Pricing strategy

Pricing strategy Paper instructions: Pricing strategy varies significantly across different market structures. The pricing guidelines in a monopoly market are relatively straightforward. Since the company is the only producer offering the product, it can mark-up the price as far as Read More …

Chemical Processing at MBM

Chemical Processing at MBM RobertRuggieri,GeorgeBrownCollege,Sept2013 ChemicalProcessingatMBMTool&Machine OnMarch23,2005,BorisKikely, president ofMBMTool&Machine(MBM), atier2aerospacecompanylocatedinVaughan,Ontario,wasreviewinghisprofit/lossstatementsfromthepreviousmonth.Hewasupsettodiscoveryetanotherreportfromhisvice-presidentofFinanceandAdministration,indicatingthatcostsforoutsourcedchemicalprocessinghavebeenescalatingand,inaddition,therewerecontinuousqualityproblemswiththecompanythatMBMhadcontractedtoperformchemicalprocessing.Herealizedthatthissituationhaddefinitelygoneonlongenoughandit wastimethatMBMstoppeddragging itsfeetonadecisiontoinsource chemicalprocessing. TheAerospaceIndustryin Ontario In2005,amongthecompaniesintheOntarioaerospaceIndustry,therewereabout45CNCPrecisionmachiningshopsmanufacturingproductprimarilyforthefollowingTier1orOriginalEquipmentManufacturingcustomers(T1-OEM):GoodrichAerospace,BombardierAerospace,Messier-Dowty,andBoeingAerospace.Thesefourcustomerscontrolledanddirectedthesourcingofproductforapproximately85-90%ofprocuredproduct.QualityisparamountfortheT1-OEMcustomers.Assuch,thesecustomerscontrolledallprocessstepsalongeachproductsvaluechain.Indeed,theT1-OEMcontrolledwhereeachmachineshopwastohaveitsproductschemicallyprocessedinorderforproducttomeetfinal expectations ChemicalProcessing In2005inOntario,T1-OEMcustomershadonlycertified3supplierstoperformchemicalprocessing.Therefore,mostmachineshopswereforcedtoseekchemicalprocessingabroad:US,Quebec,andeveninsomecasesasfarawayasEurope.Thisusuallypresentedlogisticalproblemsandcostpremiumsassociatedwithtransportation.ToestablishanewchemicalprocessingcompanyinOntariorequiredabout18monthsofpermissionsandapprovalsfrombothGovernmentandcustomers.Intheend, evenifsuccessful,thisdidnotguaranteeworkfortheprocessing company. MBMTooland Machine BorisKikelyopenedMBMininthesummerof1967.Initiallyscramblingandtakinganytypeofworkhewaspresented,Kikelywouldtravelfromcustomertocustomerseekingworkanddevelopingrelationships.By2005,MBMhadevolvedfromasmallmom-poptypecompanyintoamid-sizeenterprisewithsalesofabout$17MillionCADperyear,andgrossprofitmarginsrangingfrom25to30%. Thebusinessfocusedoncomplexmid-to-largersizecomponentsandassembliesExhibit1providesasampleofthecomplexityofthetypical component’svaluechain. TheCurrent Process Afterincurringmuchtroublewithlocalchemicalprocessingcompanies(quality,deliveryandpricingissues),MBMhad,forthelastcoupleofyears,outsourcedmostofitschemicalprocessingworktoa companyinMontreal.Althoughthechemicalprocessingwasdonefairlywell,MBMquestionedthequalityoftheworkandwasforcedtoinspectallproductreceivedfromthechemicalprocessingsupplier.Indeed,productwasnotdeliveredtothe expectedhighqualitystandards. MBMpurchasedabout$5Millioninchemicalprocessingservicesayearrepresenting about40%ofallofitsannualexpenses.Tosupportthemovementofproducttothechemicalprocessingsuppliers,MBMpurchasedatruckatacostof$45,000andhiredtwodriversatacostof$25perhour,specificallywiththetaskofmovingproductbetweenVaughanandMontrealonadailybasis(6daysaweek,assume12hourworkdays per driver,withtheoperating costforthetruck at$.52/Km. Each driver driving Read More …

Chemical Processing at MBM Tool&Machine

  Chemical Processing at MBM Tool&Machine OnMarch23,2005,BorisKikely, president ofMBMTool&Machine(MBM), atier2aerospacecompanylocatedinVaughan,Ontario,wasreviewinghisprofit/lossstatementsfromthepreviousmonth.Hewasupsettodiscoveryetanotherreportfromhisvice-presidentofFinanceandAdministration,indicatingthatcostsforoutsourcedchemicalprocessinghavebeenescalatingand,inaddition,therewerecontinuousqualityproblemswiththecompanythatMBMhadcontractedtoperformchemicalprocessing.Herealizedthatthissituationhaddefinitelygoneonlongenoughandit wastimethatMBMstoppeddragging itsfeetonadecisiontoinsource chemicalprocessing. TheAerospaceIndustryin Ontario In2005,amongthecompaniesintheOntarioaerospaceIndustry,therewereabout45CNCPrecisionmachiningshopsmanufacturingproductprimarilyforthefollowingTier1orOriginalEquipmentManufacturingcustomers(T1-OEM):GoodrichAerospace,BombardierAerospace,Messier-Dowty,andBoeingAerospace.Thesefourcustomerscontrolledanddirectedthesourcingofproductforapproximately85-90%ofprocuredproduct.QualityisparamountfortheT1-OEMcustomers.Assuch,thesecustomerscontrolledallprocessstepsalongeachproductsvaluechain.Indeed,theT1-OEMcontrolledwhereeachmachineshopwastohaveitsproductschemicallyprocessedinorderforproducttomeetfinal expectations ChemicalProcessing In2005inOntario,T1-OEMcustomershadonlycertified3supplierstoperformchemicalprocessing.Therefore,mostmachineshopswereforcedtoseekchemicalprocessingabroad:US,Quebec,andeveninsomecasesasfarawayasEurope.Thisusuallypresentedlogisticalproblemsandcostpremiumsassociatedwithtransportation.ToestablishanewchemicalprocessingcompanyinOntariorequiredabout18monthsofpermissionsandapprovalsfrombothGovernmentandcustomers.Intheend, evenifsuccessful,thisdidnotguaranteeworkfortheprocessing company. MBMTooland Machine BorisKikelyopenedMBMininthesummerof1967.Initiallyscramblingandtakinganytypeofworkhewaspresented,Kikelywouldtravelfromcustomertocustomerseekingworkanddevelopingrelationships.By2005,MBMhadevolvedfromasmallmom-poptypecompanyintoamid-sizeenterprisewithsalesofabout$17MillionCADperyear,andgrossprofitmarginsrangingfrom25to30%. Thebusinessfocusedoncomplexmid-to-largersizecomponentsandassembliesExhibit1providesasampleofthecomplexityofthetypical component’svaluechain. TheCurrent Process Afterincurringmuchtroublewithlocalchemicalprocessingcompanies(quality,deliveryandpricingissues),MBMhad,forthelastcoupleofyears,outsourcedmostofitschemicalprocessingworktoa companyinMontreal.Althoughthechemicalprocessingwasdonefairlywell,MBMquestionedthequalityoftheworkandwasforcedtoinspectallproductreceivedfromthechemicalprocessingsupplier.Indeed,productwasnotdeliveredtothe expectedhighqualitystandards. MBMpurchasedabout$5Millioninchemicalprocessingservicesayearrepresenting about40%ofallofitsannualexpenses.Tosupportthemovementofproducttothechemicalprocessingsuppliers,MBMpurchasedatruckatacostof$45,000andhiredtwodriversatacostof$25perhour,specificallywiththetaskofmovingproductbetweenVaughanandMontrealonadailybasis(6daysaweek,assume12hourworkdays per driver,withtheoperating costforthetruck at$.52/Km. Each driver driving Read More …

Microeconomic theory

Microeconomic theory INTRODUCTION Microeconomic theory explains the behaviour of economic agents (consumers and producers), confronting their choices and the constraints of the market place. Microeconomics lies at the heart of economic analysis, providing the foundations of macroeconomics and of the Read More …

confucius

confucius Paper instructions: Today we discuss the impact of Confucius on China’s traditional social structure and theories of government. The discussion of Confucius that you can find under the Files tab on bCourses will be important here. There is also Read More …