Jason, the newly appointed vice president of sales for Allied Lighting, had a tough decision to make. Mary, his regional sales director, had been consulting with him for the past two weeks on a large order that was to be installed in a new regional FEDEX shipping facility just outside Dallas, Texas. The order consisted of 900 LED lighting fixtures, each with a retail list price of $1,240. Mary was very excited about this order, as she knew that FEDEX had plans to construct at least twelve more such facilities in various cities across the U.S., and she believed that Allied's lighting fixtures would be installed in all of those new facilities.

Jason was aware that the original order for the FEDEX facility in Dallas, Texas had been secured by Allied's independent manufacturer's representative in Memphis, Tennessee, where FEDEX's corporate offices were located. However, Mary informed Jason that the facilities construction department at FEDEX's corporate offices had just contacted the inside sales representatives at Allied and requested that Allied skip the "middle man" so that they could "buy direct" from Allied and receive better pricing on the lighting fixtures for the Dallas facility, as well as the other twelve facilities that they were planning to construct. To the surprise of Jason, Allied's inside sales team approved the request from FEDEX and sent "direct wholesale pricing" (wholesale plus 5%) for the fixtures to FEDEX, eliminating Allied's manufacturer's representative in Memphis from the Dallas deal and potentially from the other twelve deals with FEDEX.

As Jason wondered how this had taken place without his approval, he worried that Allied may be in breach of its contractual obligations to Allied's manufacturer's representative in Memphis as a result of the action taken by his inside sales team. While none of Allied's manufacturer's representatives had "exclusive" contracts with Allied, Allied had informal agreements with its manufacturer's reps that any orders they obtained for Allied products would be invoiced to the manufacturer's rep at wholesale prices (retail price less 30%), and the manufacturer's rep would then bill the customer the retail price for the products. However, Jason knew that selling directly to FEDEX would result in greater profits for Allied, and a deal like this would certainly help in reaching the annual sales and profits goals that he was responsible for. He also knew that not honoring the request of FEDEX to allow them to buy direct would likely result in Allied losing the FEDEX business.

1. Identify the choice options that Jason has in this situation? What are the potential ramifications of those choice options?

2. Based on the choice options you've identified, what would you recommend Jason do? Explain the reasons for your recommendation.