Example Of Evergreen Natural Markets Essay

Type of paper: Essay

Topic: Business, Supply Chain, Company, Products, Taxes, Risk, Management, Supplier

Pages: 5

Words: 1375

Published: 2020/11/24

17529 Rocky Mountain Way

Boulder, Colorado 80309

1-303-555-1212 (phone)
1-303-555-1213 (fax)
http://www.evergreennatural.com

Persuasive Memo

Evergreen Natural Markets has been successful in all of its companies through the use of strategies that enable it to acquire, improve and at the same time retain the previous managers of the company acquired. The main focus of Evergreen Natural Markets is to ensure that the new acquisitions learn to adapt to the company’s operation principles, its core values in knowledge of the community and maintenance of a good reputation. The company’s CEO, Kathleen Norton has exceptional leadership skills and has enabled the continuous growth and success of the business (Kanter and Paul 345).Over the years, the company has recorded a steady growth and success in its different stores and the relationship between the suppliers and distributers has been okay. However, it recently came to the attention of the CEO that there are some issues with the Slotting-fee agreements the company has with its suppliers.
The mangers raised this matter during a meeting with the CEO during the quarterly retreat in Breckinridge, Colorado. However, despite some of the concerns of the managers, the organization wishes to continue with the slotting fee agreements with its suppliers as it has numerous benefits for both the distributors and the suppliers.
First, it is important to define the slotting fees or allowances in order to fully get a grasp of what the memo will address in regards to the issues raised. Slotting allowance is an amount of money or fee that gives the suppliers a kind of preferential treatment from those distributing their goods and products. It is also important to note that these fees are not fixed, but differ from one product or supplier to the other. These fees are negotiable and differ from product to product. Therefore, the company is not forcing suppliers to provide this fee. Rather, it is creating a win-win situation for both parties in that the organization safeguards itself from possible losses and the supplier gets a guaranteed channel to the consumers through the numerous stores owned by the company (Smith and John 467).
One of the benefits of slotting allowances or fee to the suppliers is the opportunity for their goods to be placed at as eye-level in the store shelves. The supplier also enjoys introduction of new products to the shelves. In the grocery industry, there is a high risk associated with this kind of arrangement to the store. The costs that arise with stocking the shelves of grocery stores with products and then going on to replace the products once the goods fail to sell to consumers (Caprice and Vanessa 45). Therefore, as a means to safeguard and reduce the costs that the stores incur with the shelving of products that are not guaranteed to sell, the company feels that slotting allowance is one way to protect itself from the potential risks and cost that may arise. For the supplier, it is important that their goods are placed at a strategic point where the consumer will see the goods. Therefore, they need to share the cost of the risk that arises in case their products fail while at the same time getting the chance to replace their failed goods.
The other benefit of slotting allowance for the suppliers is that it helps both parties keep up their business arrangement. The suppliers and distributors want to have a good and lasting business arrangement. However, as a food retail company, the organization requires to have some guarantee on minimum loses that may arise. Therefore, the supplier feels that in order to keep working with the company, the need to motivate the organization to keep the product in the shelves. There are cases where a product is not having a positive reception in the market and its sales are low. The company in this situation may feel the need to drop the product from its stores. However, a supplier may want to keep the product in the shelves despite the poor sales it records. Therefore, the supplier offers to pay the organization a small slotting fee to enable it keep the products on the shelves (Rosenbloom 67).
For the different stores acting as distributors, there are benefits that arise from this kind of arrangement. The store incurs different expenses as they set up some of these displays for the suppliers. The store has to find labour to move the unsold goods away from the shelves and then possibly restock the shelves with the new products from the same supplier. The stores have to also incur costs that arise as it sets up displays for the different goods and product. Some of the other expenses incurred by the company in general include warehousing, creating new shelf labels for new products, entering the new items to the vendor systems and acquiring and selling of the products. These amounts to huge amounts of money that cannot be covered by the money made from the sales. When coupled with the existing risks associated with the food retail business, then there is a need to develop agreements on slotting fee to help cushion the company from incurring expenses and increasing risks of losses (Treadwell 6).
Some of the concerns that were evident included the role of this system in keeping small suppliers out of the company’s stores. Some mangers argued that this system only paves way for large suppliers to ensure continued sales of their products as they can afford to pay any amount of the slotting fee in order to receive the preferential placements in the store shelves. However, this is not entirely true, in most of our stores; we have system where everyone gets a fair chance of display. The slotting fee is not industry fixed, but is discussed between the different suppliers and the company representatives. This means that everyone has a fair chance to get a preferential placement. For the small suppliers, their fees are not set high and as they only provide a small amount of goods, and then they get a slot at the display as well as a good placement in the shelves (Caprice and Vanessa 45).
As managers who have been in the industry for a while, you have come to understand the risks that are associated with this line of business. This line of business operates differently from other retail stores that operate under consignment. There is a greater risk in food retail business that arises with outright purchasing of merchandise from the suppliers. Therefore, if the merchandise purchased do not sell as expected or the store is forced to discount the prices in order to lure more sells than is presently, then there is great risks for loses for the company (Kanter and Paul 345). In the annual product failure rates, it shows that the risks are high and this costs the company a lot of money in losses. Therefore, through the slotting allowance agreements by the suppliers and the company, the company is able to minimize the losses that arise to enable its sustainability in the highly risky market. Therefore, in line with the reasons stated above, the company CEO and other top managers implores that the mangers of both the new stores and the existing stores understand the value of this agreements to both the survival of the company as well as the suppliers. It is a necessary move that must be undertaken to ensure that both parties benefit mutually from the business relationships that exist. So please, adhere to the company principles of operations and uphold community and company values in order to ensure a continuous growth in the industry.

Transmittal e-mail

Dear Name,
This e-mail is in response to your request for draft memo on the issue regarding slotting agreements brought up by mangers during the retreat. Therefore, I am sending attached the memo drafted in regards to the same.
In the memo drafted to address the issue stated, the strategies applied included citing different benefits of the slotting agreements for the organization and the suppliers. Having being in charge of the stores for a while, the managers understand the risk that arise in this line of business. Therefore, by reminding them of some of the costs and risks that the company incurs every day, I hope to help them see the importance of this practice. Therefore, I went into detail to explain how both the company and the suppliers benefit from the slotting agreement and how its keeps both parties in the market. According to them the arrangement was keeping small suppliers out of businesses and enabling the large suppliers to enjoy privileges that arise from preferential placement. Therefore, I suggest that we come up with ways of ensuring that the small businesses remain as our customers by giving them allocated slots in the shelves. I hope that you will approve of the memo drafted and will give the go ahead for the memo to be sent o all the mangers and be posted in the intrasite net.
Thank you for your time and if there any further questions in regards to the issues discussed in the memo then contact me for clarifications.
Communication Manager, Evergreen Natural Markets.

Works Cited

Caprice, Ste and Vanessa Von Schlippenbach. Consumer Shopping Costs as a Cause of Slotting
Fees A Rent-Shifting Mechanism. Berlin: Deutsches Institut Für Wirtschaftsforschung,
2010. Print.
Kanter, Rosabeth Moss, and Paul Myers. “Evergreen Natural Markets 2012.” Harvard Business
ROSENBLOOM, BERT. Marketing Channels: A Management View. Cincinnati: South-western,
2013. Print.
Smith, N. Craig and John A. Quelch. Ethics in Marketing. Homewood, IL: Irwin, 2013. Print.
Treadwell, Lauren. How to Write a Transmittal or Cover Letter. Technical Communication
Center: Colorado State University. 2015. retrieved from:
<http://www.ehow.com/how_5083209_write-transmittal-letter.html>

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