BOE Chemical is one of the largest chemical companies in the world, and annual sales in its most recent (2018) fiscal year exceeded USD10 billion. Products include natural gas, coal, agricultural and industrial chemicals, nylon, polyester and other fibres, adhesives, and even pharmaceuticals. BOE has plants in more than two dozen countries, and foreign sales account for nearly 40 percent of total sales.
The firm has a plant in a suburb of Bogota, Colombia, that employs over 2,000 people. The plant accounts for about $400 million in sales of polyester, a fiber used in clothing, industrial products, carpet, and tires. The complex is situated on 25 acres and, at first sight, resembles a penitentiary. Security is quite tight, largely because of the constant presence of Colombian bandits.
Ryan Dansforth and Kyle Manning are the firm’s plant manager and purchasing agent, respectively. Both are Americans, which is a bit unusual since it is the policy of most companies operating in a foreign country to use a significant amount of local labour. The plant manager is usually a local, trained by the firm, who is likely to hire relatives for many administrative positions, including the job of purchasing agent. In fact, BOE had a Colombian plant manager until he left a few months ago, apparently to take a prestigious government position, and took his relatives with him. Dansforth and Manning are therefore merely “temporary help” until suitable local replacements can be found and trained.
BOE operates in industries where long-term agreements with suppliers are not unusual. For example, it is common to have a 10-year contract with a clause that the vendor can match any lower price that BOE might be offered during the contract period. The firm’s purchasing
1 This case study is abstracted from ‘Cases in financial management /Joseph M. Sulock, John S. Dunkelberg’.
agent negotiates these contracts and, as might be expected, is the target of many a salesperson.
Manning seems to relish the attention he receives from the vendors. He frequently has a business lunch with a salesperson and never has had to pay the bill. An avid golfer, he is often invited to play at the one course in the area. And one ethylene glycol salesperson even presented Manning with a $1,200 set of clubs on the purchasing agent’s birthday. Perhaps the biggest perk came in January. When one vendor learned that Manning was a big football fan, he arranged tickets and travel and provided accommodations to the 1996 Super Bowl.
Dansforth has observed all the attention Manning receives and how Manning actively