Dominion Motors 2

Dominion Motors 2 - Dominion Motors 1/30/2008 Problem...

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Dominion Motors 1/30/2008 Problem Dominion Motors & Controls, Ltd has greater than 50% market share of northern Canada oil well pumping motors. The company feels this position could falter, however, once the results of tests conducted by the Hamilton Oil Company are released to the public. Hamilton, the largest oil company in Canada, concluded that Dominion's motor was only the third best, behind rivals Spartan Motors, Ltd , and Universal Motor Company. Alternatives The executives at Dominion came up with four possible solutions to their problem. The first solution was to reduce the price of their 10 horsepower motor to that of the 7 ½ horsepower model. The second idea was to reengineer the present 7 ½-hp motor to make its starting torque greater than or equal to the starting torque of Spartan's 7 ½-hp model. A third proposal was to design a definite- purpose motor for the oil well pumping market, building a 5-hp motor with the starting torque of a 10- hp model. The final suggested idea was to persuade Hamilton executives that the test results wrongly focused too much on the maximum starting torque available. The first alternative suggested was to Reduce the price of Dominion's 10 horsepower motor to that of the 7 ½ horsepower motor. This was looked at as a short term fix and it was understood that more would need to be done at a later point. In the tests run by Hamilton, Dominion's 5-hp, 7 ½-hp and 10-hp motors all came in third behind the Spartan and Universal motors. By lowering the price of the 10-hp to that of the 7 ½-hp, this would also mean having to lower the prices of the 7 ½-hp and 5-hp motors. Additionally, while the price would be cheaper it was noted that the savings were not particularly large. For Large Users, the list price of a 10-hp motor was $1,580 while the list price of a 7 ½-hp motor was $1,200. For this scenario, some executives felt it was not necessary to lower prices
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This note was uploaded on 04/11/2008 for the course MATH 126 taught by Professor Brutche during the Spring '08 term at Bowling Green.

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Dominion Motors 2 - Dominion Motors 1/30/2008 Problem...

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