...Precision Worldwide, Inc. Case Study Involved Parties: Competitor-French Firm: Henri Poulenc Precision Worlwide, Inc.-German Firm Hans Thorborg-General Manager Gerhard Henk-Sales Manager Bodo Eisenbach- Development Engineer Patrick Corrigan-Parent Company Spokesman Background: Precision Worldwide, Inc. (PWI) manufactures industrial machines and equipment for sale in numerous countries. Repair and replacement parts account for a substantial part of the company’s business. The replacement part in question, steel rings, occur in the machines manufactured only in PWI’s Frankfurt Germany plant, but can also be used on some competitor’s machines. The steel ring manufactured by PWI has an average normal life of about 2 months. Machines require between 2 and 6 rings to operate. Individual rings are replaced as they wear out. Over the years, competition had increased and now a competitor company, the French firm Henri Poulenc, has entered the market with a superior plastic ring that replaces the steel ring. The plastic ring is less costly to manufacture and has a longer life. Situation: The PWI sales manager, Gerhard Henk, is asking when this product will be available for him to sell that his competitor already has on the market, particularly in France where the competitor is the strongest. Bodo Eisenbach, the PWI development Engineer, estimates the plastic rings can be produced in about 4 months at a tool and equipment cost of about $7,500. PWI currently has about $390...
Words: 1027 - Pages: 5
...Precision Worldwide, Inc. Case Study BUS5431 – Managerial Accounting Summary Precision Worldwide, Inc. (PWI) manufactures industrial equipment and parts for sale in numerous countries. Repair and replacement parts account for a substantial part of the company’s business with the replacement part in question, steel rings, occur in the machines manufactured only in PWI’s German plant, but can also be used on some competitor’s machines. This steel ring has an average normal life of about 2 months. These individual rings are replaced as they wear out and recently competition has increased and now a competitor has entered the market with a superior and less expensive plastic ring that can replace the steel ring. The general manager of the German plant, Hans Thorborg has been considering the introduction of a similar plastic rings as a substitute for the steel rings. There is a lot of potential for this product in this market because there is a lower manufacturing cost and a greater durability compare to steel rings. The company is wondering if it is worth to shift from steel rings to plastic rings, but there are a lot of facts that they need to consider. There has been conflicting views concerning the future of the steel rings departments if they should change to plastic rings in order to acquire competitive advantage in this market and what will they do with the special steel after they have implemented the new product. A decision must be made as whether to start producing...
Words: 1749 - Pages: 7
...Precision Worldwide, Inc. Managerial Accounting BUS 5431 Group 2 Kimberly Albino Candace Hampton Frances Kately Husein Khan Daniyell Payne Hayley Romine July 19, 2015 Table of Contents Abstract 3 Key Issues and Problems 4 Decision Alternatives… Resolutions and Solutions… Recommendations… References… Abstract The purpose of this case study is to examine, classify; analyze critical concerns as well as difficulties that are impacting Precision Worldwide, Inc.’s organization. Notably, Precision Worldwide, Inc. has several competitors who are well-disposed in the market due to their reduced pricing and product substitutions. The method in which this case study observation is arranged will explore findings and opportunities related to price and production cost; the ramifications of demand in other markets. The assessment of this case study, in conjunction with arriving to an appropriate cost for materials and freight, will help determine the recommended best course of action for Precision Worldwide, Inc. and Hans Thorborg in deciding the preferred product for the organization. Key Issues and Problems Precision Worldwide, Inc. (PWI) is faced with a business decision that will potentially affect the organization’s continuity and profitability. The organization recently held meetings to discuss the introduction of a substitute product into the marketplace by a competitor. In making a business decision to ensure...
Words: 1119 - Pages: 5
...9-197-103 REV: MAY 21, 2004 WILLIAM J. BRUNS, JR. Precision Worldwide, Inc. In late May 2004, Hans Thorborg, the general manager of the German plant of Precision Worldwide, Inc. (PWI), scheduled an afternoon meeting with his sales manager, accountant, and development engineer to discuss the introduction by the French firm Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The plastic ring, new to the market, not only had a much longer life than the PWI steel ring but also apparently had a much lower manufacturing cost. Thorborg’s problem stemmed from PWI’s large quantity of steel rings on hand and the substantial inventory of special steel that had been purchased for their manufacture. After a thorough survey, he had found that the special steel could not be sold, even for scrap; the total book value of these inventories exceeded $390,000. For nearly 90 years PWI had manufactured industrial machines and equipment for sale in numerous countries. The particular machines involved in Thorborg’s dilemma were made only at the company’s plant in Frankfurt, Germany, which employed more than one thousand people. The different models were priced between $18,900 and $28,900 and were sold by a separate sales organization. Repair and replacement parts, which accounted for a substantial part of the company’s business, were sold separately. As with the steel rings, these parts could often...
Words: 1480 - Pages: 6
...The ABC’s of Failure – Getting Rid of the Noise in Your System For the past 40 years, I have observed many companies, including DuPont (where I spent 27 years) pursuing planned maintenance with the standard tools of planned maintenance: inspections, planning, scheduling, materials procurement, CMMS systems, etc. with the same results. They succeed for a while and get their percent planned and scheduled maintenance up to the 80+ only to see that drop back later to 60 I am amazed how many of the companies we work with have had this experience. This pattern of behavior has led us to conclude that the reason for this experience is that only 60% of the normal work of maintenance is inherently plannable. The rest of the work is created by random acts of what we are now calling care-lessness. The sites where we see people break this pattern and achieve 92% to 96% planned maintenance for the long term without regressing, are the ones who eliminate the inherently unplannable work. Of course, this cannot be done by maintenance alone. Everyone who does work at a site contributes to the defects that create the unplannable work, and therefore everyone must participate in eliminating the defects that create the 40% of the work that is unplannable. In the diagram below we attempt to more clearly articulate the true significance of Defect Elimination by outlining the ABC’s of failure. Fundamentally, failures happen because things that exist are not perfect. To reduce failures we must eliminate...
Words: 6229 - Pages: 25
...Precision Worldwide Inc. manufactures steel rings, which are used in certain machines. French firm Henri Poulenc competitor of Precision Worldwide Inc is introducing a plastic ring, which is a substitute for the steel retaining rings. Hans Thorborg, general manager of Precision Worldwide Inc. is worried because the plastic rings not only have a longer life than the steel rings but are also manufactured at a lower price. PWI has a large quantity of steel rings and substantial inventory of special steel. In a meeting, the general manager, the sales manager, the accountant and the development engineer discussed the possible problems and alternatives for this problem. For PWI, manufacturing plastic rings was defiantly the best solution for the problem but they still wondered what they would do with the inventory they had. According to the sales manager, customers new about the new plastic rings and were asking if PWI was already selling them. The development engineer calculated that the plastic rings could be by mid-September. The sales manager thought that since the plastic rings could be produced at a really low cost, the inventory problem was irrelevant. He suggested that if the steel rings couldn’t be sold they should just throw them away. Another problem was that Henri Poulenc was selling the plastic rings at the same price that PWI was selling the steel rings. Not manufacturing the plastic rings would be like ignore a considerable profit margin. In the meeting they concluded...
Words: 666 - Pages: 3
...Precision Worldwide Inc. Precision Worldwide, Inc. (PWI) has a plant located in Germany which manufactures industrial machines, equipment and replacement parts for sale in numerous countries. Repair and replacement parts, which accounted for a substantial part of the company’s business is now facing a dilemma, a new competitor has entered the market with a replacement part, a plastic ring, which PWI had in the past used a special steel to produce. During a meeting with the general manager, Hans Thorborg, the general manager of PWI’s plant in Germany, wanted to discuss with his sales manager, accountant and development engineer the introduction of the competitor, a French firm Henri Poulenc and the plastic ring substitute they produce (Bruns, 2004). The plastic ring produced by Henri Poulenc is created at a fraction of the cost of the steel rings that PWI currently produces, and was found to last four times longer than the steal ring (Bruns, 2004). Many strategies were discussed by PWI’s management team on how to respond to this new competitor along with discussions regarding what to do with the special steel the company has on hand. Analysis The main topic of discussion and concern is the company losing on profits if they do not begin manufacturing their own plastic ring. Which leads to the next questions how to market and price a new line of plastic rings and the big question what to do about the special steel they use to produce steel rings. If PWI sells on a new line of...
Words: 1119 - Pages: 5
...Precision Worldwide, Inc case study. Begin by talking about the issues ….. Substantive Issues Raised. The primary issue at hand involves the relevant cost of a set of replacement parts. The parts, however, range from those that are totally manufactured and ready for sale, to those that have not yet been manufactured but for which raw material is on hand, to those that have not yet been manufactured and for which no inventory of raw material exists. The case solution turns in large part on the use of contribution analysis. However, the concepts of sunk costs, opportunity costs, and product substitution are prominent aspects of any reasonable analysis. The product in question, a steel ring, is used as a replacement part for industrial machines manufactured and sold by both Precision Worldwide, Inc and their competitors. It sells for $1,350 per hundred rings with annual sales of approximately 36,000 rings. One competitor, Henri Poulenc, has introduced a plastic ring. This ring lasts up to four times as long and is priced at about the same level as PWI’s product. Mr. Thorborg, the gm of the German plant of PWI, must analyze the data, the conflicting views of his sales manager and his development engineer, and make a decision as to whether PWI should begin the manufacture of a plastic ring. In addition, a plan needs to be designed as to the pricing policy to follow for both the steel and the plastic rings. Finally, some consideration should be given to the effect of the...
Words: 778 - Pages: 4
...ACTG 360 Case 2016/3/7 Precise Worldwide, Inc.(PWI), manufacturing industrial equipment and parts for sale in numerous countries, is facing a serious problem which is Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The steel ring has an average normal life of about 2 months, but the plastic ring has an average normal life of about 8 months. Therefore, in my opinion, Hans Thorborg who is the general manager of the company should take several actions in response to this problem. The first action should do is being able to produce the plastic ring as well. Because the total cost of 100 steel rings is $1107.90. This cost is about 3 times of the cost of 100 plastic rings. Also, the plastic ring is also cheaper and durable than steel ring. Although the PWI would still have a lot of inventories for materials of plastic ring and completed plastic rings, PWI should demonstrate a positive attitude for resolving in terms of the qualitative factor of competition. In the other words, the cost of the existing inventory would replace by the opportunity cost for entering the current market. Furthermore, at the current rate of sale (690 rings per week), without any further production, 15,100 finished rings would be left on hand by mid-September. Therefore, PWI should continue producing and selling steel rings till mid-September. In the mid-September introduce plastic rings at least in those...
Words: 718 - Pages: 3
...Skip to NavigationSkip to Content TermPaperWarehouse.com - Free Term Papers, Essays and Research DocumentsThe Research Paper Factory JoinSearchBrowseSaved Papers Search Video Concepts, Inc In: Business and Management Video Concepts, Inc Executive Summary Whether to remain in the business with increase in Rental to $ 2.49 whereby increasing the profitability of the business due to stiff competition from the Blockbuster or to sell it off or hire a manager for the shop and start doing job at some other place, has to be evaluated on the basic objectives of economics of the firm. The main objective of the firm is to maximize the profit and thereby maximize the return on investment. In order to attain this at the same market share it is suggested to sell the business to the competitors, if they are interested. Word Counts: 102 Table of Content SITUATION ANALYSIS | 2 | THE PROBLEM STATEMENT | 5 | OPTIONS | 5 | CRITERIA FOR EVALUATION | 6 | EVALUATION OF OPTIONS | 7 | RECOMMENDATIONS | 9 | ACTION PLAN | 9 | Situation Analysis Outlook of Video Rental business in Lexington In Research conducted by the Chad Rowan for the business of Video Rentals when it was relatively a new business, it was found that it is profitable enough to earn more than the average rate of return on investments. So it was possible to start with the store of 200 square feet with the 500 video tape library in Lexington, North Carolina, a town of 28,000 people...
Words: 512 - Pages: 3
...UPS Supply Chain Solutions SM case study Nikon Focuses on Supply Chain Innovation — and Makes New Product Distribution a Snap Top consumer goods manufacturers now recognize that success requires more than just making market-leading products. Having the right distribution network is just as critical. Nikon Inc. is the world’s leader in precision optics, 35mm and digital imaging technology. So it’s no surprise that when the company saw the next big trend in photographic technology — digital cameras — they were ready to deliver with some of the most advanced product designs in the marketplace. But to ensure that retailers could meet the demand of tech-hungry consumers and professional photographers, Nikon, with the help of UPS Supply Chain Solutions, reengineered its distribution network to keep them well supplied. Nikon R E S U LT S GEOGRAPHIC AREA SERVED CHALLENGE SOLUTION United States, Latin America and the Caribbean Consumer Goods Design and implement new distribution strategy to introduce Nikon product line. Client Challenge To support the launch of its new digital cameras, Nikon knew that customer service capabilities needed to be completely up to speed from the start and that distributors and retailers would require up-to-the-minute information about product availability. While the company had previously handled new product distribution in-house, this time Nikon realized that burdening its existing infrastructure with a new, demanding, high-profile...
Words: 911 - Pages: 4
...A Brief Understanding of IBS ‐‐A Case Study of Toyota A Brief Understanding of International Business Strategy --A Case Study of Toyota by Peter LIU, peterliu@acculine‐mfg.com MSc International Business P14B45 International Business Strategy Lecturer: Dr Yee Kwan Tang Sponsored by 10 May 2010 Acculine Precision Manufacturing Company Tel: 0086-574-28887315, Fax: 0086-574-28875303, Web: www.acculine-mfg.com, email: info@acculine-mfg.com A Brief Understanding of IBS --A Case Study of Toyota Page 1 / 12 Content Introduction ........................................................................................................................... 2 Basic Concept of International Business Strategy ................................................................. 2 Brief Background of The World Auto Industry .................................................................... 4 Brief Background of Toyota .................................................................................................. 4 IBS of Toyota ........................................................................................................................ 6 Entry to US Market ........................................................................................................... 7 Americanization as A Way of Localization ...................................................................... 8 Recommendations...
Words: 3709 - Pages: 15
...Exotic Adventures Inc. Case Synopsis Exotic Adventures Inc. (EAI) is a travel company that offers voyages to the Arctic, Antarctica, islands in the South Pacific and Atlantic, and the Amazon River during the high water season. EAI has begun offering voyages to the Amazon River during the low water season due to a high interest by naturalists who think the voyage would be more interesting. EAI has become concerned with the depth of the water in the Amazon River during the low water season. The company has received conflicting information from Brazilian and Peruvian Pilots on the whether or not it is safe to maneuver through the river. (Shaw & Hulland, 1999) State the Assignment Question Should EAI cancel the voyages scheduled on October 8th or should they continue the voyages with the possibility of completing the voyage, cancelling the voyage at Manaus or turning back before Iquitos? Case Analysis EAI has to make a decision on whether to cancel their voyage through the Amazon river or to attempt to navigate through the river with a chance of having to cancel the trip early. Each of the options that EAI has poses a monetary loss in income to the company except for the decision of continuing through the river and completing the voyage. Canceling the trip or not completing the voyage at Iquitos not only poses a monetary loss for EAI, but also for Brazil and Peru. (Shaw & Hulland, 1999) The agents in Brazil have advised EAI that their pilots will not take EAI’s ship...
Words: 846 - Pages: 4
...Dell Inc. & Amazon.com Inc. | Dell Computer Corporation is an American multinational computer technology company based in Round Rock, Texas, United States, that develops, sells, repairs and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than 103,300 people worldwide. In 2012 it was the third largest PC vendor in the world after HP and Lenovo. Dell is currently the #1 shipper of PC monitors in the world. Dell sells personal computers, servers, data storage devices, network switches, software, computer peripherals, HDTVs, cameras, printers, MP3 players and also electronics built by other manufacturers. The company is well known for its innovations in supply chain management and electronic commerce, particularly its direct-sales model and its "build-to-order" or "configure to order" approach, delivering individual PCs configured to customer specifications by implementing a just-in-time (JIT) manufacturing approach. Dell was a pure hardware vendor for much of its existence, but a few years ago with the acquisition of Perot Systems, Dell entered the market for IT services. The company has since made additional acquisitions in storage and networking systems, with the aim of expanding their portfolio from offering computers only to delivering complete solutions for enterprise customers. Its Business/Corporate class represents brands...
Words: 625 - Pages: 3
...Case 14: QI-TECH A Chinese Technology Company For Sale About the case: The case describes QI-TECH, a Chinese manufacturer of precision coordinate measurement machines. A foreign investor that hold 50% of Qi-Tech must negotiate a sale with its Chinese partner and a potential buyer (a large Western measurement machine company). For this purpose the foreign investor must value the joint venture and develop a viable deal structure and negotiation strategy. Something about CMM Technology – the product Coordinate Measurement Machines (CMM) were used widely in the aerospace industry and other industries such as automotive and electronic for quality control purposes. CMMs represented about 25% (US$ 600 million) of the world market for measurement instruments. CMMs cost between US$ 50,000 – US$ 500,000 depending on size of parts they could measure, speed of measurement and precision. The measurement accuracy of a Qi-Tech’s most popular (Zoo3” CMM machine was 2.5 µm (1 micron = 1 millionth of a meter). A CMM generally consisted of four elements: stationery devices, including a massive granite worktable; moving elements; electrical parts; and a controller. The players Indivers BV was a Dutch holding company that had been established by Twaalfhoven who had built a business around the manufacture of aircraft engine parts in the 1970s. Overtime, Twaalfhoven had made several investments in high-tech startups to participate in the exciting growth opportunities for high technology...
Words: 1946 - Pages: 8
