DEFINITION AND JUSTIFICATION OF THE PROBLEM
The problem that Mr. Hugo Gomez is facing is how to commercialize INA's bean stock. He has to decide what is the best alternative to sell the bean supply.
Accumulated bean supply has grown a lot in the recent years, and it is important to Mr. Gomez to find out what to do to commercialize the excess of stock.
ANALYSIS OF THE ENVIROMENT
The problem that Mr. Gomez is facing was originated by past decisions. The drought of 1974 caused changes with the purchases, prices and commercialization of the bean stock. The Board set a guaranteed price below the market, which gave to farmers a huge incentive to sell their production to INA because it paid a higher price than the market (See Exhibit 1 for detailed prices and differences between INA and the market). This, combined with Government's incentives to farmers increased Tanama's bean production, and then, produced excess of supply at INA.
The guaranteed price was above the selling price to the consumers, causing a negative margin for INA; but the market was producing positive margins to wholesalers and retailers. (See exhibit 2).
In the other side, the selling price to the consumers was set above the market's price, producing incentives to customers to buy from other retailers because they offered a lower price than INA. This produced lack of demand for INA's beans, which caused a decline on INA's sales and even more accumulated bean stock. In exhibit 3 can be noticed the decline in sales and the growth of the stock.
All of these situations produced a growing stock of beans, because the pricing and commercialization policies were set against the market trend.
Before Mr. Gomez arrived to INA, there were some alternativ ...