Precision Worldwide Inc.
Autor: shinycoffee24 • December 13, 2013 • Case Study • 719 Words (3 Pages) • 1,211 Views
EXECUTIVE SUMMARY.
Introduction
Hans Thorborg, general manager of the German plant of Precision Worldwide, Inc. (PWI) has a decision to make. PWI manufactures industrial machines and equipment for sale in many countries. He has just learned that a French competitor, Henri Poulenc, has introduced a new plastic ring part that is both more durable and has much lower manufacturing costs, yet it demands the same market price as PWI’s steel rings. He has called a meeting with his sales manager (Gehard Henk), his accountant, and his development engineer (Bodo Eisenbach) to discuss this development and to ask for their recommendations. He added that their special steel that has been custom made for their manufacturing needs could not otherwise be sold or scrapped. It was determined, by Henk, that PWI could produce the same plastic ring, but it would be about 3.5 months before it would be available. Manufacturing of the new plastic rings would require equipment and tools that would cost $7500. There was also the issue of dealing with the remaining special steel that would not be exhausted by the time the plastic rings would be introduced. Patrick Corrigan, from the parent company in the US, agrees that PWI should move forward with the production of plastic rings. However, he felt strongly that PWI needed to find some other use for the steel, or if not possible, continue to produce the steel rings until the reserve is exhausted. It became clear to all involved that PWI needed to focus long term efforts on the production more durable and profitable plastic rings. In the short-run, the question becomes, “what to do with the remaining steel?” particularly once the plastic ring is available for launch? One option was to first introduce the plastic ring only in markets with direct competition, like France. Could the steel rings be sold until exhausted in other markets? (Bruns, 2004).
Analysis
It was clear to all involved that this new plastic ring is too competitive and profitable to ignore. It was discovered
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