As we made huge investment to increase the automation level for the Low End products, our company gained a cost leadership advantage in the beginning. This strategic advantage allowed us to win the highest market share by reducing prices without contribution margin declined. Erie appeared to be our strongest competitor in this segment since they also increased their automation level to ten at the very beginning, which means that the cost leadership advantage is not our dominated advantage leading us to earn above average profits any more. Under the same price level and position, customers awareness and buying accessibility would be more important to customers. Thus, the company that contained the higher buying accessibility would get more profits.
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However, starting from the year of 2017, Chester gradually sold their capacity for the Performance segment and they totally went out of the market in year 2021, which provided us the opportunity to gain more market share. However, Digby has a strong presence in the market with two products starting from the very beginning, which also posed a great threat of existing rivals on us.
4.5 Size
In year 2019, both Chester and Digby went out of the market, leaving an opportunity for us to obtain more market share. Additionally, Baldwin decreased their production for this segment gradually in the later years that allowing three companies to share the profits. Since we had low capacity to produce comparing with Erie and Ferris, we were facing great challenges. However, since Erie had the same automation level as ours and had a strong capacity to produce, they have higher ability to accept a lower selling price. This indicates that Erie would be our biggest threat in the segment.
5. Strategic Decisions
5.1 Research and …show more content…
Age is the most important criteria for Traditional and Low End segment. The expectation for age is seven years of Low End products and two years of Traditional segment. It means over the eight years, our products are expected to reach the ideal expectations. Andrews changed Size and Performance frequently for every segment except Acre. For Acre, we try to make as less changes as possible, to keep the age around seven years.
5.1.2 Material Costs. Material Cost is the most significant area of company especially for Low End and Traditional segment. We invested on TQM in 2020 that kept to reduce Able and Acre’s material costs that to increase our contribution margin as well as to assure the flexibility of the pricing to fit the market demand.
5.1.3 Ideal Position. High End customers are more focused on Performance and Size of a product. However, Andrews did not get expected profits on the High End segment in the first few years; therefore, we abandoned the High End segment and kept the parameters of Performance and Size on the same numbers for two year. For other segments, we tried to set our position following the market trends.
5.1.4 MTBF (Reliability). In pursuit of cost efficiency, we set our MTBF as low as possible for our products in Low End, Traditional, and Size segment from the very beginning, which helped our company to keep a relatively low material
However, starting from the year of 2017, Chester gradually sold their capacity for the Performance segment and they totally went out of the market in year 2021, which provided us the opportunity to gain more market share. However, Digby has a strong presence in the market with two products starting from the very beginning, which also posed a great threat of existing rivals on us.
4.5 Size
In year 2019, both Chester and Digby went out of the market, leaving an opportunity for us to obtain more market share. Additionally, Baldwin decreased their production for this segment gradually in the later years that allowing three companies to share the profits. Since we had low capacity to produce comparing with Erie and Ferris, we were facing great challenges. However, since Erie had the same automation level as ours and had a strong capacity to produce, they have higher ability to accept a lower selling price. This indicates that Erie would be our biggest threat in the segment.
5. Strategic Decisions
5.1 Research and …show more content…
Age is the most important criteria for Traditional and Low End segment. The expectation for age is seven years of Low End products and two years of Traditional segment. It means over the eight years, our products are expected to reach the ideal expectations. Andrews changed Size and Performance frequently for every segment except Acre. For Acre, we try to make as less changes as possible, to keep the age around seven years.
5.1.2 Material Costs. Material Cost is the most significant area of company especially for Low End and Traditional segment. We invested on TQM in 2020 that kept to reduce Able and Acre’s material costs that to increase our contribution margin as well as to assure the flexibility of the pricing to fit the market demand.
5.1.3 Ideal Position. High End customers are more focused on Performance and Size of a product. However, Andrews did not get expected profits on the High End segment in the first few years; therefore, we abandoned the High End segment and kept the parameters of Performance and Size on the same numbers for two year. For other segments, we tried to set our position following the market trends.
5.1.4 MTBF (Reliability). In pursuit of cost efficiency, we set our MTBF as low as possible for our products in Low End, Traditional, and Size segment from the very beginning, which helped our company to keep a relatively low material