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Scenario of the month: Doing Business Using Agents

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Jonah Ademayo is discussing recent deals with his company's agent in the country of Formania.

DBWB - Scenario - Doing Business Using Agents3

Jonah: "Well, I just wanted to congratulate you on getting us the fifth largest contract of the year."

Agent: "Thanks! However, I need to talk to you about costs. You know how everything is getting more expensive."

Jonah: "Oh yes, it is. However, you're protected in a way. The five percent commission that you receive grows with the size of our contracts."

Agent: "Therein lies the problem. When we signed I didn't realise the true cost. You can't say I haven't delivered."

Jonah: "Of course you have. So, what do you want?"

Agent: "Well, going forward I need ten percent."

Jonah: "Wow! That's a pretty steep increase."

Agent: "Sure, but I can make up for it with more and larger contracts for you. So, you'd still be better off ..."


Question: What should Jonah do?

1. Refer the decision to his managers.

2. Make a decision based on the commercial factors - the size of contracts and the profit margin.

3. Tell the agent that an increase of this size is impossible even if it means losing the services of the agent.

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