Paper Products Corporation

Paper Products Corporation
Mary Miller is the marketing manager for Paper Products Corporation and she has
to 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 FILEX
brand used by Paper Products. Mary is afraid that if she doesn’t accept the offer, the
customer will find another file folder producer.
Mary really only has two options; accept the offer from Natcom or refuse the offer
from Natcom. There is a certain degree of risk involved with either option and she needs
to decide which option is the safest for Paper Products Corporation. If Paper Products
refuses the offer they are putting themselves in a position to possibly lose 30 percent of
their business, approximately 12 million dollars per year. Even if Natcom continued
purchasing 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 Paper
Products’ file folders with their name, she would be going against company policy and it
would not be easy to change this policy. It would be very easy for Paper Products to
accommodate Natcom’s offer because they have excess capacity. If they turn down the
business, Natcom could go to another producer and cut into Paper Products’ sales at
Natcom stores. Another benefit of this offer is that Paper...

Paper Products Corporation

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