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Bharatiyasims.Com Consumer Electronics

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Submitted By vikas2411
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Company

You are handed over the management of a manufacturing of a Home Appliances company with interests all over the world but based in Bhartiya. The group has 5 manufacturing sites in Bhartiya and operations in China, Hungary, Spain and Mexico. Since 1998, it has expanded its operations globally, especially in the South East Asia.

Product line – Looking at the evolution of consumer durables industry and your company, Board of Directors have identified four major products to be focused.

1. Conventional TV (CTV)

CTV is the most popular forms of CRT Tube TV that initiated the process of TV viewing. They have curved shape glass tube screens and have gone through the transition from Black & White Tube to Colour Tube. Historically the growth in this segment has been robust but in the recent years it’s slowing down.

Your Company is working on to bring revolutionary advancement in CTV by introducing new Slim & Sleek Television. Slim & Sleek Television will have a super slim picture tube technology, that will make TV 40% Slimmer.

Slim Picture tube is a product with reduced depth providing the TV and monitor producers with opportunity to design Slim, flat and stylish TVs comparable to plasma or LCD panels maintaining Good picture Quality.

2. Flat Panel Display (FPD)

Flat Panel TV’s are the biggest revolution since the introduction of Colour TV’s and will eventually replace the conventional TV’s. You can hang flat sets on the wall, on the ceiling, or above the mantle in place of a trophy buck. Prices of Flat Panel TV’s have considerably come down and its demand is picking up.

3. Refrigerator

Company is aware that when consumer goes to the appliance store they are amazed at the selection of refrigerators available. Consumer has to narrow down the type of refrigerator in their home. This can be very dependent on the amount of space in home and size of family. 350 liter frost free Refrigerator has a mass appeal.

4. Air-conditioner (AC)

Started as a niche product, AC’s has evolved and moved into the middle class families. However, it still retains its appeal of grandness and is on the wish-list of large segment of the population. Different types of AC’s are available in the market, but 1.5 ton Split AC is one of the universal AC that is widely accepted both in the commercial and domestic sector. Your company is targeting this sector by assembling the unit locally.

Demand

Bhartiya economy has shown high growth in consumer electronics. Appetite for high-end consumer electronics has gone up with increase in the disposable incomes of families in urban areas of the country. Urban and suave consumer is been drawn towards the LCD TV (FPD) and Split AC with mixed feelings. Various Market researches has shown growth in niche segment.

Price Band for all the products. Price outside the range will not get any sales.

Operational Information

Raw Material

Air conditioners and refrigerators work the same way. Instead of cooling just the small, insulated space inside of a refrigerator, an air conditioner cools a room, a whole house, or an entire business.
Television requires input and teamwork on the part of a range of design engineers. Audio, video, plastics, fiber optics, and electronics engineers participate in conceptualizing a new television design and the technical and sales features that will set it apart.

To assemble your product line you will be requiring the outer shell of the appliance, circuit board, compressor, Hydrochlorofluorocarbon (HCFC) gas etc. that will be broadly segmented into two categories i.e. Shell and Compressor (SComp) and Circuit Board (CB). Both the inputs will be required in varied proportions to assemble the product line. Details are mention in Starting Conditions.

Miscellaneous information

Capacity usage for FPD, Fridge and AC is twice the production i.e. if you are producing FPD= 2000 units then Capacity usage will be 4000 units. Also Manpower used for FPD, Fridge and AC is twice the base rate mentioned in the Starting Conditions

Software sensitivity of Products vs Price

CTV (sensitivity=2.8) - 20000 units of CTV is in warehousing. If you lower the price the demand is huge. But profitability goes down, this is set-off by saving in the warehousing cost ($15 for CTV). Teams with higher price get lower demand but very good total profitability. They end up paying for huge CTV inventory as warehousing cost.

The teams with pricing in the middle benefits by optimizing the profit and demand. Thus good profitability and lower warehousing cost.

FPD&AC (sensitivity = 1.9) = lower price gets higher demand but lower profitability. Teams with higher price will get low demand but very gud tot profitability. However, difference in profitability between low price vs high price teams is not too wide and low price teams can also catchup.

Fridge (Sensitivity= 4.9)– Middle level pricing will get good profitability.

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