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Wilkerson Case

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1. Describe Wilkerson’s competitive environment. At a minimum, include any barriers to entry, industry maturity, the specific market and production complexity for each product, and marketing concerns.

Wilkerson is a manufacturing company specializing in manufacturing components for water purification systems; the company makes valves, pumps, and flow controllers. Wilkerson is a supplier to companies that actually manufacture the water purification equipment. The relevant officers of the organization are:

* Robert Parker, President * Peggy Knight, Controller * John Scott, Manufacturing Manager

According to the United States International Trade Commission,

“U.S. exports of water filtration and purification equipment reached $1.8 billion in 2011, increasing by 20 percent since 2007 and by 110 percent since 2002, with Asia the leading export destination. Due to insufficient availability of water, rising incidence of extreme weather events, and increasing global demand for water resulting from demographic shifts, urbanization, and industrialization, U.S. exports of water treatment equipment are expected to remain high.”

So, it is safe to assume that this is a highly competitive industry with high barriers to entry and attractive growth prospects due to the fact that this is an industry that is arguably in the Growth Phase of the industrial life cycle. The high barriers to entry can be attributed to the complex nature of the equipment, the production process, and volume.

The current situation for Wilkerson is that 2 out of its 3 product lines are currently underperforming the target gross margin (according to the current accounting system). Valves are -.11% of target and Pumps are -15.46% of target. Flow controllers are exceeding target by 5.96%. The data indicates that this negative trend is likely to continue for valves and pumps due to

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