Distribution Agreement Case study

The source of conflict between Lucid and Black Box is the issue of exclusivity of
territory. The element of exclusivity or non-exclusivity is one of the major issues that affect
many agreements between distributors and manufacturers. In this case, the Black Box has
bypassed the agreement that Lucid would be the only distributor in South America as long as the
distributor met the required minimum orders before the set deadline. Once a manufacturer agrees
to an exclusive territory, franchising an additional distributor or engaging with direct transactions
with retailers is considered a breach of contract. The contract is not explicitly defined as a
business opportunity or franchise agreement. Clearly, the agreement set between Black Box and
Lucid should be governed by the business opportunity laws since Black Box would be at liberty
to look for other distributors within the South American territory if Lucid fails to uphold their
end of the agreement.
Question 2
Lucid should use arbitration instead of going to the court because an arbitrator would
most likely t objective arbitration from which both parties are meant to benefit. Arbitral
decisions have significant advantages over normal court proceedings, especially having the
opportunity to appoint arbitrators who are experts in the business. This choice of dispute
resolution would be informed by the fact that a distribution agreement has certain elements that
both parties should uphold such as minimum purchase requirements, product warranties,
purchase order requirements and termination rights.
Question 3

DISTRIBUTION AGREEMENT CASE STUDY 3
Some tactics Lucid could use if it decided to use negotiation as a method of dispute
resolution include listening, remaining professional, enough preparation, and understanding the
dynamics of the deal. Listening is an art of business communication that fosters an environment
where key issues are effectively tabled to encourage appropriate response. Poor negotiators
believe in controlling the conversation. However, effective negotiators remain focused on
gaining understanding. Lucid would benefit if they established grounds for understanding,
flexibility and acknowledging existing limitations depending on internal and external business
pressures.
Question 4
Lucid and Black Box can improve their supply chain relationship by establishing a clear and
comprehensive distribution agreement that defines the nature of the relationship. This agreement
would include important aspects of business for both Lucid and Black Box, like territory and
exclusivity. These two elements remained unclear in the first agreement, and it left a large gray
area where there was a breach of the agreement. The nature of the business environment in the
internet age has a significant influence on business strategies even for manufacturers. Since
relying on the traditional brick-and-mortar model is no longer the sure way to increase sales
volume, the agreement should Black Box room to advance their relationship with consumers
without affecting the Lucid’s ability to operate a profitable business in South America.
With regard to territory, the two companies must agree on the scope of business that Lucid
would be conducting. In addition to setting up a comprehensive agreement, both companies
should commit to improving communication and possibly implementing the concept of lean in
their business relationship. Considering lean principles in the supply chain would ensure that
orders placed by Lucid would be delivered on time. Moreover, Black Box should realize the

DISTRIBUTION AGREEMENT CASE STUDY 4
value of a distributor in reaching the target customers. In a nutshell, the distributor-manufacturer
relationship should be teamwork-based to foster an environment of consistent brand performance
and growth.