Fe’nix Del Sur, Llc

Company Overview        

Fe’nix del Sur, LLC is a limited liability company specializing in the collecting and selling of artifacts and original replicas. Fe’nix specifically sells an array of South American and African artifacts. Some of these artifacts include jewelry and pottery from the Hopi and Navajo tribes. Fe’nix headquarters is located in Phoenix, Arizona, with other offices located in California, Miami, and Boston. The company’s gross sales are $25 million, and the national sales manager, Myron Rangard, attributes the company’s success to the growing demand for authentic artifacts and jewelry. Fe’nix expanded their product line in 2001, when they began to offer replicas of authentic items. They have native people from these specific countries that recreate these pieces, that are only a small portion of Fe’nix’ gross sales. Only a true artist or collector of these items would know they were replicas, and they are good for gifts and decoration. Fe’nix has gained national popularity and a well-respected reputation as one of the most notable companies in this type of market.

Problem Statement

The expansion of the product line to include replicas is the root cause of the problems that Fe’nix has experienced and may experience in the future.  The first problem is the fact that it is becoming increasingly harder to obtain these artifacts from the native countries. National regulations and political hardships in countries like Africa can prevent Fe’nix from getting these products to the United States. Subsequently, the competition to get these artifacts is the second major issue. The competition has doubled in the past decade and Fe’nix even had to add three new buyers. Customers are going directly to the manufacturer for these artifacts instead of buying from Fe’nix, and amateurs are selling facetious items at outrageous prices, that will ultimately affect this industry negatively. Fe’nix latest problem is the contract that they were presented with by a large department store chain to carry their products. The contract stated that the company would buy the products at 10 % less than the existing prices, which would be no less than $750,000. With this agreement, the chain predicts there will be a $4 million increase in sales of these artifacts. The only condition of this contract would be that Fe’nix would have to triple the amount of replicas they sale, as opposed to the very small amount they are currently selling. This leaves Fe’nix with a major dilemma.

Relevant Info (SWOT ANALYSIS)

        Fe’nix del Sur possesses much strength. They are a leading company in selling authentic artifacts and are praised in the industry. They are a reputable dealer and as previously stated, are bringing in great numbers, at $25 million in gross sales, and increasing by 20% each year. Some weaknesses that Fe’nix possess are the limited distribution of their products. Due to the exclusivity of the product that they sell, it can only be purchased at showings, by hand selected interior designers, exclusive department stores, and specialty dealers.  This will weed out a potential market for those who may want these artifacts in their spaces, but don’t have the funds or knowledge of this particular industry. Another weakness is the fact that they are having to pay more for these artifacts as they are becoming harder to find, and having to subsequently charge their customers more. Taking the contract would also display more weaknesses for the company because they will be selling more replicas, therefore changing the market for their products and affecting there notoriety. Taking the contract however can be a major opportunity for Fe’nix. If they take it they will be present in a major chain of department stores, which will gain them more exposure and more customers, which will produce more revenue ultimately. Threats to the company would include the difficulty they are experiencing getting these products from overseas due to regulations and other uncontrollable and controllable environmental factors that will be further discussed.  One can infer that over time, with the amount of competitors there are, that these authentic pieces will become obsolete and that the only thing on the market will in fact be replicas.

Environmental Scan

Fe’nix del Sur has three important factors that are important to the survival of its businesses. There are regulations, competitive and economic factors that play a part in how this business should operate. On the competitive end Fe’nix is aware of its reputation around the world, they are known for authentic artifacts that art lovers want to purchases. Their reputation doesn’t stand for the things that can cause the business to fall short. Influences such as limited distribution, art interest of consumers changing, not having much product to push out to distributors amongst other things that can be financial red flags; maybe even leading to debt because they are spending more than what is being made.  David Olsen noted “We have watched our gross margin slip in recent years due to aggressive competitive bidding by others.” Fe’nix innovators also have much concern about the sale of “inauthentic junk” tarnishing the reputation of the art business as a whole. According to the company’s president the business does have an upside to increase their annual growth but the decision is based upon unauthentic artifacts being created. That will be a huge risk to take considering customers and current dealers who are intrigued by the authenticity of the art.