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Precision Worldwide,Inc (PWI) Precision Worldwide,Inc (PWI) is a manufacturing company of industrial machines and equipment for almost 90 years. One of their plants located in Frankfurt, Germany, produces a particular model at a price ranging from $ 18,900 to $ 28,900. Moreover, the plant has another department that manufactures steel retaining rings. These rings are considered as an integrate part of the machines they are actually manufacturing. This department can sell their rings either internally or externally because they are a large market and demand for this product. The general manager of the German plant, Hans Thorborg has been considering the introduction of plastic rings as a substitute for the steel rings. His idea…show more content…
The remaining 15,100 steel rings will have to be calculated as a sunk cost. With this new product offering, PWI will be able to acquire new clientele across the globe and still be able to maintain the loyalty of their existing patrons. He will still have over 15000 units when the date of the place rings roll out. Finally, Hans Thorborg will have to be strategic in the way that he deals with the specific rollout of the plastic ring in France, as well as the rest of the country. All of these factors will be involved in his decision to deal with his team and strategic instruction he will give everyone. The introduction of the plastic rings into the market should be followed by amarket survey to determine the acceptability of the market to the innovation. An analysis of the consumer behavior is important in planning the appropriate action to be taken on the period required to sell the plastic rings. The survey should be able to tell the effects of the innovation for PWI to assess how long the product can be introduced into the market without affecting the image and market share of the company. When PWI sells 100 plastic rings, they are expected to make $838.25 more in profit than the sale of 100 steel rings. It costs $1107.90 to produce one hundred steel rings. When that is compared to creating a hundred plastic rings, which only costs $279.65, it becomes more evident why PWI should
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