Major issues:
1. The information received from the sales person following up with ‘Hamilton’, had put the executives under jeopardy as to what steps must be taken to maintain the market share and grow in the market.
2. The change in the schedule of power rates, could affect the specifications of oil well pumping motors. Power companies also demanded that over motoring must be stopped.
Analysis for solving the issues:
Alternative-1
1. Reducing the price of the motor will be a feasible option only for a short period. As in the industry the companies want more of starting torque. So it will work until the report is out. People who wanted 10 horse power will also get advantage as all those wanted 10hp will get it at a lesser price. We should also reduce price because if the report is out at the right time then the 10hp stock will not sell. So we need to reduce the price and sell it in the market.
Alternative-2
2. This is not at all a profitable idea
3. 1st way-$790 (cost) - The Company has to lower down its margins. It follows NEMA. Competitors can also do. Torque war will start.
4. 2nd way-$867 (cost) - High cost and so we sell it in lower quantities and margins.
Alternative-3
5. Until the formal report comes out in the public domain till then there is no large benefit for going for a new product. So wait till then. Manufacturing cost + investment will have to be made. The economies of large scale production will not come in. 22000 in 1-200hp at 50%market
6. If it goes up to 60% to 26400, then 4400*1045=4598000.Even without including that oil wells grow by the anticipated fig of 1000 then even ...