SOUTHWESTERN OHIO STEEL COMPANY

SUBMITTED BY: GROUP A9

A N I R U D D H S I N G H R AT H O R E D E E PA N W I TA S E N M O H AM M A D F I R O Z S AM E E R S I N G H P O K H AR I A

Problem Statement
Should Southwestern Ohio Steel Company sponsor the event at Matworks Annual sales meet in order to maintain the ongoing relationship

Situation Overview
SOSLP has a history of developing strong relationships with mills and customers, and prided itself on providing state-of-the-art services to add value to the channel. The company generally doesnt spend large amounts on any type of promotional activity and especially not on individual customers. Though for the company, the concept of partnership with customers is very important. The company recently received a letter from a large and long-time customer asking that, as a major supplier, Southwestern Ohio Steel contribute to the Matworks annual sales meeting by sponsoring an event that would cost anywhere from $5,000 to $80,000. The customer was large and serious about Southwestern's participation, but as a supplier, the company had never done business in this way.

Option I Sponsor
Option 1 To Sponsor the Event
Cost to the Company: The annual expenditure of our company for advertising and other promotional activity is $25000 annually. Therefore if we decide to sponsor an event we will have to incur a minimum expense of $5000 (Golf tournament). As our company earns a profit of $20160 from Matworks annually, sponsoring an event with minimum amount should be feasible.
Companys Policy: The Company doesnt spend large amount on any type of advertising or promotional activity. We are considered as industry leader. To increase our sales and promote ourselves against our competitors certain promotional activity will be needed. Therefore altering the company policy in the interest of the company will be beneficial. Thus sponsoring an event with minimum of $5000 is preferable.

Option I Sponsor
Business Relationships: By sponsoring an event in Matworks annual sales meet we get an opportunity to improve our relationship bond with Matworks and it also shows the way we value one of our oldest and long term customers. In a way we can also maintain a view that, for us relationship with customer matters the most rather taking advantage of the situation to make quick bucks. Future Sponsorships: If we sponsor an event for Matworks there are good chances of other companies asking for sponsorship in future. Presently Matworks is actually facing problems, so by sponsoring the event we can show the company and other customers that we stand by our customers when they are facing hard times. Corporate Image: If we sponsor the event in Matworks we get to improve our business relationships with them and it shows that we support their morale in there bad times. There wont be any chance of bad publicity if we dont sponsor the event, but there are chances that our competitors might use the opportunity to break into our account. Hence the Corporate Image will be maintained and our goodwill will increase.

Option II Dont Sponsor

Option 2 Not to Sponsor the Event
Cost to the Company: If we dont sponsor any event in Matworks annual sales meet then we would be saving a minimum amount of $5000 which can be used by the company for future purpose. Companys Policy: The Companys policy will not be altered if we dont sponsor. We can stick to our earlier policy of low advertising expenses.
Business Relationships: Matworks being our important customer, there are good chances of our relationship getting hampered with the company. We may lose a very important customer in future, which will not impact the business as it is only 0.27% of total business.

Option II Dont Sponsor

Future Sponsorships: If we dont sponsor the event now there are very less chances of other customers asking for sponsorship in future based on our decision but since our competitors might agree to sponsor this event, an industry trend will set in and in future this might well come back to SOSLP.

Corporate Image: Company may have a bad image for all the customers of similar size and nature as Matworks. There is a possibility of losing Matworks as our customer. So indirectly it will be affecting our companys image in the market.

Recommendation
SOSLP should sponsor the event with minimum sponsorship of $5000 (golf tournament). The amount can be paid from the companys profits. If we sponsor this event, we see a bright future with Matworks and there are great chances of our sales getting increased.

If we practise our usual advertising policy like giving tickets for basketball game, we reach out very limited number of people, but by sponsoring this event we can reach out large number of people and also improve our corporate image. Also our company executives will get an opportunity to have a dialogue with executives of Matworks.
Matworks can be asked for more business in exchange of the sponsorship indirectly as the officials of Matworks can be impressed at the Golf Tournament where the major time is spent in talks rather than on the sports. Also sponsoring a aspirational sports like Golf will enhance image of SOSLP. This sponsorship should not be refused as this opportunity will be taken up by a competitor and the industry trend will set in, which will bring more such situations n future, so the company can be ready now itself.

Course of Action
Sponsor the event by paying a minimum amount of $5000 for the Golf Tournament. We need to change our advertising policy so that we can spend more on advertising to increase our customers and improve the brand image. We can invite the executives of four subsidiaries to attend the event, there by creating awareness of their products as well. We should look to improve our sales after the event as we will be having improved brand image in the market. A direct one-to-one relationship with the buying centre of the Matworks can be established and future business can be sealed by terms of new relationship.