ACE BROKERAGE COMPANY

Submitted by: SDM Group - 5

27NMP06 Anupam Mishra
27NMP19 Manush Maken
27NMP31 Swati Gupta

27NMP51 Komal Tagra

CASE CONTEXT

Steel City is unique market for supermarket industry for food and
processors and manufacturers and 80% of retail grocery sale through
locally owned chains and cooperatives
Ace Brokerage Company is a large food broker located in Steel City,
Alabama.
John Kline is president of the Ace brokerage company and concentrated
on supermarkets in Steel city and never be in institutional distribution.
Ace represents the principal Morreaux Sugar Company now has a 70%
market share of the retail grocery market in sugar sales.
The away-from-home eating market has started to increase with one
third of all meals consumed in the United States being away from home
and about one-half meals consumed away from home being projected in
the next 6 to 8 years
Morreaux has requested Ace to put more emphasis on institutional
business.
Kline now has to make the decision on whether to consider Morreauxs
request or refuse it.

CHANNEL STRUCTURE
Ace Brokerage Company
One of the three largest brokers (commission of $ 0.5M per year)
Avg. commissions - around 3 %
Renowned for quality of service
Represent 25 suppliers (of which Morreaux is one of the largest)

FoodFood
Processor
Brokers
& Manufacture

Retail Sales

FoodLocal
Processors
Wholesaler
/ Manufacturers

Institutional Sales

Two Alternatives
Kline Morreaux
Developing
Refuse
Accepts
Kline
Morreaux
to
the
Open
It
afraid
an
Offer
may
Institutional
the
that
beinstitutional
risky
if such
for
Sales
things
Sales
willhappen,
requireothers
additional
will also
manpower
start doing this way & its new co

DECISION TREE

ALTERNATIVES & ANALYSIS

Alternative
Kline rejects the
proposal

Pros

Cons

Concentrate on the area Morreaux may find new

of expertise that is
partner which may mean
retail grocery
loss of revenue for Ace
Save on expenses and
avoid further problems
that come with the new
market

Refusing the option may

limit further growth and
sales potential
May destroy the
Relational relationship
with Morreaux

Kline accepts the

proposal

Further strengthens
relationship

Amount of time and money

to start up new
department

Increase in commission,
profits and market

Inexperience (management
capabilities) may lead to

RECOMMENDATIONS

Keeping the growing trend of away-from-home eating, Ace Brokerage

Company should accept the Morreauxs request to develop an
institutional trade& leverage the new opportunities
An initial investment is necessary for future growth of the company,
though it may be bit expensive for Ace for short term
This decision will also further develop the strong relationship that Ace
has built over the past years with Morreaux
This decision may increase Aces bargaining power on brokerage
commissions
This decision will be in line of Aces objective of good service & quality
to its clients

Thanks