Louisville Slugger Paper

Topics: Bats, Supply and demand, Costs Pages: 4 (683 words) Published: May 30, 2012
1a. Why do you think that Louisville Slugger purchased the Alcoa factory rather than continue letting Alcoa make it’s bats? as a cost effective investment which allowed them to leverage purchasing power for raw materials and renegotiate existing contracts based on a larger business model more involved in quality control in order to maintain a positive reputation gain knowledge of experienced people which allowed them to get into the market more quickly

(To me, this has an element of why purchase, but seems to be more an outcome than a reason to purchase.) direct control instead of purchasing from someone else

(These aren’t really purchasing vs. contracting answers, they are more why did they get into the aluminum bat market) more aluminum bats being purchased over wood bats
wood bat sales decreasing

1b. In hindsight was this a good decision?
yes it showed consumers that Louisville Slugger was serious about dominating aluminum market position to learn what made good product
reduced competition in market
eliminated opportunity for Alcoa to contract with others

(This doesn’t tell why it was a good decision)
not in favor if aluminum bats were a fad, better to outsource in that case

(The decision to purchase vs. contract was not affected by these statistics, they are statistics on why get into the aluminum bat market to begin with) demand for wooden bats dropped from 7 mil to 800 thousand

95% of non pro bats today are aluminum
aluminum decreased expenses (of consumers) because of broken wooden bats easier to hit with

1c. Why, after deciding to build a new plant did Louisville Slugger decide to stay in California? stay close to suppliers
reduce logistical time and cost
high strength alloys are made in region
other supplies and services in region

(this goes along with logistical time and cost)
save money in shipping charges

2a. What costs do you think are added because of product variety? 50 different setups, productivity lost...
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