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dominion motors case

dominion motors case - Matt Pitzer Team#19 Dominion Motors...

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Matt Pitzer Team #19 Dominion Motors & Controls January 28, 2008 Problem Dominion Motors controlled a very large percentage of the market for oil pumping in Northern Canada by selling a few different types of oil-pumping motors and controls. In 1985, their largest customer conducted a study and discovered that the motors they were buying from Dominion were in fact the third best ones on the market for what they needed. Solution #1 The first solution that the company came up with was to lower the price of DMC’s 10-hp motor to that of the 7.5-hp motor that they produced. They thought that this method would give them the competitive advantage that they needed in the market while at the same time combat the threat of the Spartan motor that was favored in the report. While this idea sounded promising, there is no way that it would have been sustainable in the long run. The 10-hp machine couldn’t be produced for the same cost as the 7.5-hp so the company would face losses while the plan was implemented. Also, the company would need to strategically plan when they were going to announce the cut backs. The price reduction could upset some of their other customers because they might have just bought a large order of the 7.5-hp at the same price as the 10-hp was marked down to. This solution also is completely dependent on what effect the Bridge’s report produces. If Dominion reduces their price after the report comes out, it might be seen as a desperate last effort to keep their market share which could be viewed negatively by their customers. However, if Dominion reduces their prices before the report comes out, they suffer even greater losses.
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