Response to Question C : Describe a time when you took a great risk. What was the outcome?

1. Yazmin Wong Alvarez
Candidate for IE MBA Program entering 2013
Response to Question C

2. My Company
 Family Business group formed by 3 successful
companies:
 A retail shoe company with 42 stores in Peru.
 One factory that supplies shoes to the retail stores.
 A importer company that supplies to own shops.
 Annual sales: € 17 million (2012).
 Staff: 250.
 Additionally for the last 8 years, we had been working
with micro business to supply shoes to our stores.

3. Mr. Alarcon (potential supplier)
 Supplier of leather shoes to our stores for the last 8 years.
 Had an average of 10 workers.
 All his production was hand made, therefore his low capacity
of production did not met our sales, and often we break
stock.
 In 2011 Alarcon only delivery 5 dozens per week of shoes.
At that time we had 30 stores and the quantity per item was
not enough.

4.  He need money to expand operations:
• Buy machinery
• Buy raw materials
• Hire more staff

5. Why I got involved?
 Benefits for my company:
 Will access good quality inputs at lower costs.
 Secure inventory.
 Good quality in manufactured products. Have a say on
quality/cost/trends.
 Benefits for Alarcon
 Loyal supplier for many years and would like to help.
 Invited to work in coordination with the production
manager of our factory. Share the knowhow of
industrialized shoe production and improve his production
process.
 My company will guarantee in order he could buy leather
and outsoles with a credit line of 30 days.

6. Why I got involved?
I envisioned a WIN-WIN situation for both
enterprises.

7. Risks
 As every operations involving a large amount of the
company’s capital: opportunity cost of investing this money
somewhere else.
 Don’t pay his debt.
 Take our know how and secrets, and then apply them to his
factory and work with direct competitors.

8. We gave him the money
 For me Alarcon was a responsible and honest supplier who
is hard-working from the beginning.
 He rely in our company in order to see his company grow.
We were his only customer.
 I had to show the partners that supporting Alarcon would
save us money in our purchases and help us meet our
clients’ demands.
 After my proposal was approved I made the arrangements
to lend him the money and to work in cooperation with our
production manager and our design team.

9. Outcome
After a 2 years of effort:
 Alarcon owns a industrialized shoe factory with machinery
that allows to increase his production and sell a variety of
shoes to us.
 His production capacity has increase from 7 to 20 dozens
per week and still growing.
 Our purchase orders to him had increased by 200%.
 All his production is sold to our stores and we are
encouraging him to produce other categories of shoes.

10. Lessons learned and similar
“in‐company” success stories
based on this experience
 This outcome has made me realize I can work in alliance
with small suppliers and make them part of our supply
chain.
 I am very motivated for the results and I will start doing the
same with other micro supplier who want to success.