Mercadona-Conservas Ubago: The intersupplier concept

The case considers the decision that the President of Conservas Ubago, SL, Eugenio Martinez de Ubago, ought to take regarding the suggestion that he receives, to become an intersupplier of Mercadona. Conservas Ubago is a small company that works in the canning and preserving of fish, in the south of Spain and competes in a mature market. Mercadona is the leader in Spanish retail in supermarket format and the second operator in commercial distribution in this country who made a proposal to Conservas Ubago to create an alliance without a contract that requires a series of conditions (absolute transparency regarding costs, control) in exchange for an increase in business of some 30-35% per annum. The Company has been a Mercadona supplier for more than 10 years and is trying to analyse the opportunities and risks involved in the concept of being an intersupplier