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Industrial Scale

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Submitted By jeep1983
Words 449
Pages 2
-Executive Summary
Industrial Scale has been producing a balance beam scale for many years and they are the leader in that market. Recently, Wilson Inc has begun to manufacture a similar scale that has been copied from the Industrial Scale model. Wilson Inc offers deeper discounts to contractors and has managed to gain a 27% market share. Industrial Scale is not concerned about its competition the way its sales manager wishes that it were.
-Assessment
Industrial Scale manufactures a relatively simple device and has been doing so for many years. Up until recently it has claim to 90% of its market. This device represents $600,000 in yearly sales which is 15% of the total company sales. The units are long lasting, so most purchases are not due to replacement.
Wilson Inc, has emerged in the last 5 years, and copied Industrial Scales design (the copy rights have long expired). The Wilson design is a more simplified version which does not include a recent improvement which has been incorporated by Industrial Scale. The price of the two scale are the same, however, Wilson offers 20% discounts to contractors compared to Industrial scales 10%.
The sales manager of Industrial Scale has convinced himself that Wilson Inc is not a threat. But, he decides to see what can be done about reducing cost. Cost could be reduced by a few percent internally or by lowering the quality of the good. Also, a new design has been made, but it will increase cost by 8% or $100. They currently sell roughly 400 units per year at a price of $1500 and a cost to them of $1250. They are considering a cost increase of 5%.
Industrial Scale has a sale team that focuses on calling larger contractors and placing advertisements in trade papers. Wilson Inc does not advertise and simply provides a mail order service. Industrial Scales, financials are also in order, with no long term debt and a well diversified company. However its cash is tight and it relies on loans for excess cash. Wilson now sells roughly 150 units per year compared to Industrial Scales 400 units per year.
Wilson Inc has definitely become a threat and needs to be dealt with. The option of doing nothing is no longer a viable one. Industrial Scale does still have other options. One thing to be looked at is the advertising campaign of Wilson’s, this method could be duplicated by Industrial Scale and could result in reclamation of the market. However, a battle between two organizations is rarely good. It may be possible for Industrial Scale to purchase Wilson and continue to make both scales under a unified ownership.

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