Precision Worldwide, Inc Essay

1725 Words Jun 2nd, 2011 7 Pages
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
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Cost variance analysis is needed to determine areas for improvements and opportunities. Pricing policies will then come after target costing measures are explored. (Garrison & Noreen, 2003)

3. Finally, some considerations should be given to the effect of the decision upon the firm’s image in the marketplace. Answer: There are a number of considerations that may likely impact the image-building processes of PWI are to be seriously considered when making decisions. Thus the effect of decisions involving the following issues is considered: (1) the issues involving the cost structure which continue to hamper the pricing policies and market potentials of PWI’s products. It appears that PWI has not really looked into the possibility of actively pursuing efforts to compete in the market through cost-effective production processes, lower prices to recognize the availability of better-equality substitutes such as the plastic rings; (2) the possible discovery of distributing the planned cheaper plastic rings in areas where competition is tight. This issue might prove to be an indefensible issue if customers discover such unfair selective distribution scheme; (3) the disposal of the remaining inventory of special steel and the finished steel rings might not be acceptable to the market unless prices are made more attractive and useful to the buyer. However, disposal made at a cheaper price and the prompt

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