Butler System Case Summary

793 Words 4 Pages
MGT 377 Case Study 1

Introduction
Butler Systems is a rather large company that manufactures environmental control systems and power conditioning equipment. More specifically they produce battery backup and other computer support systems. Since Butler Systems is the world’s leading supplier, the companies annual sales typically exceed $1 billion. The company’s battery backup systems use the HD-5 battery which makes up the main component of the system. this system is a backup system designed to prevent glitches and enable computer network systems to ride out temporary power outages.

Summary of Situation
The HD-5 battery is the crucial component of over 80% of the EPS systems. Out of the batteries available for the systems there are two types.
…show more content…
It is even more of a problem with SDX Chemicals not fulfilling their part of the contract. In the contract with SDX Chemicals it states that they are to fulfill their obligations and give a written notice of intent to cancel or alter their contract 60 days before it is to change. After the initial five year term of the contract it states that if neither party informs the other of their intent to end the contract then it will renew automatically for one year successively. In the contract one of the things that are required of SDX is to be on time with their deliveries as well as to achieve a 100% service rate. SDX claims that the contract is now null and void and that the price of batteries is going to double. In this instance they are also in breach of their contract because there is to also be another 60 day notice of intent to change the price of the product. Now as VP of operations, in keeping good business relations, would remind SDX to revisit the terms of the contract with Butler Systems and to address the issues that are currently happening. If they do not see the error of their ways then we will have to fall to our secondary supplier for our supplies until the situation is resolved. At this time looking for another supplier to take the place of SDX Chemicals would also be advisable in case it is decided to sever all ties with SDX Chemicals as a supplier. In order for SDX …show more content…
For one reason if the price of the batteries doubled without warning the cost would undoubtedly be transferred to the consumer. This would mean that the cost of EPS systems would cost a great deal more. It may also force the company not to offer as many systems with flame retardant battery casings because they are more expensive. Another reason this is important is that we all should strive to make lasting business relationships and in doing that the use of contracts is important. There may even be long term negations specific to the company if they are a preferred

Related Documents