Assignment No. 2
A report on
Computron, Inc. (1996)
In partial fulfillment of the requirements of the course
SCHOOL OF PETROLEUM MANAGEMENT
PANDIT DEENDAYAL PETROLEUM UNIVERSITY
Computron is an American Company established in 1992. It had opened an office in Paris and thus planning to expand in Europe.
The main problem arises as konig & cie which is one of the most important clients of Computron had invited four other companies to submit bid for the contract. The computron’s normal price being 43% higher than the lowest bid may become the main reason for losing the bid.
Thus the report deals with different option the Computron can successfully apply to win the bid.
I. EXECUTIVE SUMMARY
II. SITUATION ANALYSIS
III. PROBLEM STATEMENT
IV. STATEMENT OF OPTIONS
V. CRITERIA FOR EVALUATION
VI. EVALUATION OF OPTIONS
VIII. ACTION PLAN
Letter of Transmittal:-
MR. Thomas Zimmermann
Date: - 15 July, 1996
Subject: - report on pricing decision of Computron 1000x for konig & cie bid.
I would like to take this opportunity to present the report which consists of analysis on action plan for future growth of Computron in Europe keeping in mind the present opportunity that lies in konig and cie. bid and evaluation of options available to win the bid against major competitor in European market.
Computron is an American company which has its manufacturing unit in U.S. and is planning to expand its business in Europe for which it is building a plant in Frankfurt. The total sales of Computron in Europe are divided as follows:-
Breakdown of Computron’s costs are as follows:-
|Factory cost |$384,000 | |33*1/3 mark up cost |$128,000 | |Import duty (15% of quoted U.S. Price |$76,800 | |Transportation and installation |$33,600 | |Total “normal price” |$622,400 |
Market share of different companies are as follows:-
Also the President of Computron is not too keen on reducing the markup cost as he doesn’t want to compromise on profit & quality.
Even though there are instances where markup cost is 20%. Considering all these facts Computron need to come up with a price which will help it to win the bid keeping its future plan in consideration as they may not be able to change this price for further deals.
Also the prices quoted by different companies are as follows:-
|RMAG |$436,000 | |EDAG |$545,000 | |Digitex |$311,200 |
But here we are not considering the bid given by Digitex as its quality is inferior to the Computron 1000x quality and also it has never been able to compete successfully against Computron. So we are taking the lowest bid as...
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