Numerical Control and Sat

Topics: Numerical control, Lathe, Better Pages: 9 (1765 words) Published: April 12, 2012
Sat & Co.: Market Orientation

Sat & Co.: Market Orientation
The company
• Machine tool: power-driven machine, not portable by hand when in operation, which worked metal by cutting, forming, physio-chemical machining or a combination of these techniques. Metal-cutting machines include lathes. Modern machine tools were controlled by computers and were referred to as CNC machine tools. Sat & Co. was producing small machine tools since the end of the 19th century Since 1966 Sat & Co. set-up the lathe machine tool division. In the early 1990s the company set-up the CNC division. Its products were continuousely improved and enhanced and the build quality was premium. The company was selling its products for over 100 years in over 100 countries.

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Sat & Co.: Market Orientation
The services
• The company was providing support and service to all its customers, irrespective of the geography. To ensure high quality service it held a significant number of spare parts in stock, ensuring that it dispatched over 90% of orders received before noon in the same working day. Furthermore, prior to selling a machine, the company's sales presonnel would evaluate the buyer's needs and even, if needed, offer financing packages. As a result of the product and service, the company acquired a good reputation for its quality of machines and services. It can be inferred that the company was market-oriented as it had market-led skills necessary to meet cutomer needs.

Sat & Co.: Market Orientation
The present situation
• From 1996 onwards the company saw a constant drop in sales in both the lathe and CNC divisions. The chairman, Sat Cartland, believed that one reason was because the company was focusing too much on technology to improve productivity and efficiency of the machines, adding constantly features that made the machines more expensive and more complicate to use. Sometimes these features were not useful at all to customers. Furthermore, the lathe division was not upgraded at all, the machines being very basic and not atracting customers. In early 2006 the company posted a loss of 50% of sales. The two business lines were struggling to produce at 50% of capacity. The management's team belief was that the company's sales were so low because it lacked a market orientation strategy and poor management of resources. John McGuire was hired as marketing director in order to implement the concept of market orientation.

Sat & Co.: Market Orientation
The present situation
• The company sold internationally, the market being split between the U.S. (35%), the U.K. (25%), the rest of Europe (25%) and the rest of the world (15%). The Chairman wanted to expand the Indian and Chinese markets, taking advantage of the 10% annual growth rates of these economies. While he was sure that the product quality will overcome the price advantage of Indian and Chinese products, he was aware that the local producers had access to technology and capital, enabling them to catch-up in terms of quality. The growth in demand of machine tools was of 5% in 2009, with developing countries like India, China, Malaysia providing the majority of the estimated growth. Eastern European countries that just joined the E.U. were also seen as countries of high investment in upgrading existing factories. The U.K. was a mature market, the machine tool markets being highly cyclical. McGuire's job was to identify the problems and come up with his recommendations in order to turn around both divisions.

Sat & Co.: Market Orientation
McGuire's actions
• McGuire started by evaluating the sales records of the company and finding out that 65% of all engineering shops in the U.K. had at least one lathe machine manufactured by Sat & Co. He wanted to survey the end-users of the machines to find out if: • they had experienced any technical difficulties with the functioning of the machines • they...
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