Priorities

PART I: SITUATION ANALYSIS

1. On the Perceptual Map, all segments drift to the lower right.

Which segment drifts at the fastest rate? High End at a rate of 1.273 per round.

Which drifts at the slowest? Low end at a rate of 0.707 per round.

2. Each Segment’s Ideal Spot shows the buyer’s preferred coordinates within the circle. Why is the High End Ideal Spot to the lower right of the segment center? Why is the Low End Ideal Spot to the upper left of the Low End segment center?

The segments are moving. For customers looking for the “high end” best of the best, from their perspective, if they buy a product at the ideal spot (i.e. better than center), it will still be a cutting edge product when it wears out. For customers that are only interested in price and not as much quality, they are fine with the “older model” in fact the older model means cheaper prices so they will drag their ideal spot back upwards to be less advanced then the segment center.

3. On a unit demand basis, the Performance Segment is growing at the fastest rate, 19.8% each year. In which round will demand for Performance products exceed the demand for Size products?

The Performance Segment will exceed the demand for Size in year 3.

4. Explain how increasing First Shift Capacity can reduce per unit labor costs.

Second shift workers are paid 50% more than the first shift workers so it’s better to increase First Shift Capacity rather than paying Second Shift Workers 50% more.

5. Automation reduces per unit labor costs but it has two disadvantages. What are these?

You have to spend in “Investment” for new plant and equipment if you deviate from the standard automation rating.

Second disadvantage is that once you automate, you have to Separate or" lay off" employees and have to pay each separated worker $5000 separation package.

6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its price. Logically,...