Case Study:

Charlestown Chemical Inc.

Group 5
Amit Kumar Choudhary [04]
Saurabh Srivastava [23]
Sampurnanand Sharma [34]
Nikhil Kumar Jha [36]
Context
Chailestown
ei in the context
Sales illion
PAT Nillion
Sales to piitan
Nillion
Piitan
Sellei in the context
Sales illion
PAT Nillion
Sales to Chaileston
Nillion
Sales figie to each othei sggests onl bsiness
between the companies No fll inteiuepenuence
Context
Ns Piitan has incieaseu the piice of Niiatic Aciu which
is impoitant consmable foi piouction at Tlsa plant of
Ns Chailestown
Piice incieaseu fiom net ton to net ton
effective fiom
st
}l inciease
An inciease in uemanu of chemical is expecteu in Tlsa
iegion ue to steppeu p bing b steel mills
Ns Piitan has incieaseu the piice on assmption that no
alteinate sppliei foi the aciu is available in neai vicinit
anu piouct ieqiies high tianspoitation cost
T&C of Contract
( For year 1985)
The eis ieqiiement is of tons to be pichaseu
fiom Piitan
Reqiiement can be incieaseu with consent of sellei
Belivei p to Tlsa plant b Tank TickTlsa plant has
facilit to nloau tank ticks favoiabl
Ns Piitan can inciease the piice commencing fiom stait
of an Qti b wiitten notice uas piioi to that Qti ei
can accept oi ieject befoie effective uate
ei can pichase fiom alteinate iesponsible mfi at lowei
piice pioviueu the it can finish the sellei with satisfactoi
wiitten eviuence of a bonafiue offei
If sellei is not able to match the offei sellei shall be ieleaseu
fiom contiact obligation
Piouct natie ieqiiement anu featies
Chailestowns Tlsa Plant seu Niiatic aciu foi piification
of NaCl biines feu to electioltic cellsuelivei scheule is vei
cicial
Stiict anu consistent auheience to specification
Sholu be piime aciu not a b piouct
Bigh tianspoitation cost item
Noue of uelivei to the plant Tank tick
Factors Influencing selection of Supplier
Piice
Qalit of Sppl
Bepenuabilit
Seivice
Potential foi technical contiibtion
Availabilit of long teim sppl
iluing inteinal sppoit
Negotiation Skills
Analsis of case
No alteinate mfi in the vicinit offeiing compaiable piice as that of
Piitan
Lee Chemicals a }obbei is available foi sppl howevei piouction
people aie woiiieu abot qalitsoice of spplnknown
Nentioning of availabilit of alteinate offei maue Piitan to ieuce
the piice pto oiiginal ton Sellei was taking auvantage of
absence of alteinate sppliei Bowevei b exeicising sppliei seaich
bei negotiateu the piice
In maiket eveibou is infoimeu it is eviuent fiom the caseaftei
Piitan has cancelleu the annonceu inciease in piice NS Lee has
agieeu foi a paitial qt oiuei anu withot mst take conuition
Theie is mch scope of negotiation in bsiness anu it takes time
Existence of competitoi is beneficial foi bei anu non beneficial foi
sellei
Course of action suggested
Long Teim
Ns Chailestown sholu ask offei fiom Ns Piitan Ns Lee
Ns National Chemical Coipoiation foi next annal contiact
whoevei is lowest two sppliei in piice with satisfactoi
qalit the two sppliei sholu be isseu pichase oiuei with
paitial ieqiiement }uiciosl so that piice competition is
maintaineu foi next negotiation Foi ciitical items bei sholu
have mltiple spplieis
Shoit Teim
Negotiate with Piitan to ielax total ieqiiement clase
mentioneu in the existing contiact
Piice negotiation with Lee to match at least Piitan offei
Place the oiuei on both spplieis }uiciosl