Developing a Competitive Strategy; Contemporary Cost Management Techniques89Luzon. Average production and sales are 500 units per month. Ram hasachieved its success in the market through excellent customer service andproduct reliability. The manufacturing process consists primarily of assemblyof components purchased from various electronics firms, plus a small amountof metalworking and finishing. The manufacturing operations cost P110 perunit. The purchased parts cost Ram P250, of which P130 is for parts that Ramcould manufacture in its existing facility for P80 in materials for each unit,plus an investment in labor and equipment that would cost P35,000 per month.Ram is considering outsourcing to another MNR firm, Basher Enterprises, themarketing, distribution and servicing for its units. This would save RamP125,000 in monthly materials and labor costs. The cost of the contract wouldbe P105 per radio.Required:1. Prepare a value-chain analysis for Ram to assist in the decision whether topurchase or manufacture the parts, and whether to contract out themarketing, distribution, and servicing of the units.2. Should Ram (a) continue to purchase the parts or manufacture them and(b) continue to provide the marketing, distribution and service or outsourcethis activity to Basher? Explain your answer.

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Description: Developing a Competitive Strategy; Contemporary Cost Management Techniques89Luzon. Average production and sales are 500 units per month. Ram hasachieved its success in the market through excellent customer service andproduct reliability. The manufac

Value Chain : An organization performs a number of activities from the product development to the…

Business

Operations Management

1. Prepare a value-chain analysis for Ram to assist in the decisión whether tő purchase or manufacture the parts, and whether to contract out the marketing, distribution, and servicing of the units. 2. Should Ram (a) continue to purchase the parts or manufacture them and (b) continue to provide the marketing, distribution and service or outsource this activity to Basher? Explain your answer.

1. Prepare a value-chain analysis for Ram to assist in the decisión whether tő purchase or manufacture the parts, and whether to contract out the marketing, distribution, and servicing of the units. 2. Should Ram (a) continue to purchase the parts or manufacture them and (b) continue to provide the marketing, distribution and service or outsource this activity to Basher? Explain your answer.

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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