Problem Statement

I. Problem Statement

a. Should we accept the contract with the department store chain in order to increase our overall sales, but lower the quality of our products to replicas and risk losing our current customers?

II. Industry Analysis

Fe’nix Del Sur mainly competes in the authentic market, dealing mostly to collectors, but they have a small portion of sales of replicas that are mostly purchased by gift buyers and decorators.

III. Organizational Analysis

a. Fe’nix Del Sur imports and sells a wide variety of South American and African artifacts for collectors and has established themselves as one of the more reputable dealers in Southwestern jewelry and pottery. They expanded their line to items that are replicas of authentic artifacts that only a knowledgeable buyer or collector would know, but the replicas are a small portion of their sales. Their gross sales are $25 million and are increasing at a constant rate of twenty percent each year. They currently deal through specialty dealers, firm sponsored showings, and a few exclusive department stores. They also are the sole supplier to their clients.

b. Fe’nix Del Sur’s business definition would change significantly because they would be committing more of their business towards producing replicas for the mass market instead of authentic pieces, which in return might cause them to lose business from their current consumers.

c. Fe’nix Del Sur’s distinctive competency is developing their reputation as the most respected source of South American and African artifacts. They have earned this reputation because of their ability to carefully verify the authenticity of the South American and African artifacts.

d. Fe’nix Del Sur’s relationship with the retailers is becoming increasingly competitive because the department stores are sending their own buyers out to deal directly with the Hopi, Navajo and other African sources. They are also competing with fly-by-night competitors who are dumping inauthentic pieces at really low prices, which in return have given the industry a bad reputation.

e. If Fe’nix Del Sur accepts this contract, it will enable them to better compete with other retailers, broaden their position in the replica industry, and may add $4 million in additional sales.

IV. Alternatives

a. Accept contract

i. Advantages

1. They may potentially increase their sales by $4 million over their annual growth, depending on consumer acceptance.

2. It will broaden the firm’s position in the replica segment of the industry.

3. It will help them better compete against the other mass-merchandise