Reference no: EM131672154

Troy Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Troy was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Troy said, “I Ben’t like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us!” Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Troy decided he had heard enough. After all, Troy prided himself on being a man of action. There was no way he was going to allow that salesman to keep taking advantage of Southeastern. Troy called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they use lower-grade boxes that would probably work well enough in Southeastern’s process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Troy told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. Troy also said to make sure the suppliers knew that price was going to be the determining factor in this quote, since he considered corrugated boxes to be pretty much a standard industry item.

Assignment

1. Is Troy Gibson acting legally? Is he acting ethically? Why or why not?

2. What should Southeastern Corrugated do when they receive the request for quotation from Coastal Products?