CASE FOR ANALYSIS Why Is Cooperation So Hard?

Armando Bronaldo immigrated to the United States six years ago after working as design leader for an Italian company specializing in home sound systems. Armed with a vision and $15$ years of experience, he founded his own company, Technologia, as the supplier of sound translation components including the base radiator, dome tweeter $($for high frequency$),$ composite cone $($for midrange sound$),$ the binding post $($for sound translator delivery$),$ and ohms impedance $($for conducting sound through the speakers$).$ As it builds its reputation for quality and supply chain service and delivery, Technologia relies heavily on continuing a solid relationship with AUD, a manufacturer of home sound systems, under the management of CEO Audie Richards. AUD was the company's first contractual partner, currently accounting for $50$ percent of the small supplier's business. The initial agreement with AUD has grown and the current business relationship brings a steady stream of orders that has enabled Bronaldo, even in a tough economy, to add workers over the last three years. Bronaldo loves the reliability of selling to AUD, but he sometimes questions whether the business relationship is overbalanced in favor of the powerful manufacturer.

"I think in the beginning Audie played his hand well, knowing that we were a start$-$up and trying to secure a

solid customer base. In my eagerness to get the contract and in trying to please the head of a big company, I found myself saying 'Yes' and carrying out his wishes and demands," Bronaldo admits. "Because we were a young company and because he is$,$ by far, our biggest customer, I think he got into the habit of assuming the focus would remain on his needs and his profits throughout the business relationship. But now, with our feet under us as a company, I think it is time to look again at the relationship between the two companies."

Richards is satisfied with the present arrangement he has with Technologia and sees himself as both partner and mentor, as he recently explained to a colleague. "Bronaldo came to this country and started his company and I was willing to give him a chance, set up our logistics$,$ and make it possible for him to grow his company. I think it's worked out very well for AUD. And now he talks about wanting to change the way we do things. I$\text{'}$m suspicious about what he has in mind. But he needs us more than we need him. Look, I've got a good supplier; he gets lots of business from us; I see no reason to change it$."$

Although the relationship and dialogue at the top management level is strained, mid$-$level managers at both companies $do$ talk and are eager to explore and implement a new vendor managed inventory $($VMI$)$ system that