De Havilland Inc Case Study

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Executive Summary:

The current problem with the De Havilland INC. case is awarding the bid to Marton who did not present their financial analysis as instructed in the bid. They came in with the lowest bid, which can be either a tactic just to get business and they hike their prices later, or they actually are that good at what they do. The decision has been made to go with Marton because of their lower prices and we will be able to see their financials when we do a site visit to their facility.

One of the issues with this process is that De Havilland has lost some of the control in the bid process since Marton as put a time limit on the decision of 120 days. This makes it difficult for De Havilland to be able to negotiate with the other companies that came in slightly higher than Marton. It seems as though Marton doesn’t have as much to lose as Marton, which is clearly evident in what Dollard Plastics has been charging compared to what Marton is offering.

De Havilland is trying to lower costs and get a five year fixed rate contract with the winning company in order to eliminate constant contract negotiations. The financials of Devon were looked as since they are the parent company of Marton and are publicly traded. Marton submitted invoices on billing material and unit cost break downs, which makes one wonder what they are hiding.

The recommendation is to go with Marton and do a full audit of their facility and financials. If everything looks in order, de Havilland will terminate the Dollard Plastics contract and start one with Marton, and if the financials are not in order, de Haviland will continue out the contract with Dollar Plastics and start a new five year with DAS Composites. Table of Contents:

Issue Identification……………………………………………………………………Page 3

Environmental and Root Cause Analysis…………………………………….Page 3

Alternatives and/ or Options …………………………………………………….Page 4

Recommendation and Implementation ……………………………………...Page 5

Monitor and Control ………………………………………………………………… Page 6

Conclusion…………………………………………………………………………………Page 6

Issue Identification

It has been decided that I would like to award the bid to Marton but there are some issues that come with this decision. The main issues I see is that Marton has negotiated a “stand alone price all or none.” Even if the source selection Board (SSB) wanted to negotiate, Marton wouldn’t budge on price. Some short term issues that could arise from the bid process is that Marton’s bid is only on the table for 120 days. One would think this would be enough time to make a decision, but this is a big company dealing with another big company. Decisions rarely happen quickly. We don’t have the actual financials of Marton, only the financials of Devon, which will also delay the decision while we visit their plant and facilities. Another issues is that de Havilland’s former owner Boeing, is giving Marton 16.5% of their business. This could be a conflict of interest for us since Boeing may sway Marton’s decision process in working with us on this projects because it looks like they are expected to do more work with Marton in the future.

Environmental and Root Cause Analysis:
Since we don’t have the financials for Marton just yet, it is somewhat difficult to examine their financial state. Looking at the information we do have for analysis, they are going to maintain the same amount of staff for the next five years regardless of how much work they bring into their shops, which appears to be on the rise. This is shown by the increase in labor hours on Exhibit 6. This makes me worry about slippage of deliveries and or work fatigue, safety and possible manufacturing errors to do overworking the staff.

I also need to examine why Marton’s costs are much lower than any of the other companies as seen in Exhibit 3. A thorough examination will have to be done on the Marton’s financials once we do a facility visit, as there could be a chance that...
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