Situation: Company 1 . Fresh company (10 years), tiny compared to opponents 2 . Earnings problems three or more.
Produces wind-profiling radar systems for weather forecasting and wind recognition 4. 9-12 months to boost cash flow Talents 1 . Faithfulness to specifications and top quality production 2 . Technical competence provides total system integration—customers can buy either standard components or a full program 3. Meteorologists and atmospheric scientists give you the customer with sophisticated support 4. All resources had been devoted to wind-profiling 5. Government contracts—account intended for 90 percent of revenue Weaknesses. Poor cash flow installment payments on your Lack of a well-developed marketing department several. No salespersons—management and engineers call consumers 4. Simply no production functions to be competitive in high-volume, low-voltage segment 5. Zero resources and technical experience to remain competitive in high-output segment Opportunities 1 . Blowing wind Technology develops almost all of the major part parts and software, vs . competitors who depends on many different manufacturers. installment payments on your HOWEVER , the development of the power source has been problematic, SO Wind Technology has to develop power instead of getting an HVPS from exterior supplier several.
HVPS has greatest likelihood of commercial accomplishment Threats 1 ) Vaitra is unwilling to place additional money in to Wind Technology 2 . 9-12 months to implement fresh strategy and improve cash flow Product Promote component parts, specifically the high-voltage power supply (HVPS) 1 ) Small , with low level of output (less than 3kV) a. Communications 2 . Medium (between three or more and 10 kV) m. Radars and lasers three or more. Large (greater than 15 kV) c. High-powered By rays and plasma-etching devices Market Total market potential is approximated at $237 million
Wind flow Technology’s estimated market share is 0. 5%, or $1. 185 million Finances Margin: 30 percent (production=70 percent of selling price) or $355, 500 Variable/Fixed Costs: Unknown Promotion Budget: 10 percent or perhaps $118, five-hundred Contribution Perimeter: $237, 1000 Competition Unysis—the only key player in the wind profiling market Buyers Research labs, large clients, OEMs, and distributers Government: Research, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), state schools, Department of Defense Trouble: The market for wind profiling radar systems has been developing at a much lower rate than anticipated. Options: 1 .
Enter into HVPS market, or drive out the couple of years (cutting costs) that the firm had believed it would take until the wind-profiling market obtained high expansion levels? 2 . If getting into HVPS marketplace, establish concentrate on segment several. If going into HVPS industry, develop a advertising promotion prepare Scenario 1: Enter HVPS market 1 . The product supplies a differential benefits, superior quality, is usually innovative, trusted, customizable, and technologically advanced 2 . Provides an additional +/- $237, 000 in contribution perimeter per just about every 0. 5% of market share is obtained. 3.
HVPS could be created with hardly any added set costs & production will cost 70 percent of selling price. Scenario two: Do not enter into HVPS market 1 . Small company in a mature sector 2 . Severe cash flow complications make it difficult to produce, marketplace, and carry inventory three or more. Development of power supply will remain a problem 4. Hard to cut costs once Wind Technology already does not have a sales force or marketing division 5. Realistically only have 9-12 months prior to the company moves under Building target segment—Recommendations: 1 . Microwave—highest market expansion and power 2 .
Radar—2nd highest progress and charm, 3rd highest market share and strength three or more. Semiconductors—highest charm, 2nd highest market share Promotion Plan: 1 ) Collateral Material a. 5, 000 pieces * $5. 50 each = $27, 500 2 . Public Relations m. Cost to publish and mail to publishers = 500 usd c. Is there hidden costs, such as publishing? d. How many people actually sign up to wind technology trade publications (Exhibit several = three hundred and fifty, 538 in circulation) at the. Of the 350, 000 in circulation, if perhaps 1% of subscribers actually read the PR= 3, 500 reached several. Direct Mail farreneheit. More effective than PR, since recipients have the material in heir hands versus passing up over the page in a mag. g. Buying list of potential customers = $5, 000 h. Are there data available online? (Perhaps today, although not in 1991 in the time the case) i. $7, 500 every 1, five-hundred mailed t. @ 3, 000 sent (universities, government) = 20 dollars, 000 expense 4. Trade Shows k. $50, 000 in costs + $50, 500 for 5 staff members to go to l. Reach has to be less than PR and direct mail as a result of geographical constraints—limited to the number of interested people near control show—maybe you, 000-2, 1000 people go to trade display, and only 25% stop and appear at your item m.
Benefit—Get to see physical product and talk to authorities n. Benefit—People who attend the control show are probably looking to purchase (50% are hobbyists, 25% thinking of buying, 25% certainly not interested in all—tag alongs) i. two hundred fifty people call at your product, +/- 50 have an interest o. Potential to cut costs—why does it price $10, 1000 per person to attend? Send current employees intended for +/- $3, 500 per head (airfare, hotel, food). five. Trade Journals p. Design News shows the best value, at only $0. 05 per web page in circulation, it has a reach of 170, 033 visitors at an expense of $8, 120 six. Personal Selling q.
Telesales ii. Salary for worker would be $50, 000 iii. 90 cell phone calls per day 2. 250 days = 22, 500 per year, assume 74% are hang-ups = a few, 625 truly talk phoning around, 5% have an interest = about 250 ur. Field Revenue iv. Gives most incremental revenue sixth is v. Most costly ni. $80, 000 vii. However , this person may serve dual roles, also attending industry events, responding to customer service issues, etc . Final Suggestion: Kevin, by Wind Technology, acknowledges that it would be high-risk to carry on with the HVPS spin-off, however, not doing some thing to improve the firm’s cash flow was evenly risky.
Therefore , I would support neither decision, but rather go to the reason behind the problem which can be Vaitra’s decision to cut money for Wind Technology. Kevin needs to see a management for Vaitra and ask for money to stay sustaining the business enterprise for another 2 yrs. At that point, the industry is usually expected to older and the high growth amounts that they predict may be achieved. In the meantime, it is far from worth it to restructure the company, and put into action costly promotion strategies that may not even work during the couple of years which they will be most necessary.
However , in two years, the moment Wind Technology anticipates an even more secure cash position, they will begin focusing on the HPVS, hiring personal sellers, and attending trade shows. Then, maybe they can likewise pursue more than just 0. 5 percent of the industry. That is, however , if they even should do so , it will be easy that they will do well with their current products. It would be best to have got ample solutions and do anything to the best with their abilities if the time is right, versus emptying their storage compartments just to get simply by in the industry, and abandoning their particular current approach which could achieve success in the incredibly near future.