Corporate Momentum

Internal Corporate Memorandum

From: Quality Abroad Inc. president Date: January 27, 2006

To: Senior Management Team of Bull's Eye

Re: Quality should terminate sourcing product in Myanmar

Quality should terminate sourcing product in Myanmar because the immediate savings from sourcing clothing products from Myanmar could soon be exceeded by Quality's losses from : (1) reduced future revenues due to the undermined reputation in the industry compared to Quality's most direct competitor Walmart (2) damage of PR image in public caused by accusation from the government, human rights organizations and media.

Even though Bull's Eye may suffer the pain of increasing cost of its source clothing as a result of stopping imports from Myanmar, the net income could be reduced in amounts difficult to estimate. It's a good chance to give Bull's Eye a positive PR image. So I recommend Bull's Eye make an announcement immediately after it implements the policy of stopping importing from Myanmar. The announcement will build customers' trust and confidence towards Bull's Eye which leads to future revenues. Also, this action will show Bull's Eye's care about human rights compared to those competitors which didn't respond to the comments of the senators, International Labor Organization, and National Labor Committee.

The best next steps: Quality should look for possible alternative countries for sourcing product, like China and El Salvador. Bull's Eye should find a way to allocate Quality's cost to all other products sold by Bull's Eye, and allocate some of the cost increase to general overhead.