Sorzal Case Study
Case Summary
Sorzal is an importer and distributor of artifacts mainly from South America and South Africa, and of jewellery/pottery mainly from South-western India. The company has developed a reputation of being one of the most respected importers of these rare and authentic items. The company's annual sales are $12 million and have been increasing at a constant rate of 20 percent per year over the last ten years. However, due to high levels of increased competition, gross margins have been deteriorating. Distribution is limited, as most of it is done by Sorzal itself in the form of firm-sponsored showings, and some specialty shops and exclusive department stores. Sorzal acts as a middle man, insofar as it imports from suppliers and distributes to dealers. Dealers are beginning to alter their purchasing strategy and have begun buying directly from suppliers, removing Sorzal from the process. Sorzal has been offered a contract by a mass-merchandise department store that obligates Sorzal to triple replica production, but would result in add an estimated $1 million in sales. The dilemma is whether to accept the offer, considering external competitive factors in the market and any potential negative effect on Sorzal's reputation.
Decision Areas
Symptoms Causes Decision
Limited distribution Nature of product line and supply shortages Whether or not to expand current distribution to mass-market stores with replicas and/or authentic items
Limited supply Political situation in Africa, more competition, government and nationalistic views towards artifacts Determine whether more emphasis needs to be placed on products other than difficult to acquire authentic line in order to hedge risks
Increasing Sales Higher demand and acceptance for expanded distribution of South American and African artifacts Decide whether to increase market penetration for high end department stores to purchase Sorzal's South American and African Artifacts, as the end purchaser, the consumer
Sorzal is an importer and distributor of artifacts mainly from South America and South Africa, and of jewellery/pottery mainly from South-western India. The company has developed a reputation of being one of the most respected importers of these rare and authentic items. The company's annual sales are $12 million and have been increasing at a constant rate of 20 percent per year over the last ten years. However, due to high levels of increased competition, gross margins have been deteriorating. Distribution is limited, as most of it is done by Sorzal itself in the form of firm-sponsored showings, and some specialty shops and exclusive department stores. Sorzal acts as a middle man, insofar as it imports from suppliers and distributes to dealers. Dealers are beginning to alter their purchasing strategy and have begun buying directly from suppliers, removing Sorzal from the process. Sorzal has been offered a contract by a mass-merchandise department store that obligates Sorzal to triple replica production, but would result in add an estimated $1 million in sales. The dilemma is whether to accept the offer, considering external competitive factors in the market and any potential negative effect on Sorzal's reputation.
Decision Areas
Symptoms Causes Decision
Limited distribution Nature of product line and supply shortages Whether or not to expand current distribution to mass-market stores with replicas and/or authentic items
Limited supply Political situation in Africa, more competition, government and nationalistic views towards artifacts Determine whether more emphasis needs to be placed on products other than difficult to acquire authentic line in order to hedge risks
Increasing Sales Higher demand and acceptance for expanded distribution of South American and African artifacts Decide whether to increase market penetration for high end department stores to purchase Sorzal's South American and African Artifacts, as the end purchaser, the consumer