Custom Fabricators Case Solution

Threat from New Entrants There are currently no new threats from new entrants in this market. Company G’s technology, testing and production process that is very efficient for profitability cannot be easily replicated.

Can the performance cycle be improved through the use of the 25 percent and 15 percent suppliers? What trade-offs must be made to use these suppliers?

Outsourced almost 87% of production activities involving spare parts while maintaining core competencies like R&D, design, quality control and key trademark

Business risk evaluation – possible and moderate = medium business risk. The threat of new entrants and substitute products are very high, in addition to the high level of competition in the industry. Therefore, the business risk that MTI faces – losing customers due to lack of product differentiation, profit decrease due to increase in competition in the industry are likely possible to occur. In addition, the effects from new companies entering the industry will have a moderate effect on MTI’s revenue stream. As a conclusion, MTI faces medium business risk.

Riordan Manufacturing, Inc. is a fortune 1000 company with revenues in excess of $1 billion (University of Phoenix, 2012). This wholly owned company is a global plastics manufacturer that employs 550 people with annual earnings of $46 million. Riordan has a reputation for being an industry leader in the industry of polymer materials and has various clout heavy clients such as the Department of Defense and major automotive companies. The company recently went global by relocating its Michigan operation of fan manufacturing to China. This paper will explain lean production and capacity planning for the new process

Research your employer (or a company of your choice) and, using Table 6.1 (p. 187), determine which of the six potential manufacturing options has the greatest impact upon the organization and why. Submit a two to three page, APA style paper explaining your reasoning.

The threat of new entrants is moderate. It is relatively easy for a company to enter this market because there are not a lot of legal barriers. But a smaller company that has just entered the market would have a tougher time competing with some of the larger companies – an obvious reason being that larger companies can have larger inventories. Another reason is that larger companies can do things to weaken the smaller companies, such as offer discounts, sales promotions, and increase spending on advertising. Since most of the companies in this industry are competing on

Minimize the competitive risk Business want to prevent threats that could occur from the gain that competitors might have advantage in the market. For example, Two companies compete in the same domestic market. Company X may fear that Company Y will make money from a foreign market if left alone to serve that market. Company Y may then use those profits in various ways like advertising or development of improved products to improve its competitive position in the domestic market. Entering foreign markets could stop a competitor from gaining advantages.

Entrants erode the market and rarely grow it enough to the incumbent’s advantage. New entrants have an impact on the industry business but at a moderate level. This is mainly because new firms will find it difficult to compete against the incumbents’ strong brand, like Starbucks and McDonalds, and because the market is saturated. However, the costs of entry are relatively low. Most of the raw materials are cheap and the distribution chain is not complicated. This makes it easy for new companies to enter the market. Also, established companies might leverage their brands as they enter the industry to compete against the incumbents.

So, if the demand stays in the same range, we can reduce the new tooling costs to 0 and actually start saving money if FlexCon decides to outsource its family of pistons manufacturing.

High rivalry from family owned businesses, full line dairies, and large international companies. High threat due to loss of patent; product can be copied by competition and former employees

i. By creating a sourcing contract with the JV partner, one will minimize the risk of financial lose. Example: If there is a change in Renaults production goals.

There are also some risks for each strategy. Upholding cost leadership can be risky because of the requirement of frequent capital investment to sustain cost advantage, then cost surges narrow price differentials and diminish ability to compete with other’s brand royalty. Differentiation strategy has some threats, such as imitation decreases alleged differentiation, buyers need for differentiation falls. Meanwhile, the risks for focus or niche strategy are the differences in preferred products or services between the strategic market and target as a whole narrows, the cost discrepancy between wide ranged competitors and the focused firms broadens to eradicate the cost advantages of allocating a narrow target or to offset the

Contract manufacturing- where manufacturing is contracted to an external foreign partner provides a low risk and potentially low cost mode of entry. Benetton and Ikea are a good example of companies who successfully rely on a contractual network of small overseas manufacturers. Benetton has over 80% of its production outsourced to 450 contractors (located in low cost production countries such as India and China). As a result of the money saved on labour, Benetton can sell products 20% cheaper, helping it to maintain a low cost position in comparison to competitors. Of course, this method may not be appropriate for every company as there is a loss of knowledge and intellectual property rights, and the transaction costs involved must also be considered.

However, MacDowell Corporation believes that changing the relationship with San Fabian Supply Company will make it benefit more. On one hand, MacDowell has been marketing its products through an exclusive distributor only in the Philippines and the parent company wants to market the products same as in other countries. On the other hand, the demand for construction materials has decreased since the expansion of its plant in the Philippines before. MacDowell Philippines’ plant operating rate was very low, at only about 45% capacity, and the overcapacity plagued the company a lot. To get rid of this situation, MacDowell Philippines wants to increase sales and its new president believes that having more dealers can lead to more sales. So MacDowell wants to change the relationship with San Fabian Company in the