To increase his profits, Sundaram diversified into selling vegetables. Earlier, a vegetable vendor used to visit the gated community once every week. The vendor, after seeing dismal sales ever since Sundaram started selling vegetables, stopped visiting the gated community. The residents’ association did not like losing the rent they were receiving from the vendor. Additionally, the maintenance staff of the gated community benefitted from receiving vegetables either for free or at extremely low prices, as the vendor, reluctant to take back the unsold stock, chose to distribute them at little to no cost. This enabled the residents’ association to retain maintenance staff whose attrition rate was increasing with more gated communities coming up in the nearby area.
Which of the following options will BEST address the concerns of the residents’ association arising out of Sundaram getting into selling vegetables?
Answer: C
Stakeholder and criterion: the residents' association. It has two concerns: (a) the rent it used to get from the vegetable vendor is gone, and (b) maintenance staff got cheap or free vegetables from the vendor, which helped keep them at a time of rising attrition. The best option should address both.
Why option 3 is best: giving the vendor a rent discount brings him back. The association earns rent again, though less of it, and the vendor goes back to handing his unsold stock to the staff. That restores the perk that helped retain them. More competition also benefits residents and keeps a check on Sundaram's prices.
- Option 1: a fine is punitive. It neither brings back the vendor's rent nor the staff benefit, and it sours the relationship with Sundaram.
- Option 2: forcing free vegetables from Sundaram covers only the staff concern, not the lost rent. It also imposes a cost his contract never included.
- Option 4: a second grocery store does nothing about vegetables for staff and may not even sell vegetables. It is also a much bigger step than the problem needs.
- Option 5: extra rent from Sundaram covers the revenue concern, but the staff lose their free vegetables. Sundaram has no unsold stock to give away the way the vendor did.
Answer: Option 3