Southwestern Ohio
Situation Analysis
The implications of whether we decide to sponsor Matworks’s sales event or not, are manifold and need to be explored from the point of view of various stakeholders of Southwestern Ohio Steel LP (SOSLP). To analyze the situation before us, I will look at the industry and major stakeholders in our decision in turn.
Analysis of the Industry
The steel service industry has two major characteristics; costs of transportation over long distances are prohibitive and suppliers are essentially homogenous and highly competitive resulting in low margins of around three percent for the industry as a whole. This has two implications for us. Firstly, we can not afford to lose business in our two hundred mile radius market because increasing the market size is cost prohibitive. Secondly, we must compete effectively on quality and customer service levels to maintain or even increase our current customer base.
Analysis of major stakeholders in the decision
Matworks: We need to first analyze Matworks’s motivation behind sending us a sponsorship letter. While the company claims that their sales event is an opportunity for us to meet their regional vice presidents and top sales executives, it is possible that Matworks is in financial trouble and is looking at this event as a way to make easy money. However, we cannot take the issue lightly considering Matworks is a long standing customer. Furthermore, Matworks provides us with consistent requirements, which helps our margins by reducing uncertainty and inventory holding costs. We must keep these considerations in mind while deciding a response.
SOSLP: Given that we are recognized as industry leaders in technology and service and that we have a reputation of honesty and integrity, our relationships with our customers are built on performance rather than marketing measures. In the context of Matworks, this is very important because this implies that Matworks’s decision on whether to retaliate in case
The implications of whether we decide to sponsor Matworks’s sales event or not, are manifold and need to be explored from the point of view of various stakeholders of Southwestern Ohio Steel LP (SOSLP). To analyze the situation before us, I will look at the industry and major stakeholders in our decision in turn.
Analysis of the Industry
The steel service industry has two major characteristics; costs of transportation over long distances are prohibitive and suppliers are essentially homogenous and highly competitive resulting in low margins of around three percent for the industry as a whole. This has two implications for us. Firstly, we can not afford to lose business in our two hundred mile radius market because increasing the market size is cost prohibitive. Secondly, we must compete effectively on quality and customer service levels to maintain or even increase our current customer base.
Analysis of major stakeholders in the decision
Matworks: We need to first analyze Matworks’s motivation behind sending us a sponsorship letter. While the company claims that their sales event is an opportunity for us to meet their regional vice presidents and top sales executives, it is possible that Matworks is in financial trouble and is looking at this event as a way to make easy money. However, we cannot take the issue lightly considering Matworks is a long standing customer. Furthermore, Matworks provides us with consistent requirements, which helps our margins by reducing uncertainty and inventory holding costs. We must keep these considerations in mind while deciding a response.
SOSLP: Given that we are recognized as industry leaders in technology and service and that we have a reputation of honesty and integrity, our relationships with our customers are built on performance rather than marketing measures. In the context of Matworks, this is very important because this implies that Matworks’s decision on whether to retaliate in case