Do i engage in business conflict of interest situation?

Discussion in 'Growing and Managing a Business' started by abunene, Feb 19, 2011.

  1. abunene

    abunene
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    Greetings,
    Let me start by telling my current situation.
    I am an owner of a SINGLE BRAND retail shop/boutique (brand A).
    I have an obligation to sell and stock our product from single regional distributors.

    Now i want to expand my business by becoming another brand distributor (brand B) and opening my own brand B boutiques. Goods are of the same type but different level of luxury. For example like Toyota and Mercedes in cars.

    Will i be engaging in a conflict of interest situation? What should i do if i insists of opening the brand B but i want to keep my current retail boutique?

    Thank guys i hope to get a fresh insight from you guys.
    Please express your opinion here.
     
  2. Joseph.Shivell

    Joseph.Shivell
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    There might not be a conflict of interest, for two reasons. You mentioned that the goods are of the same type, but a different level of luxury, so you are appealing to two different demographics. On the other hand,does the brand A company also make the same product in a different level of luxury? If so, there might be a problem. The other reason it might not be a conflict of interest is because you would not be selling both at the same location. To use your example Toyota and Mercedes would not be sold at the same dealer, because they are owned by two separate companies. However, Toyota does own Lexus, so they probably would not want one of their dealers to own a Mercedes dealer, even if it was at another location.
    I'm not really sure about this so someone else who knows more than I do could probably make it clearer.
     
  3. scifi

    scifi
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    Well in a brief you are migrating from an exclusivity to being a Multi-Brand because your aspirations and results are not matching...Also , you want to go in expansion mode...Since you have been dealing an exclusive brand, I assume you have spend pretty bit time in this brand....Now, moving on to multi-brand is good because Luxury Goods have no limits..What might be Luxury for someone might be need for some one...For eg.. Air Conditioners might be luxury for Middle Income groups but is a need for High Income Groups...

    SO venturing into a new limit of luxury is just another addition to your portfolio and expansion of your present range..instead of being interest conflict....Every Range in Luxury has its own niche and customers..Its rarely happens that persons moves into Upper Segment of Luxury when he has come for some other lower segment given he is not Bill Gates type....;)
     
  4. Fergal

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    Welcome to our Business Forum abunene. What conflict of interest are you concerned about, for example are you concerned about the impact that opening a new retail outlet to stock Brand B might have on your relationship with your existing supplier?

    Do you have a written agreement in place with your current supplier?
     
  5. Charles-John

    Charles-John
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    In my opinion it is a good idea to start two shops of different brands. There is no problem even if both are targeting same customers, if somebody doesn't like Nike let them buy Reebok, you get the sales. More options more sales.
     
  6. jsingerston

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    The only way I see this being a conflict of interest is if you expect it to harm your relationship with your current business partners. If this is going to harm the relationship you have with your existing distributor then yes there is a conflict of interest. Otherwise, you are simply acting as any normal business person would act to take advantage of other opportunities in your marketplace.
     
  7. abunene

    abunene
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    Your point is exactly what i am concerned about. What can i do about it? I want my business to expand as i see large potential market here, on the other hand i want my relations with the distributor on a good level.
    FYI, my distributor also sell his product to other shop that sells multiple brands.

    On the agreement, it state i can only sell the brand A products on that brand A boutique. it also said that i will not participate on conflict of business situation but doesnt state anything clearly.

    Thanks guys ur advices mean a lot
     
  8. jsingerston

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    I see you are in a real jam. Obviously you are wishing that you had not agreed in your contract to sell only brand A products.

    Here are the things you need to consider now:

    1)What will the reprecussions be if you break the agreement and do as you wish anyway? (What reprecussions personally? What ones will affect your busienss?)
    2)Are those reprecussions worth it?
    3)Was this fine print in an agreement or was it openly discussed before signing your contract?
    4)If it is fine print in the agreement, then the other person might be willing to overlook it. You should ask him.
    5)Is there some other way that you can get around this like by launching a different store that sells whatever products you want?
     

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