Southwestern Ohio Steel Company
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Southwestern Ohio Steel Limited Partnership (SOSLP) was considered to be one of the industry leaders in technology and service. SOSLP sells to approximately 500 customers, twenty five of which produces about two-thirds of the company’s sales. Dan Wilson, vice president of sales at SOSLP, had recently received a letter from Matworks requesting SOSLP to provide sponsorship for an upcoming Matworks annual sales meeting. Dan needed to decide if providing sponsorship was feasible keeping in mind that Matworks had been a long standing customer of SOSLP while also knowing that gifts were no longer a custom in the steel industry.
Wilson should not offer to sponsor the annual sales meeting as this would not comply with company and industry situations.
In earlier days, “wining and dining” the customer had been a part of the steel industry and adjusted as a cost of doing business. But recently government regulations had restricted this method of doing business and now “buying” business was just not a part of the industry. Sponsoring the annual sales meeting does not comply with the present business ethics and SOSLP could risk hurting their image and losing respect in the marketplace.
Matworks at one time had been one of SOSLP’s best customers and bought almost exclusively from the company. Over the past few years they had run into financial trouble and thus were not buying as much. They had gone from being in the top ten best customers to about ninetieth. Twenty five customers produced about two-thirds of SOSLP’s sales; Matworks was far off. The contract with Matworks was negotiated on a yearly basis and sponsorship was not a part of this contract. Also the sponsorship would lead SOSLP’s other customers to believe that SOSLP would be willing to support their future events even if it was not in the contract. Also they would think that SOSLP would provide financial assistance when they run into trouble.
The extreme competitiveness amongst suppliers of the market meant that large customers with established requirements were highly prized since that led to accurate forecasting and better inventory management through consistent sales. But over the past few years Matworks orders have constantly been declining, which has gone from $2.4 million to $672,000 in two years, possibly throwing