Case7 - RCI case analysis.docx

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Management (MGM)
Tarun Dewan

Case #7 - RCI Master Distributor: Evolution of Supplier Relationships Background of RCI 1946 – Mark Schwartz founded a motor repair business and secured a General Electric (GE) franchise for component parts. When customers brought in motors for repairs, Schwartz gave them a fully working motor in exchange for an estimated repair fee. During this time, Schwartz then repaired the broken motor and replenished his motor inventory. This service innovation allows the customer did not have to wait for the lengthy repair delays. 1962- motor repair is the core of RCI business. However, GE’s General Purpose Control operation developed a new contactor for its air-conditioning and refrigeration business. Mark Schwartz persuaded GE and got to exclusively distribute these contactors to the aftermarket through air-conditioning and refrigeration wholesalers. 1963 – RCI sold the motor repair business and gained several product line from GE. RCI had demonstrated to GE that they could get GE’s products to market, with the parts moving from master distributors to wholesalers and ultimately service repair persons. Mark Schwartz had implemented many innovation, he worked with GE’s engineers designed six new units to replace hundreds of models. This allows RCI continued to distribute these models exclusively. 1974 – Danny Swartz make most of the day-to-day business decisions with Mark’s involvement limited to the major decisions. Danny learned 2 most important way to maintain a relationship with supplier. Firstly, never use contract to deal with suppliers in order to build a relationship of trust with them. Secondly, demonstrate to the suppliers how difficult distribution is, so as to eliminate the risk of being cancelling the exclusive distribution rights. 1992 - Current operation RCI distributed over 6000 electrical and related products earning revenue of $ 35.8 million and with operating profit of $3 million.. RCI sells to air conditioning and refrigeration wholesalers who in turn sell to air conditioning and refrigeration contractors and repair houses. RCI do not participate in the distribution of the appliances, their role is limited to the aftermarket channel for repair parts. Problem Definition Daniel (Danny) Schwartz, the CEO of RCI was received a call from Arnold Levy of Component Manufacturing Corp. Levy wanted to change his dist
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