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Paper Products Corporation
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Paper Products Corporation
Mary Miller is the marketing manager for Paper Products Corporation and she hasto decide whether she should allow her largest customer to buy some of Paper Products’file folders and market them under their own name (Natcom Inc.) rather than the FILEXbrand used by Paper Products. Mary is afraid that if she doesn’t accept the offer, thecustomer will find another file folder producer. Mary really only has two options; accept the offer from Natcom or refuse the offerfrom Natcom. There is a certain degree of risk involved with either option and she needsto decide which option is the safest for Paper Products Corporation. If Paper Productsrefuses the offer they are putting themselves in a position to possibly lose 30 percent oftheir business, approximately 12 million dollars per year. Even if Natcom continuedpurchasing their other supplies from Paper Products, and only quit purchasing file folders,the business would lose approximately 4.2 million dollars per year. If Mary decided to take the offer from Natcom, and allow them to sell PaperProducts’ file folders with their name, she would be going against company policy and itwould not be easy to change this policy. It would be very easy for Paper Products toaccommodate Natcom’s offer because they have excess capacity. If they turn down thebusiness, Natcom could go to another producer and cut into Paper Products’ sales atNatcom stores. Another benefit of this offer is that Paper Products woul...
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