Morrissey Forgings, Inc..

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In early 1986, Tim Morrissey reviewed the disappointment at the company's operating results in 1985 (see Exhibit 1). Business established in 1938 by Tim's grandfather as a modernization of a scrap metal company, had been built earlier by the great-Team since 1902. The Company entered the business Stove (stove) when this product is sold in the market in the early 1970s. In the year 1977 only use the stove heating product line. Business which operated outside the factory and office space rental in Bridgewater, Vermont which is believed by his family as a factory owner. Business is run very well until the year 1980, with market power for heating source environment in sensitive areas of New Zealand where the company operates. Stove sales in 1983 were $ 9,000,000, - to 30 000 units. But in the year 1985 stove sales decreased by more than 30 competitors, industry leading technology, the market decline, the price level is high, and strong competition. In mid 1980, it was felt that the 'Wood Stove' has environmental problems (air pollution), surpassing the solution about the environment. EPA Act concerned with this industry. Associated with declining profits, lower unit sales and a large industrial capacity, MFI introduced a new product line in 1988 - a combination stove and oven. This product requires little modification of the stove. Price per unit oven is $ 10 for materials and labor, and Morrissey give oven price $ 50 higher than the stove ($ 350 vs.. $ 300). These products generate contribution margin per unit $ 40, thus pushing Morrissey to try to develop the product market in the oven. MFI distributes via dealers stoves in the Northeast area who know the products with reliable quality degan. The Company together with dealers and customers advertising and sales promotion (6% of sales), but the marketing sales by dealers has been there from the 6th place of the branch sales in 1983 up to 12th place in 1985, divided into two areas. When the product oven plus,...
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