This was the first case writeup I ever did.
Question: What are Lawrence and Stephen’s biggest problems?
Answers: Lawrence and Stephens’ biggest problems were their dependence on Silver Salt Granulating Company and not producing enough salt.
Supporting Case Observations:
- Dependence on Silver Salt Granulating Company
- Source of dependence (p. 2, ¶ 3)[1]:
- Silver Salt bought first batch of salt, offered to buy all salt production
- Lawrence and Stephens accepted
- Only one buyer; became dependent on this single buyer
- Silver Salt is middle man; they refine and sell the salt (p. 2, ¶ 3):
- Not producing enough salt
- Saline Salt pans only produce about 3220 tons of salt a month (p. 2, ¶ 2)
- Sea salt production varies widely due to changes in wind speed; production can change from year to year (Grini et al., p. 13, ¶ 3)
- Solar evaporation method takes a long time and is inefficient
- Takes a month for a pan to create 805 tons of salt (p. 2, ¶ 2)
- Requires large amounts of land, land is expensive to buy more of
- Labor costs more than it used to; minimum wage rising[4]
- Spending more money on labor
- Source of dependence (p. 2, ¶ 3)[1]:
Weakness of position:
- Increased sales; market thriving; higher demand for salt
- Salt extraction gets more efficient over time; might be able to produce more salt
- Increased demand for salt water; government wanted to convert salt water to fresh water because of depleting fresh water supplies[5]
[1] Saline Salt Case Study
[2] Henehan, Brian M. “Eliminating the Middle Man”, http://agribusiness.dyson.cornell.edu/SmartMarketing/pdfs/henehan1-03.pdf
[3] See source above
[4] US Department of Labor, Minimum Wage Chart (http://www.dol.gov/featured/minimum-wage/chart1)
[5] 42 USC Chapter 19; Saline Salt and Salt Waters