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Minor Case Study Essay

In: Business and Management

Submitted By evafeng7777
Words 1317
Pages 6
Background
Siemens AG in Munich was divided into 7 groups and 5 divisions as a both electronic and electrical producer. The Electric Motor Works (EMW), belonging to the largest group named Energy and Automation where occupied nearly a quarter of total-revenues in 1987, primarily produced low wattage alternating current (A/C) motors. From 1937, Siemens stopped producing electric motors. With the massive reconstruction after WWII, EMW plant in Bad Neustadt became the principal electric motors producer. * Products and Processes
In 1970s, EMW produced standard motors (80% sales volumes) and customised motors (20% sales volumes)
The process of long run production was highlighted by standard motors due to large differentiated demand. * Market and Competition
The market for standard motors was perfect competitive. The Eastern Bloc competitors with lower rates are dominant in market despite the actions by EMW in 1980s. * Costing system
Under old costing system, overhead cost was separated to 3 categories related to materials, production and support.
For new strategy, another two overhead pools were established to assign the used support related cost in further details. * Strategy
EMW enlarged production of low-volume customized motors and lessened high-volume standard motors.

Problems and issues * Problems: For old strategy, disadvantages in price competition existed due to low labour rates. And under old costing system, EMW has inaccurate data for costing customised motors. * Issues: Efficiency improvement was achieved in production. And then old costing system cannot optimise the relationship of increased support related cost and transformed mixed products. The augmented support overhead was discovered not up to the increased materials, labour hours and machine hours. Yet it was more linked to the orders amounts and the amounts of...

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