...Assignment #2 Precision Worldwide, Inc Summary Precision worldwide Inc is currently in the dilemma of determining how to go about the introduction of a new French and Japanese prototype of their steel ring. The French were able to reinvent this plastic ring at a lower cost and more durable at the same time. This is extremely detrimental to the steel ring market and will force precision worldwide out of business if actions are not taken. Related Business Issues 1. Excessive inventory levels of steel rings Hans thorborg carries large quantity of steels rings and special steels inventory, which values about $390,000. The special steels couldn’t even sale as scrap as it described in article. The article also indicates that hans thorborg will cost $110,900 to convert special steels into 34500 steels rings. Hans thorborg needs to take in to account the sunk cost of the steel ring and how to be effective with the production of the plastic ring. The sunk cost fallacy is that sunk costs are sunk whatever your decision is and only the future matters. The fallacy in thinking about the sunk costs is precisely that people feel completed to get their moneys work even if it makes them suffer Whether or not the steel rings sell. The second aspect that will influence han`s decision is the will still have over 15000 units when the date of plastic rings roll out. 2. Cost of Steel Rings and Manufacturing Facilities The total cost of 100 steel rings is $1107.90, which is about 3 times...
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...Precision Worldwide, Inc. Case Study Involved Parties: Competitor-French Firm: Henri Poulenc Precision Worlwide, Inc.-German Firm Hans Thorborg-General Manager Gerhard Henk-Sales Manager Bodo Eisenbach- Development Engineer Patrick Corrigan-Parent Company Spokesman Background: Precision Worldwide, Inc. (PWI) manufactures industrial machines and equipment for sale in numerous countries. Repair and replacement parts account for a substantial part of the company’s business. The replacement part in question, steel rings, occur in the machines manufactured only in PWI’s Frankfurt Germany plant, but can also be used on some competitor’s machines. The steel ring manufactured by PWI has an average normal life of about 2 months. Machines require between 2 and 6 rings to operate. Individual rings are replaced as they wear out. Over the years, competition had increased and now a competitor company, the French firm Henri Poulenc, has entered the market with a superior plastic ring that replaces the steel ring. The plastic ring is less costly to manufacture and has a longer life. Situation: The PWI sales manager, Gerhard Henk, is asking when this product will be available for him to sell that his competitor already has on the market, particularly in France where the competitor is the strongest. Bodo Eisenbach, the PWI development Engineer, estimates the plastic rings can be produced in about 4 months at a tool and equipment cost of about $7,500. PWI currently has about $390...
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...Precision Worldwide, Inc. Case Study BUS5431 – Managerial Accounting Summary Precision Worldwide, Inc. (PWI) manufactures industrial equipment and parts for sale in numerous countries. Repair and replacement parts account for a substantial part of the company’s business with the replacement part in question, steel rings, occur in the machines manufactured only in PWI’s German plant, but can also be used on some competitor’s machines. This steel ring has an average normal life of about 2 months. These individual rings are replaced as they wear out and recently competition has increased and now a competitor has entered the market with a superior and less expensive plastic ring that can replace the steel ring. The general manager of the German plant, Hans Thorborg has been considering the introduction of a similar plastic rings as a substitute for the steel rings. There is a lot of potential for this product in this market because there is a lower manufacturing cost and a greater durability compare to steel rings. The company is wondering if it is worth to shift from steel rings to plastic rings, but there are a lot of facts that they need to consider. There has been conflicting views concerning the future of the steel rings departments if they should change to plastic rings in order to acquire competitive advantage in this market and what will they do with the special steel after they have implemented the new product. A decision must be made as whether to start producing...
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...Project Proposal- Part 1 Angela Alvarado 1. For my research project I am going to review some Disney movies and the general media as in television shows and commercials, and take note of how many sexual innuendos or subliminal messages run throughout them. 2. My direct interest in doing this specific topic is to see if there are any innocent Disney films, and When is the right age to expose sexual content to children, when do they become mature enough to notice what’s sex. 3. In order to get the research information I need, I am going to spend some of my nights watching various Disney movies, and different typical television shows and commercials that air on abc family. I am also going to observe my little cousin watch various Disney movies with me, and abc family shows in order to see what their reaction is to them. In order to this I do need to invest in a new vhs player since mine is broken at the moment. 4. My plan for this project is to observe, first I am going to watch a few Disney movies on my own and take note of sexual innuendos or subliminal messages I may find. Then I plan on watching the same movies with my little cousin in order to see what they think of the movies or if they notice anything basically how it affects them. Then after our movie night another time I’ll watch some shows with them that would be on the abc family network and also see what their reaction is to that. 5. I predict that I will find a lot of subliminal messages throughout...
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...Precision Worldwide, Inc. Managerial Accounting BUS 5431 Group 2 Kimberly Albino Candace Hampton Frances Kately Husein Khan Daniyell Payne Hayley Romine July 19, 2015 Table of Contents Abstract 3 Key Issues and Problems 4 Decision Alternatives… Resolutions and Solutions… Recommendations… References… Abstract The purpose of this case study is to examine, classify; analyze critical concerns as well as difficulties that are impacting Precision Worldwide, Inc.’s organization. Notably, Precision Worldwide, Inc. has several competitors who are well-disposed in the market due to their reduced pricing and product substitutions. The method in which this case study observation is arranged will explore findings and opportunities related to price and production cost; the ramifications of demand in other markets. The assessment of this case study, in conjunction with arriving to an appropriate cost for materials and freight, will help determine the recommended best course of action for Precision Worldwide, Inc. and Hans Thorborg in deciding the preferred product for the organization. Key Issues and Problems Precision Worldwide, Inc. (PWI) is faced with a business decision that will potentially affect the organization’s continuity and profitability. The organization recently held meetings to discuss the introduction of a substitute product into the marketplace by a competitor. In making a business decision to ensure...
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...Precision Worldwide,Inc (PWI) Precision Worldwide,Inc (PWI) is a manufacturing company of industrial machines and equipment for almost 90 years. One of their plants located in Frankfurt, Germany, produces a particular model at a price ranging from $ 18,900 to $ 28,900. Moreover, the plant has another department that manufactures steel retaining rings. These rings are considered as an integrate part of the machines they are actually manufacturing. This department can sell their rings either internally or externally because they are a large market and demand for this product. The general manager of the German plant, Hans Thorborg has been considering the introduction of plastic rings as a substitute for the steel rings. His idea comes from one of his competitor, Henri Poulenc who has already implemented this new product in the market. Precision Worldwide Inc is currently in the dilemma of determining how to go about the introduction of a new Japanese prototype of their steel ring. The Japanese were able to reinvent this plastic ring at a lower cost and more durable at the same time. This is extremely detrimental to the steel ring market and will force Precision Worldwide out of business if action steps are not taken. Some of the factors that Precision Worldwide will be facing are how to deal with their excessive inventory levels of steel rings and how to strategically enter the plastic ring market. Hans Thorborg needs to take into account the sunk cost of the steel...
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...The ABC’s of Failure – Getting Rid of the Noise in Your System For the past 40 years, I have observed many companies, including DuPont (where I spent 27 years) pursuing planned maintenance with the standard tools of planned maintenance: inspections, planning, scheduling, materials procurement, CMMS systems, etc. with the same results. They succeed for a while and get their percent planned and scheduled maintenance up to the 80+ only to see that drop back later to 60 I am amazed how many of the companies we work with have had this experience. This pattern of behavior has led us to conclude that the reason for this experience is that only 60% of the normal work of maintenance is inherently plannable. The rest of the work is created by random acts of what we are now calling care-lessness. The sites where we see people break this pattern and achieve 92% to 96% planned maintenance for the long term without regressing, are the ones who eliminate the inherently unplannable work. Of course, this cannot be done by maintenance alone. Everyone who does work at a site contributes to the defects that create the unplannable work, and therefore everyone must participate in eliminating the defects that create the 40% of the work that is unplannable. In the diagram below we attempt to more clearly articulate the true significance of Defect Elimination by outlining the ABC’s of failure. Fundamentally, failures happen because things that exist are not perfect. To reduce failures we must eliminate...
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...industry. Knowing and understanding customer needs is at the center of every successful business, whether it sells directly to individuals or other businesses. Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests. However good your product or service is, the simple truth is that no one will buy it if they don't want it or believe they don't need it. Don’t be afraid to let go of what you have today for tomorrow’s success if you have all the right tools to make the right choices for the business. Hans Thorgorg the general manager of Precision Worldwide Inc (PWI) has to face this dilemma utilizing some of his key personnel to devise the right plan to cut company loses in order to get ahead of his competitors or continue to press forward with business as usual. Precision Worldwide,Inc (PWI) is a manufacturing company of industrial machines and equipment for almost 90 years. One of their plants located in Frankfurt, Germany, produces a particular model at a price ranging from $ 18,900 to $ 28,900. Moreover, the plant has another department that manufactures steel retaining rings. These rings are considered as an integrate part of the machines they are actually manufacturing. This department can sell their rings either internally or externally because they are a large market and demand for this product. The general manager of the German plant, Hans Thorborg has been considering the introduction...
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...9-197-103 REV: MAY 21, 2004 WILLIAM J. BRUNS, JR. Precision Worldwide, Inc. In late May 2004, Hans Thorborg, the general manager of the German plant of Precision Worldwide, Inc. (PWI), scheduled an afternoon meeting with his sales manager, accountant, and development engineer to discuss the introduction by the French firm Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The plastic ring, new to the market, not only had a much longer life than the PWI steel ring but also apparently had a much lower manufacturing cost. Thorborg’s problem stemmed from PWI’s large quantity of steel rings on hand and the substantial inventory of special steel that had been purchased for their manufacture. After a thorough survey, he had found that the special steel could not be sold, even for scrap; the total book value of these inventories exceeded $390,000. For nearly 90 years PWI had manufactured industrial machines and equipment for sale in numerous countries. The particular machines involved in Thorborg’s dilemma were made only at the company’s plant in Frankfurt, Germany, which employed more than one thousand people. The different models were priced between $18,900 and $28,900 and were sold by a separate sales organization. Repair and replacement parts, which accounted for a substantial part of the company’s business, were sold separately. As with the steel rings, these parts could often...
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...Precision Worldwide Inc. Precision Worldwide, Inc. (PWI) has a plant located in Germany which manufactures industrial machines, equipment and replacement parts for sale in numerous countries. Repair and replacement parts, which accounted for a substantial part of the company’s business is now facing a dilemma, a new competitor has entered the market with a replacement part, a plastic ring, which PWI had in the past used a special steel to produce. During a meeting with the general manager, Hans Thorborg, the general manager of PWI’s plant in Germany, wanted to discuss with his sales manager, accountant and development engineer the introduction of the competitor, a French firm Henri Poulenc and the plastic ring substitute they produce (Bruns, 2004). The plastic ring produced by Henri Poulenc is created at a fraction of the cost of the steel rings that PWI currently produces, and was found to last four times longer than the steal ring (Bruns, 2004). Many strategies were discussed by PWI’s management team on how to respond to this new competitor along with discussions regarding what to do with the special steel the company has on hand. Analysis The main topic of discussion and concern is the company losing on profits if they do not begin manufacturing their own plastic ring. Which leads to the next questions how to market and price a new line of plastic rings and the big question what to do about the special steel they use to produce steel rings. If PWI sells on a new line of...
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...Precision Worldwide Inc. manufactures steel rings, which are used in certain machines. French firm Henri Poulenc competitor of Precision Worldwide Inc is introducing a plastic ring, which is a substitute for the steel retaining rings. Hans Thorborg, general manager of Precision Worldwide Inc. is worried because the plastic rings not only have a longer life than the steel rings but are also manufactured at a lower price. PWI has a large quantity of steel rings and substantial inventory of special steel. In a meeting, the general manager, the sales manager, the accountant and the development engineer discussed the possible problems and alternatives for this problem. For PWI, manufacturing plastic rings was defiantly the best solution for the problem but they still wondered what they would do with the inventory they had. According to the sales manager, customers new about the new plastic rings and were asking if PWI was already selling them. The development engineer calculated that the plastic rings could be by mid-September. The sales manager thought that since the plastic rings could be produced at a really low cost, the inventory problem was irrelevant. He suggested that if the steel rings couldn’t be sold they should just throw them away. Another problem was that Henri Poulenc was selling the plastic rings at the same price that PWI was selling the steel rings. Not manufacturing the plastic rings would be like ignore a considerable profit margin. In the meeting they concluded...
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...analysis (LSCA) — supported by a central research group, Agilent Laboratories. Our businesses excel in applying measurement technologies to develop products that sense, analyze, display, and communicate data. Agilent Technologies’ 19,000 employees serve customers in more than 110 countries. These customers include many of the world’s leading high-technology firms, which rely on our products and services to increase profitability and competitiveness, from research and development through manufacturing, installation, and maintenance. We enable our customers to speed their time to market and achieve volume production and high-quality precision manufacturing. In fiscal year 2006, Agilent Technologies had net revenue of $5 billion. More than half of this revenue was generated from outside the United States. We maintain facilities in about 30 countries, with worldwide headquarters in Santa Clara, California. Our global presence offers a distinct competitive advantage, with R&D, manufacturing, sales, and support capabilities serving customers around the world. Agilent Technologies operates two primary businesses— electronic measurement and life sciences and chemical analysis—...
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...Precision Worldwide, Inc case study. Begin by talking about the issues ….. Substantive Issues Raised. The primary issue at hand involves the relevant cost of a set of replacement parts. The parts, however, range from those that are totally manufactured and ready for sale, to those that have not yet been manufactured but for which raw material is on hand, to those that have not yet been manufactured and for which no inventory of raw material exists. The case solution turns in large part on the use of contribution analysis. However, the concepts of sunk costs, opportunity costs, and product substitution are prominent aspects of any reasonable analysis. The product in question, a steel ring, is used as a replacement part for industrial machines manufactured and sold by both Precision Worldwide, Inc and their competitors. It sells for $1,350 per hundred rings with annual sales of approximately 36,000 rings. One competitor, Henri Poulenc, has introduced a plastic ring. This ring lasts up to four times as long and is priced at about the same level as PWI’s product. Mr. Thorborg, the gm of the German plant of PWI, must analyze the data, the conflicting views of his sales manager and his development engineer, and make a decision as to whether PWI should begin the manufacture of a plastic ring. In addition, a plan needs to be designed as to the pricing policy to follow for both the steel and the plastic rings. Finally, some consideration should be given to the effect of the...
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...ACTG 360 Case 2016/3/7 Precise Worldwide, Inc.(PWI), manufacturing industrial equipment and parts for sale in numerous countries, is facing a serious problem which is Henri Poulenc (a competitor) of a plastic ring substitute for the steel retaining rings presently used in certain machines sold by Precision Worldwide. The steel ring has an average normal life of about 2 months, but the plastic ring has an average normal life of about 8 months. Therefore, in my opinion, Hans Thorborg who is the general manager of the company should take several actions in response to this problem. The first action should do is being able to produce the plastic ring as well. Because the total cost of 100 steel rings is $1107.90. This cost is about 3 times of the cost of 100 plastic rings. Also, the plastic ring is also cheaper and durable than steel ring. Although the PWI would still have a lot of inventories for materials of plastic ring and completed plastic rings, PWI should demonstrate a positive attitude for resolving in terms of the qualitative factor of competition. In the other words, the cost of the existing inventory would replace by the opportunity cost for entering the current market. Furthermore, at the current rate of sale (690 rings per week), without any further production, 15,100 finished rings would be left on hand by mid-September. Therefore, PWI should continue producing and selling steel rings till mid-September. In the mid-September introduce plastic rings at least in those...
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...Precision Worldwide, Inc. Introduction When a competitor develops and introduces a superior product that is less costly to manufacture and even many times usable and durable, the key to people at Precision Worldwide must decide whether to match the competitor's product, when to do so, how to price or what sustainable competitive advantage it needs to adopt during the next strategic period, given that it holds a large inventory of its now inferior product. This issue concerns the steel and plastic rings which the company, Precision Worldwide, Inc. (PWI) is opting to produce as a matter of competing intensively with a French company, Henri Poulenc, which was at the same time posing a big threat to the viability of the steel rings PWI is producing. . PWI is confronted not only with a substitute product which is both cheap and durable. Compared to PWI’s steel rings, the plastic rings being produced by Henri Poulenc is both cheaper and lasts longer. PWI is also facing the risk of earning the ire of its customers if it manufactures but selectively introduces the cheaper plastic rings in areas where it is faced with the ‘plastic’ competition. As a result, PWI is now confronted with a dilemma of differences in strategic measures to undertake given the differing opinions of its key people. Questions Posted for this Note: 1. You have to analyze the existing data, the conflicting views of the sales manager and the Development engineer. And make a decision as to whether PWI should...
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