Precision Worldwide, Inc. Case Solution & Answer

Precision Worldwide, Inc. Case Study Solution

Introduction

Precision worldwide incorporation is a well-known manufacturing corporation of industrial technologies and tools (Bruns, 1997).The company is about 90 years old. The Precision worldwide incorporation from about century produces a lot of machines, tools, spare parts like steel rings. The company does business worldwide. Most of the countries have the branches of Precision Worldwide Incorporation. The Headquarters of the company are in the city of U.S. A (Ohio). In the ending of 1990, the competition of spare parts and machines increases in the market as Japanese enter the same market and offer the same featured products at low prices. The particular machines involved in Thorborg dilemma produced only in the plant of company Frankfurt. The thousand employees were hired for that plant. The products of this plant were sold to the separate organization of sales. Different models were to be designed for pricing that machines, which ranges from $18,900 and $ 28,900. The company was agreeable in market share and good brand image.

Problem Statement

The Steel Rings manufactured by the company has a very short age limit of only two months depends upon how much the machine is used the more the usage of rings decreases the life of rings. Competition is strong, especially in the market of France. Company should solve this problem as soon as possible, otherwise competitors can gain competitive advantage.

Situation Analysis

By considering the current situation of the company, the sales manager study about the plastic rings and immediately suggests that the Precision worldwide corporation must launch the plastic rings otherwise the company can be gone in losses. If the competitors offer the plastic made rings before PWI they easily target the market and attract the customers towards their side. After the advice of sales manager, the development engineer estimates that the plastic rings production takes about 4 months in the coming finished product. The costing department estimate the cost of about $7500 for each equipment. The company has the $3.9 lacs steel material in stock for producing steel rings. Unless plastic rings manufacture, the company sells steel rings. In the mind of September, the company has about 15100 steel rings in stock. The sales manager of Precision believed that the costing of plastic rings must be lower than the steel rings. The competitor of Precision worldwide corporation Henri said that he would sell the plastic rings at the same price as PWI steel rings. Sales manager suggests that if the PWI is not going with the idea of plastic rings production, the company is ignoring a good profit margin. After the meetings regarding this issue, it was to be concluded that the company only offers plastic rings to those markets in which competitors are producing the plastic rings.

SWOT Analysis

Swot analysis is a powerful tool for every organization to understand the internal and external factors which directly impact on organization.

Strengths

Brand equity of the company is high. The company is tooperating the operations on a global level. The company has a competitive advantage in machinery market of German. The switching costs of the company are very high. Customer retention is high. The research and development department of the company is also strong.

Weakness

The prime weakness of Precision Worldwide is that the products of company have low differentiation with the products of competitors. The company is highly depending on the existing products like steel rings.

Opportunity

The current opportunity for the company is to grab the option of manufacture plastic rings which generate more revenue for the corporation. The Precision Worldwide has branches on different countries which helps to company to know the culture of different countries and use the different currencies in customer business transitions.

Threats

The major threat for the company is the strong competitor in the market in France. With the changing in customer’s perception towards products, the market shares can go down. Employees’ demand to increase wages and salaries is also a threat for company because employees are the golden asset for the organization.

Porter’s Five Forces Model

Competitive Rivalry

The competition is high in machine and equipment industry. The strong competitor at the time of manufacturing plastic rings is Henri Poulenc in the market in France. Rivalry competition is high because the plastic rings are sold by this France competitor.

Bargaining Power of Supplier

Precision worldwide has lower bargaining power of supplier because the company is about to 90 years old and the relation of company with suppliers is very good. The suppliers offer a normal rate of materials which involves in manufacturing of plastic rings.

Bargaining Power of Customers

Precision worldwide has higher bargaining power of customers because the steel rings havetiny usage with high prices and the customers want the plastic rings at lower prices. There are many competitors in the market, that’s why customers bargain with company.

Threat of New Entrants

Precision worldwide has very less threat for new entrants because the company is operatedfor almost 90 years. The company has high brand equity with high positioning in the international market. The product portfolio of the company is also strong in the market.

Threat of Substitute Products and Services

In the current situation company has the threat from the competitor because he is selling the plastic rings in France market which is a substitutefor Steel rings.

PESTEL Analysis

Political Factors

The company is operated on an international level, so the political factors affect the business. The forces are laws of employment, policies of income taxation, political instability, the Precision worldwide negatively impact by political factors.

Economic Factors

Precision Worldwide has countless and unavoidable impact of economic factors. The interest rate, inflation, economy growth and working hours. Increase in inflation increase the risk for the company.

Social Factors

The social impact for Precision Worldwide is high because this is the multinational company and the culture of one country differs from another. Safety and health care are the two important factors of social factors.

Technological Factors

Precision worldwide has strong technological and research centres in every branch which make the policies based on increasing revenue by adding additional technology which is concerned with that country.

Environmental Factors

Precision worldwide properly manage the environmental factors because the company is of machines and their tools and they have not much the seasonal impact. Environmental factors directly impact on performing organization.

Legal Factors

Precision Worldwide has a high risk of legal factors. The financing of business in different countries with different markets is very complicated. Every country has its own taxes rules which can decline the revenue of the company. The hiring of employees in different countries has also some issues to manage organizational culture…………………..

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