Getting the more profit in present will not be fruitful in business in the long run. We should fulfill the oral agreement. We should refuse the EPMs to maintain the Proper Business Channel. If we want get more profit from this deal, we, keeping in mind the above noted drawbacks, we should diplomatically ask some time from EPMs for thinking and urgently arrange a meeting with that dealer whom we are committed according to the rate of Rs.55/kg. Tell the dealer/middle-man that due to draught in Australia the prices have been raised up to Rs.75/kg but I have orally committed to you and I will not entertain the EPM because of you. whereas on the other hand I am being offered by the EPMs for more than 75/kg. Now we must revise the rates and you should also see those EPMs who came to me for yarn on high rates. In such a way he will reconsider the decided rate by himself without any tension. By such a way we will gain profit and our goodwill and customers relationship will be intact.
Problem Statement:
How to get rid of this threaten and save the employment of 450 people and the repute of the company.