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Company Case 7.5-Hp Motor

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This option was to simply reduce the price of the 10-hp motor to the price of their 7.5-hp motor. This is really the only option that can be fully implemented before the primary selling season starts. Furthermore, it could be possible to postpone the price reduction for two or three months until DMC encountered objections and the market became aware of Hamilton's endorsement of the Spartan motor.
There are a couple of issues with this option. First of all, this is only a short run solution because over time, due to the higher electric rate as well as potential penalties for over-motoring, companies would prefer to use motors that fit more accurately their power and torque needs. Finally, profitability per unit that DMC currently enjoys …show more content…

It had been DMC's policy to support industry standards by not publicizing or claiming operating characteristics in excess of NEMA standards. In addition there is a high possibility of customer resistance to motors that exceed NEMA standards in temperature or dimensions.
3. Undertake design of a definite-purpose motor for the oil well pumping market:
The third alternative suggests designing a 5-hp motor with the torque of a 10-hp motor, and releasing it in the next four to five months. The pros of this option include having sufficient starting torque to fulfill oil companies’ need, and a price advantage over competitors with 7.5- and 10-hp motors. Additionally, it is exactly what the market presumably wants in the foreseeable future, because higher monthly costs associated with higher horsepower motors and possible penalties for over-motoring would cause oil companies to consider downsizing their motors. Proponents of such a motor believe this solution will give the company an important advantage over competitors, which is expected to last for a long time. This would give Dominion an immediate and long-term competitive advantage, and could increase their share of the oil well pumping market to approximately 60%.
The cons of this option, however, are that it is the most expensive of the four options, requiring a $75,000

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