Precision Worldwide - 1622 Words

Precision Worldwide, Inc. Case Study Case Study 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†¦show more content†¦For this analysis purpose, if we consider that PWI is going to stop making steel rings, the cost of materials already bought is a ‘sunk cost’ to the extent that it exceeds what the materials are now worth if sold or held for fu ture use. For 100 Steel Rings: Cost of Material (Sunk Cost): (321.90) Cost of Labor (100% labor charge): 196.50 Cost of overhead: 157.2 Total cost – Sunk cost: 675.6 – 321.9 = $353.7 Unit cost of Steel Ring (with Material cost as Sunk): 353.70 / 100 = $3.54 Table 3: Relevant cost from Table A of case study supplied by cost accounting department of PWI with steel ring Labor costs at the 70% of regular wages during slack period and, steel ring material costs included as a sunk cost, administrative overhead cost removed, and departmental overhead cost reduced. For 100 Steel Rings: Cost of material (Sunk Cost): (321.9) Cost of Labor (70% of regular labor charge): $137.55 Cost of overhead: $157.2 Total Cost – Sunk Cost = $294.75 Unit cost of Steel Ring (with Material cost as sunk cost and labor charges reduced to 70%): $294.75 / 100 = $2.95 6) Table 4: The effect of Plastic Ring versus Steel Ring Lifespan. Assume a company called ‘A’, needs 6 rings to operate the machine Life Span of Steel Ring: 2 Months; In 16 months, they replaceShow MoreRelatedPrecision Worldwide1110 Words   |  5 PagesPrecision 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, HansRead MorePrecision Worldwide1583 Words   |  7 PagesExecutive Summary Precision Worldwide,Inc (PWI) is a manufacturing company of industrial machines and equipment for almost 90 years. One of their plants located in Frankfurt, Germany, produces a particular model at a price ranging from $ 18,900 to $ 28,900. Moreover, the plant has another department that manufactures steel retaining rings. These rings are considered as an integrate parts of the machines they are actually manufactured. This department can sell their rings either internally or externallyRead MorePrecision Worldwide, Inc1239 Words   |  5 PagesCASE WRITE-UPS: â€Å"Precision Worldwide, Inc.† When a competitor develops and introduces a superior product, that is less costly to manufacture and even many times usable and durable, Hans Thorborg, the general manager of the German plant of Precision Worldwide, Inc.(PWI), and his team have to decide to math the competitor’s product. When to do so, how to price or what sustainable competitive advantage they need to adopt during the next strategic period, given that they hold a large inventory, whichRead MorePrecision Worldwide, Inc1726 Words   |  7 PagesPrecision Worldwide, Inc. Introduction When a competitor develops and introduces a superior product that is less costly to manufacture and even many times usable and durable, the key to people at Precision Worldwide must decide whether to match the competitors product, when to do so, how to price or what sustainable competitive advantage it needs to adopt during the next strategic period, given that it holds a large inventory of its now inferior product. This issue concerns the steel and plasticRead MoreBUS5431 Case 1 Precisions Worldwide Essay752 Words   |  4 Pagesï » ¿ Harvard Business Case 1 - Precision World Wide, Inc. Managerial Accounting BUS5431, Spring 2015 What action should Hans Thorborg take? Why? Hans Thorborg is the general manager of a manufacturing firm, Precision Worldwide, Inc., which produces steel rings for various domestic and international companies. Recently there has been a shift in the market to a new product, a ring made of plastic rather than steel. The new product is of a higher quality in regard to consumer concernsRead MorePrecision Worldwide, Inc Havard Case Study Essay examples1033 Words   |  5 PagesSUBJECT: Precision Worldwide, Inc. RECOMMENDATION: My recommendation for Precision Worldwide, Inc. (PWI) is to immediately stop the production of steel rings. PWI then needs to sell the remaining steel rings to at least recoup some of their initial investment. In the meantime they should start producing, selling, and distributing plastic rings to their entire market of customers while attracting new customers who may prefer this new option. CONCLUSION: By changing their production offering toRead MoreEssay on History of Fender ® Musical Instruments Corporation937 Words   |  4 Pagesillustrious history dating back to 1946, Fender has touched and transformed music worldwide and in nearly every genre: rock ‘n roll, country and western, jazz, rhythm and blues and many others. Everyone from beginners and hobbyists to the worlds most acclaimed artists and performers have used Fender instruments and amps, and legendary Fender instruments such as the Telecaster ® and Stratocaster ® guitars and Precision ® and Jazz ® bass guitars are universally acclaimed as design classics. In the 1940sRead MorePrecision642 Words   |  3 PagesPrecision Worldwide,Inc (PWI) Precision Worldwide,Inc (PWI) is a manufacturing company of industrial machines and equipment for almost 90 years. One of their plants located in Frankfurt, Germany, produces a particular model at a price ranging from $ 18,900 to $ 28,900. Moreover, the plant has another department that manufactures steel retaining rings. These rings are considered as an integrate part of the machines they are actually manufacturing. This department can sell their rings eitherRead MoreColgate Palmolive Toothbrush Case Study1303 Words   |  6 Pagess new toothbrush, Precision, and choose the one that is the most suitable in the face of the market competition and consumer needs. The report also aims to make recommendations for the positioning, branding, communication and promotion of the product under the chosen strategy. Situation Analysis Company: In 1991, CP held 43% of the world toothpaste market and 16% of the world toothbrush market. Other oral care products included dental floss and mo uth rinses. In 1991, worldwide sales of CP s oralRead MoreAccounting781 Words   |  4 PagesSince Henri Poulenc, the competitor of Precision Worldwide, only influences 10% of the market share worldwide. As mentioned the new plastic rings would not be produced by any company other than Henri Poulenc for some time. Financials aside, knowing this information would negate the urgency made by sales manager, Gerhard Henk, who commented that if customers found out plastic rings were sold elsewhere then it would be detrimental the sales of Precision Worldwide machines – which are many times the print