Orion Controls Case
Answer 1 I would say we should sell existing valves than develop an improved model and sell it at increased price if you simply look at the decision tree I made based on the assumption and information the case provides. The Expected Monetary Value (EMV) of building new model is $105,500, whereas we can earn $100,000 payoffs by selling current model (see Figure 1). When considering the situation the Orion Controls faces, however, I should reconsider my decision. Orion has established its reputation in leading-edge technology, product reliability, customer relations and willingness to design customized products. For such reputation, Avion Chemicals approached to Orion and asked them to develop a new valve
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Answer 2 Armstrong may be upset about Harrington because she estimated that there was only an 80 percent chance the improvements would be dramatic enough to warrant the full 100 percent price premium. Again, Orion is the leading designer and manufacturer of industrial valve systems. For such leading and innovative company, her assumption seems to be quite low. It is obvious that her low expectation for dramatic improvement doesn’t make significant difference in the EMVs. In other words, if she proactively dedicates her effort to redesigning and increases the possibility for dramatic improvement to 90%, the EMV will go up to $141,500 so that Armstrong can positively go ahead with the development efforts (see Figure 3).
Answer 3 In order to evaluate if it is worth paying $30,000 to Professor Calliope for make Gemini’s shortcut work, I would like to use The Expected Value of Perfect Information (EVPI) method.
[Calculation]
Max EMV:Event node 10.8*275,000 + 0.2*(-125,000) = 195,000
Event node 20.9*195,000 + 0.1*(-100,000) = 165,500
Event node 30.8*35,000 + 0.2*(-365,000) = -45,000
Event node 40.9*(-45,000) + 0.1* (-340,000) = -74,500
Event node 50.75*165,500 + 0.25* (-74,500) = $105,500
EVwPI:Event node 10.8*275,000 + 0.2*(-125,000) = 195,000
Event node 20.9*195,000 + 0.1*(-100,000) = 165,500
Event node 30.8*35,000 + 0.2*(-365,000) = -45,000
Event node
The manufacturing manager now feels that the competitors’ valves are of equal quality as that of Wilkerson. Currently, the competitors have not changed their prices and GM has been maintained at 35%.
The mission-presidio system was a settlement set up by the Spanish, the role of these missions was to transform Native Americans into christians and civilize them. This system was brought to California in the 1700s by the Spanish. This settlement had been used by the Spaniards before to protect Spain’s interest and to colonize in other places which they had already done in Texas for example, Baja California, Mexico and as far as Guatemala. The intent of the missions in California was to colonize the coast of California, because King Carlos III was concern about the English and Russians expeditions, he did not want them to get this lands before they did so he authorized the expansion of the missions to Alta California. The role in this missions was to convert as many natives into catholicism for them to become civilized. It was a way of expanding the spanish population by baptizing the indians because by baptizing them they were becoming part of the spanish.
The implementation of the integrated aquasnap, will increase at a slightly greater rate each year, and will allow Carrier to earn about $8.6 million dollars more in 2002 alone, and $22.5 million more from 1997 to 2002. Also mass production will lower the overall cost of manufacturing due to various factors (i.e. cost of materials, number of parts, number of operations, assembly time, assembly cost, selling price, and overall price will all be reduced). The share projections are a steady 14% until 1998. If the delay bleeds into 1999 the overall loss on that entire year would be $6.8 million, but the overall market share would still increase $15.7 million through 2002.
“Projects account for about one fourth of the U.S. and the world’s gross domestic product” (Schwalbe 2012). With that said, there are many challenges and issues that hinder the ultimate success or completion of a project. So is evident in the case of the Orion Shield Project, whose execution faced issues of technical, ethical, legal, contractual and interpersonal natures. Taking on a role that assumes responsibilities in stark contrast to newly appointed project manager Gary Allison’s professional background and experience doomed the project from the start. Not only did Gary not have the experience, he failed to research and prepare himself, prior to the project’s
In determining our initial strategy, we knew that we wanted to focus on the product that would be most profitable and key in on features that are important to the customer. Looking at product sales in 2008, the NiMH sold 28.0 M units and the Ultracapacitor sold only 4.3 M units. Based on these sales, the NiMH generated $280.3 M and the Ultracapacitor generated $86.2 M. In addition, when reviewing the Income Statement, the NiMH produced a profitable contribution in the years 2006 through 2008. The Ultracapacitor, on the otherhand, produced an unprofitable contribution during the same timeframe. Based on these figures, we decided to focus on the NiMH.
3.) The estimated product costs for valves, pumps, and flow controllers using ABC for overhead activities (primarily Ex. 1 & 4) and direct cost data from the Exhibits are:
1. How would you describe Boeing’s approach to project management? What are its strengths and weaknesses?
Both partners were mutually agreeable on the Electronic Integration and the Inventory issues. We both agreed to have 100% Electronic Integration and have a 3 week inventory to minimize costs to both sides. The next issue that was brought up was the quality and the concerns were raised about the 1000/1000000 i.e. 1/1000 failures. We agreed that this needed to be addressed to a level of 100ppm so that the
In order to keep up with the competition, Victoria Chemicals must make changes to its business strategy. The project that is accepted must meet several criteria that the board has set based on performance measures. The projects are ranked as engineering efficient proposals. The addition to net income of the project must be positive and therefore increasing earnings per share. The net present value of the project’s free cash flows must be positive, and the internal rate of return must be greater than 10 percent, and the payback period for the project must be less than six years.
Faced with the challenge of continuing to remain the leader in industrial valve systems, Orion Controls is required to decide whether or not to carry out product improvement redesigns. A successful redesign will secure the company an initial level of sales of 50 or 90 units to two new customers followed by the benefits of enjoying an innovator’s reputation.
The method showed that the pricing that was being used for the three products were not correct. The price at which the pumps were being sold was low were high whereas flow controllers were low. Because of which the most profitable product was coming out to be flow controllers whereas it was actually the least profitable.
CJI needs to analyze its value chain and decide if building the pumps in-house justify the capitalization costs, impacts on their relationship with Heavy, and whether it will dilute their business proficiency.
This paper will discuss the history and background of Arck Systems and its merger with Lux Software. I will then examine, discuss, and analyze the nuances of the merger and the resulting issues that arose with different compensation packages for each company’s sales team. In my analysis, I will address the intended and unintended consequences of incentive compensation plans. Finally, I will offer my recommendations to Arck Systems.
(Lewicki, 2010, p. 585) Fontaine and Gaudin did not prepared to negotiate the full contract. They did not anticipate nor prepare to resolve additional issues. Due to their inexperience, Fontaine and Gaudin were not the correct pairing to conduct the renegotiation, as well, they did not have decision making authority. They had to contact senior level management in order to reach a final agreement. This delay extended the negotiation timeline. Adding to the already stressful situation, the prospect of losing Reliant as a consistent client prosed a potential major issue, especially relating to supply as it would be difficult to identify another client to fill the former demand level. Also, Pacific senior leaders delayed their decision to expand into PVC products, over a year. This delay created uncertainty with the forecast for VCM and derivate products, which had a negative marketing impact for one of the top essential products. Also, contributing to the list of weaknesses, Fontaine’s definition of a successful negotiation differed from the corporate office, in that, he linked a successful negotiation outcome to keeping Reliant as a client by extending the current terms of the contract, solely. However, just as important, Fontaine neglected to take into account all the other potential issues or points of
The proposed transfer price now is also lower than the expected prices from Black and FER so it should not be a problem with Guy Mercier who is pressuring Kamp to sell the engine at a reasonable price so that he can raise profit and bonus for his division.