Supplier Scenario

Company: Dr Pepper/Snapple (Finance MBA level)

Supplier Scenario

You are the head of sales for a relatively small company. You have just received a massive order for parts/supplies/services (whatever would be applicable but you should identify what you will "supply" as a part of the scenario because it may impact how you will address your scenario response) from the company your group has selected to research. To fill this order, you (the supplier) will need to increase production and hire additional staff to work a second shift. The order will represent 25% of your company's production capacity in the year to come and 20% of capacity for three years after that. You are concerned, however, about the viability of the company you are to supply to and the business risks posed by such a large order from one primary customer.

• Are your concerns justified?
• How does this company treat its other suppliers based on your review of their financials (hint: look at payables history and the ability of the company to meet its short term obligations)?
• If you feel this contract is worth pursuing, identify what you can do to protect your company. If you feel the contract is not worth pursuing, explain why.