Precisión Worldwide

Case Study Precision Worldwide, INC.

Presented by: Chirivi, Laura Delgado, Andres Goss, Lepriest Jackson, Banikah Willams, Alfred

Case Study – Precision Worldwide, INC. Precision Worldwide is a manufacturer of steel retaining rings used in certain machines sold by the company and some that were manufactured by its competitors. Precision Worldwide’s management at the Germany plant was present with an all too common dilemma in the business world. What to do when a competitor enters the market with a substitute product that is less expensive to produce and has a longer life. The general manager of the German plant, Hans Thorborg, must make a strategic decision to keep his company competitive and profitable. He must decide when and if to produce the plastic rings, what to do with the existing inventory of both raw materials and finished product. At the same time Thorborg is receiving conflicting information from the different managers and the parent company. The sales manager Gerhard Henk wants the company to begin producing the plastic rings immediately to start selling them in order to stay competitive. The development engineer brought up the question of the excess inventory once the production of the plastic rings commenced. From the parent company, Patrick Corrigan, insisted that the steel be used either for something else or plastic rings. In one of the last meetings it was suggested that the company sell the plastic rings only in countries were the competitor was present. Since it was estimated that the production of plastic rings would not be ready until mid-September Precision of continue to produce and sell the steel rings. Based on accounting information the cost per hundred is $1107.90, this amount can be reduced to $1058.78 per hundred using the excess labor at 70% of regular wages. This would allow the company to reduce the price of the steel rings in order to sell off the estimated 15,100 units left on hand by midSeptember. The idea of beginning...