Wind Technology Case Study

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  • Topic: Economics, Marketing, Costs
  • Pages : 5 (1184 words )
  • Download(s) : 376
  • Published : March 21, 2013
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Situation:

Company
1. New company (10 years), small compared to competitors
2. Cash flow problems
3. Produces wind-profiling radar systems for weather forecasting and wind detection 4. 9-12 months to improve cash flow

Strengths
1. Adherence to specifications and quality production
2. Technical expertise provides full system integration—customers can order either basic components or a full system 3. Meteorologists and atmospheric scientists provide the customer with sophisticated support 4. All resources had been devoted to wind-profiling

5. Government contracts—account for 90 percent of sales

Weaknesses
1. Poor cash flow
2. Lack of a well-developed marketing department
3. No salespersons—management and engineers call customers 4. No production capabilities to compete in high-volume, low-voltage segment 5. No resources and technical expertise to compete in high-output segment

Opportunities
1. Wind Technology develops almost all of its major component parts and software, versus competitors who depends on a variety of manufacturers. 2. HOWEVER, the development of the power supply has been problematic, SO Wind Technology needs to develop power supply instead of purchasing an HVPS from outside supplier 3. HVPS has greatest potential for commercial success

Threats
1. Vaitra is unwilling to place additional money into Wind Technology 2. 9-12 months to implement new strategy and improve cash flow

Product
Sell component parts, specifically the high-voltage power supply (HVPS) 1. Small, with low level of output (less than 3kV)
a. Communications
2. Medium (between 3 and 10 kV)
b. Radars and lasers
3. Large (greater than 10 kV)
c. High-powered X rays and plasma-etching systems

Market
Total market potential is estimated at $237 million
Wind Technology’s estimated market share is 0.5 percent, or $1.185 million

Finances
Margin: 30 percent (production=70 percent of selling price) or $355,500 Variable/Fixed Costs: Unknown
Promotion Budget: 10 percent or $118,500
Contribution Margin: $237,000

Competition
Unysis—the only key player in the wind profiling market

Customers
Research labs, large end-users, OEMs, and distributers
Government: Research, NASA, state colleges, Department of Defense

Problem:
The market for wind profiling radar systems has been developing at a much lower rate than anticipated. Options: 1. Enter HVPS market, or ride out the two years (cutting costs) that the company had estimated it would take until the wind-profiling market achieved high growth levels? 2. If entering HVPS market, establish target segment

3. If entering HVPS market, develop a marketing and promotion plan

Scenario 1: Enter HVPS market
1. The product provides a differential advantage, superior quality, is innovative, reliable, customizable, and technologically advanced 2. Provides an additional +/- $237,000 in contribution margin per every 0.5 percent of market share is achieved. 3. HVPS could be produced with very little added fixed costs & production would cost 70 percent of selling price.

Scenario 2: Do not enter HVPS market
1. Young company in a mature industry
2. Severe cash flow problems make it difficult to produce, market, and hold inventory 3. Development of power supply will remain a problem
4. Difficult to cut costs when Wind Technologies already does not have a sales force or marketing department 5. Realistically only have 9-12 months before the company goes under

Establishing target segment—Recommendations:
1. Microwave—highest market growth and strength
2. Radar—2nd highest growth and attractiveness, 3rd highest market share and strength 3. Semiconductors—highest attractiveness, 2nd highest market share

Promotion Plan:
1. Collateral Material
a. 5,000 pieces * $5.50 each = $27,500
2. Public Relations
b. Cost to...
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