Lancer Gallery LLC is a company that sells South American and African artifacts, jewelry, and pottery. They originated as a trading post in the early 1900s and are now one of the most famous dealers in southwestern artifacts. They are headquartered at Phoenix, Arizona and distribute their product throughout the United States. In 2001 Lancer decided to expand their product lines by making replicas of authentic artifacts.
Finally, Lancer is doing quite well financially, with gross sales of $35 million with an increase of 20% per year. The primary problem that the Lancer Gallery has run into is whether or not they should reposition themselves into a company that mainly produces replica products. In January 2010, Lancer was contracted by a mass-merchandise department store chain and was offered at least $4 million annually to create triple the amount of artifact replicas. The head of Lancer Gallery has come to a huge dilemma.
The company president Andrew Smythe has stated that it is a wonderful offer, as it will add $4 million in additional sales which is over their annual growth, which would help a lot due to the recession. However, becoming a company that mainly creates replicas can have a huge effect on their current dealers and customers as Lancer has created a reputation over the years for their quality artifacts. Accepting this contract may as well be sacrificing their image and eventually lose their current distributors.
There is also secondary problems; Lancer has a limited supply of artifacts, competition has greatly increased in recent years, and their revenue has been declining because of the economy. An alternative would be to create a sub division that only creates replicas. This way they can stay loyal to their current distributors as well as honor everything stated on the contract. Another alternative would be to simply re-negotiate the contract.
" Section 131 of the corporations act 2001 has changed the common law in respect of pre-Registration contracts ." Explain the common law view of pre-registration contracts and then explain how section 131 has changed the common law. Then analyse and discuss the effect of section 131 and 132 in respect of the rights and obligations of promoters, companies and third parties. Your answer should make ...
If Lancer Gallery refuses to become a company that mainly creates and sells replicas, they can ask for a new contract that will hopefully still have a respectable offer. Finally, their last option can simply be to take the offer and create replicas for the mass-merchandiser. Lancer Gallery already has an issue with inventory, as they have a limited supply of authentic artifacts. Becoming a company that creates replicas will restock their inventory and sell them to the mass-merchandiser.
It might tarnish their image and reputation but they will receive great compensation for their work. My recommendation would be to create a sub division for the replicas. The main division will continue to sell authentic artifacts, keeping their current distributors and customers happy. They will continue their operations as if they denied the contract offer. The sub division will be in charge of creating the replicas mainly for the mass-merchandiser. This will honor the contract’s obligations while also keeping recurring customers satisfied.