Monday, May 20, 2019

Harper: Cost and Attractive Markets Essay

How good is the result? The product in theory has great potential able to save represents in two study industries, ceramics in paints. Looking at both individually 1) Paints Potentially 12 18 cents of savings to accepted estimations, however research with client has shown great difficulty. Was not working well due to suspension problems, was ineffective to swallow the right shine for use in white paints. Further to a greater extent(prenominal), once quality of end product was acceptable, savings was found to be 3cents per a gallon, which was deemed not worthwhile. However more wear on draw in on machinery due to abrasive properties of domimite. 2) Ceramics Huge initial investment to switch over the dies but estimated to be a large number of advantages a. Strength of tile improves b. Minimal moisture expansion c. If used more than 20% thermal expansion goes down reducing tile mfg time. d. Low temperature in kiln e. Reduces Variable cost of tile by 17% through the above mechan isms. Tile industry Fixed cost is enormous due to machinery, labor etc. However actual tests have not been so conclusive. While advantages of them ar seen, there have been issues with warping and with cracks. Penetration with smaller suppliers but failed to interest medium and large manufacturers.What obstacles has harper encountered in developing the market for Dominite? Single source player, very unattractive to large customers Testing has been stupid Failed to find right mixture Failed to sale the higher grade material Penetrated the wrong market instalmentShould Harper try to sell the Dominite operation? It Depends How much for? For the right price, certainly. It comes down to how realistic are the immature projections that came out in 1985. Can we really meet those targets? I doubt it. How much do we take aim to sell to break even? Assuming we use 1985 be for 1986 we would need to sell? Doing the math I assumed everything was a fixed cost except for the 35% of the plant cost(if I took anything else as a variable cost it would go more than the price)giving us a VC of 48. There fore we would have necessitate to sell 54 g-force units which is way way way more. I do feel that exchange costs and admin costs should be part of variable costs, but when I calculate it that way our VC is more than our price which is fucked up.Basically we really need to sell more or sell the entire division. If the finish is not to sell the Dominite operation, what changes should be made in the current gross gross revenue program? What are the near attractive markets? What offer should be presented in terms of value proposition and price? Basically our gross revenue are not doing too well. Take one look at the original projections and our current sales data. Stuff of nightmares. The question is how can we improve it? We have been using trade shows, industry magazines and cold calls. They have gone as far as to leverage their contacts within the pain industry but it i s facilitate not clicking. I think we need to spend some serious R&D time. Our sales pitch so far has been hey, use some dolomite and shit will get better. My good word would to actually figure out what formula works for which application and actually sound like we fill in what we are talking about when we go to the customer.The most attractive markets are obviously paint and ceramic given our product. Let us look at each one of those individually 1) Ceramic 33% of market is 4 big guys, this is key. Any one of them will procure 40 60 thousand tons a year and we will be able to break in. At all costs we must try and get to one of these customers. 33% is medium players amounting to 12 companies. The customer trying to buy us out is in this category. No data on how much they buy but I find it to be a lot less than what we need to even break even 33% left are all small which we have been hitting. 2) Paint 25% of the market is with big guys and 75% with the small guys. Again we have to target the big players.The small guy stratergy is not cutting it. though given the technical difficulties with paint and the minor margins we make, I am wondering if we should save on those sales resources and move them to ceramics. Our valuation offer is basically price saving and reduced time for manufacturing. Our price is warlike with talc which is the product we directly compete with, however we are barely making it. Its a hard call and I want to discuss with you guys in the meeting tomorrow. Are any changes inevitable in the Dominite sales organization? First of all we are cannibalizing our own sales resources with the introduction of superfine. I think we need to dedicate resources solely to dominite to make an impact. Second of all all the above points I made about hitting the right market segments.

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