Escaping a dominant supplier

The sequence Caudwell used to survive the loss of his Motorola contract and de-risk the business.

John Caudwell's framework, from Love, Pain & Money, pp. 132 to 139.

Keep supply alive
Reverse the earlier deal by getting service providers to buy Motorola phones for him, with a guarantee of confidentiality.
Look at the remaining five percent
Examine the smaller suppliers, such as Nokia and Panasonic, for an alternative.
Pick a challenger with weak distribution
Choose a supplier with a small share, like Nokia at two percent, that lacks aggression, sales and distribution.
Pull the decision maker onto your ground
Invite the boss to see your operation so you control the setting and show your distribution power.
Negotiate for volume
Agree a low unit price, such as £50, with creative cash and short term credit terms.
Cap dependence
Never rely on any one company for more than 10 percent of business.

From chapter: Chapter 16_SNAKES IN THE GRASS, pp. 132–139

More from this book