Business Marketing

MDI Gurgaon
Case Study
GROUP

Charlestown Chemicals, Inc.

5
Esha Sharma

SDM Section A

Timeline

15th June: Puritan raises prices from 97.50$ to 132.50$

22nd June: Meeting with Puritan 21st June: Lee submits representatives bid of $111 per ton, informing them of delivery by tank car, better offer max 3500 ton per yr, 17th June: Quotation invited must-take 3000 ton from Lee Chemicals

1 July: Puritan 23rd June: Lee reduces price to $105retracts price rise. Reiterates exclusive delivered by truck. supply clause

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Alternatives
Status quo with Puritan Enter into contract with Lee and look for the second supplier

In house production of Muriatic acid

Pros and cons of Status quo with Puritan

Pros

Long relationship between Puritan and Charlestown High quality Meets the demand of Charlestown
Cons Charlestown will lose bargaining power with Puritan Cascading effect to other product suppliers as well Increased price may effect the market share of Charlestown

Pros and cons of Entering into contract with Lee and other suppliers
Pros

Replacement in short time Risk of delivery lies with jobber Risk spread over different suppliers in the supply chain
Cons Loss of a Potential Long term partner Quality concerns Higher cost due to the delivery by tank cars

Pros and cons of In-house production of Muriatic acid

Pros

Self reliance
Cons

High cost structure Waste of investment in non core activities

Recommendations
Negotiation with Puritan on the terms of the contract

Effective Supplier Relationship management program should be in place

Periodical feedbacks and joint meetings with the supplier and an eye on the market conditions

Thank You!