Tuesday, September 28, 2010

Steady_T clarifies blending facility advantages

The blending plant is NOT reliant on the existence of the P2O business at all....
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The converse of that may not be true. The blending facility provides a guaranteed outlet for the P2O product.

Perhaps the local refinery doesn't want to buy P2O because it fears the competition from JBII. Or perhaps they buy some and then demand a price cut or they will quit buying. There are a number of scenarios where JBI could find itself at the mercy of other companies. That is why in business school they teach you to never let one customer become too large. That customer acquires too much leverage over your company.

By have the blending facility JBI has a way to market its product no matter what happens. If JBI's customers know that, they also know that they don't have leverage over JBI.

Consider it as a form of insurance that can pay for itself.

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