Reference no: EM133154223

Frank Pilgrim returned from the Korean war and started a commercial plumbing company that provided subcontractor services for companies building commercial buildings. Frank and his crew traveled all over Florida, Georgia, and Alabama while based in a small central Florida town called Orlando. Of course Disney came along, Orlando exploded, and Pilgrim found he could stay home and have plenty of work.

In 1994 Pilgrim retired, turning the company over to his son and daughter, twins that had grown up in the business. John handled installations and service, while Jackie took care of the books and sales. One of the mainstays in Pilgrim's customer portfolio has always been Pledger Construction. The company was a major player in the construction boom in Orlando and has continued to grow with construction projects across the Southeast. Pledger once accounted for about 60 percent of Pilgrim's business, but other customers have grown in size. Now, with 8 percent of Pilgrim's total sales volume, Pledger is the sixth largest account (the top five ranging from 9 percent to 12 percent). Recently, though, Pledger has experienced significant growth and has been pressing Pilgrim for price concessions to continue its growth.

Growth for the account could be as much as 25 percent over the next year, but Pledger's strategy seems to be entirely based on being the lowest cost.

"Jackie, look, we've grown up together. You know we're growing like wildfire," said Chris Pledger, grandson of the founder of Pledger Construction and a lifelong friend, "and I'd hate to have to go to someone new after all these years. You've got to do better on this bid for the new Marriott resort."

"Chris, I'd like to, but if I cut that any more, I'm likely to take a loss," she said.

The conversation dragged to an end after Chris reiterated his threat to take his plumbing business elsewhere. After that phone call came another, this one from Southern Prime Contractors (SPC). SPC was a brand new company six short years ago and now is half the size of Pledger.

"Jackie, I'd like to bid on the new Marriott resort. Can I count on you to provide us with a bid similar to the Gaylord job?" asked Mario Medrano, a project manager at SPC. The Gaylord job was a large, world-class resort that was the jewel in the crown of SPC's brief history. Pilgrim's margin on that job was a full 50 percent more than Pledger was offering Jackie on this new project.

"Can I get back to you on that, Mario?" asked Jackie. "I've got to talk that over with John first." She glanced up as John entered the room. "Let me call you back-shouldn't take but about 10 minutes." She hung up the phone as John sat down.

Question:

1. Assuming that you are Jackie and is talking to John right now, discuss with John how you will handle the proposal of the 2 companies. Use first person point of view.

2. Is there an ethics dilemma if Jackie and John decided to let go of Pledger, and take on Southern Prime Contractors instead? Justify your answer.