The paper "Relationship of Sydney Shirt Manufacturers and Its Retailers" is a great example of an assignment on management. Following a management review on the relationship of Sydney Shirt Manufacturers and its retailers, the management was of the opinion that there was a need to reassess the (non-binding) agreements between Sydney Shirts and Retailer 4, one of Sydney’ s retailers. The following is a negotiation report of the agreement reached between Sydney representative: Distribution Manager, and Retailer 4 representative: Merchandising Manager. The report is based on the assumptions made, which are attached at the end of this report. Summary of the Agreement Jointly Reached and Potential Benefits Upon negotiation with Retailer 4 merchandising manager, it was agreed that the retailer was going to increase the minimum order quantity for Sydney Shirts from 500 units at a time to 550 units at a time.
The agreement to increase the minimum order quantity for Retailer 4 has a potential benefit of reducing Sydney’ s distribution costs by 3.5 cents per unit in the short run. This will be possible as Sydney will be able to make distribution of shirts to the retailers in bulk of extra 50 units each time Retailer 4 makes an order.
In the long-run, the increase in minimum order quantity will have a potential of decrease in total carrying (holding) cost incurred by Sydney in its warehouses as well as reducing the distribution cost with more than 3.5 cents per unit due to the existence of economies of scale. In addition, it is anticipated that the retailer will agree to increase further the minimum order quantity beyond 550 units. The two representatives in the negotiation agreement agreed that Sydney Shirts Manufacturers and Retailer 4 were going to undertake a cooperative advertising strategy for Sydney shirts brands.
It was agreed that each of the sides was going to contribute equally towards the advertising budget, but the advertisement content will be highly controlled by Sydney Shirts Manufacturers with a 75% control while the retailer would control the remaining 25%. This will mean that Sydney will feature more in the advertisements done where all its product lines and other activities such a corporate social responsibility will be featured in the advertisement content while Retailer 4 will only be featured as one of its leading retail distribution stores.
The joint advertisement strategies will be conducted monthly. The cooperative advertising strategy will results in short-term benefits for Sydney as its entire product lines as well matters of relevance to the public will be featured in the advertisement resulting in the popularity of Sydney Shirt Manufacturers and its brands. Due to the persuasive nature of the advertisement, it will result in increased sales with the retailer from the current 34% to 36% in the short-run.