Industrial Grinders
Case Study - Industrial Grinders N.V.
Problem Statement:
Industrial Grinders, N.V. has decided to start manufacturing and selling plastic rings for use in their machines. Currently, they manufacture and sell steel rings, along with the machines they also manufacture and sell through another division of the company. They recently discovered that a competitor in France will now be selling plastic rings. These plastic rings will serve the same purpose as the steel rings Industrial Grinders manufactures. However, they cost less to manufacture and they last longer. Management has decided that Industrial Grinders will now start to manufacture plastic rings. Lawrence Bridgeman, General Manager of the German plant, is tasked with deciding whether or not he should scrap a large quantity of steel, manufacture and sell both steel and plastic rings or continue to manufacture and sell steel until their stock of steel is depleted.
It was strongly suggested by management from the parent company in Holland that they should try to find some use for their special-stock steel, and if not – they should manufacture the steel rings. This is a potential waste of resources – money spent on manufacturing for rings they might never sell, rather than just scrapping the steel altogether.
I see Bridgeman’s main problem being how to convince management of one option over the other(s).
Key Issues:
An inventory of steel indicates that the total book value of steel rings and unprocessed stock is valued around $93,000. The unprocessed inventory of steel is valued at $26,400. The steel is manufactured specially for this company and purchased in large quantities so they can get a mill to manufacture it for them. It is doubtful that they can find another use for the remaining $26,400 worth of stock.
Selling plastic rings in the competitor’s market while continuing to sell steel in the other markets could potentially harm current sales – as those customers could feel that
Problem Statement:
Industrial Grinders, N.V. has decided to start manufacturing and selling plastic rings for use in their machines. Currently, they manufacture and sell steel rings, along with the machines they also manufacture and sell through another division of the company. They recently discovered that a competitor in France will now be selling plastic rings. These plastic rings will serve the same purpose as the steel rings Industrial Grinders manufactures. However, they cost less to manufacture and they last longer. Management has decided that Industrial Grinders will now start to manufacture plastic rings. Lawrence Bridgeman, General Manager of the German plant, is tasked with deciding whether or not he should scrap a large quantity of steel, manufacture and sell both steel and plastic rings or continue to manufacture and sell steel until their stock of steel is depleted.
It was strongly suggested by management from the parent company in Holland that they should try to find some use for their special-stock steel, and if not – they should manufacture the steel rings. This is a potential waste of resources – money spent on manufacturing for rings they might never sell, rather than just scrapping the steel altogether.
I see Bridgeman’s main problem being how to convince management of one option over the other(s).
Key Issues:
An inventory of steel indicates that the total book value of steel rings and unprocessed stock is valued around $93,000. The unprocessed inventory of steel is valued at $26,400. The steel is manufactured specially for this company and purchased in large quantities so they can get a mill to manufacture it for them. It is doubtful that they can find another use for the remaining $26,400 worth of stock.
Selling plastic rings in the competitor’s market while continuing to sell steel in the other markets could potentially harm current sales – as those customers could feel that