Northern Drilling Inc.
NORTHERN DRILLING INC.
Executive Summary
Peter Bremner, the general manager of Northern Drilling Inc. has received a request for proposal from Mond Nickel to bid for an upcoming project that will be Northern’s largest contract to date.
The project involves an intermediate job, as well as a deep drilling job, and will require that Northern prioritize this contract over other existing contracts in terms of manpower and equipment. Northern has to assess the technical feasibility of this project before bidding with a competitive price.
Mond Nickel being one of the largest players in the mining industry, winning this project would be a large step towards Northern’s growth strategy. However, overestimating their ability, or alternatively, selling themselves short would be detrimental to their overall success.
The problem in question can therefore be defined as:
1. Should Northern bid for this project?
2. If it bids for the project, should it go for both jobs?
3. At what price should Northern bid?
4. What are the possible outcomes of Northern winning this contract, in terms of existing contracts, future contracts, and competition?
Possible Courses of Action:
The alternative courses of action that Northern can take are summarized below:
Bid for both projects (intermediate and deep)
Don’t bid for either project
Bid for one of the projects (intermediate or deep)
The main criteria for evaluating the alternatives will be the technical feasibility, costs and return on investment involved, and implications in terms of Northern’s Growth strategy.
ANALYSIS
Based on the proposed criteria and available alternatives, I would recommend that Northern bid for the deep drilling job. The reasons for my choice are as below:
1. Required Investment and Returns
Northern has 12 drills, which are currently being utilized for other projects. In view of this, it would be necessary to invest in new drills and equipment. The total cost of these investments would be:
•
Executive Summary
Peter Bremner, the general manager of Northern Drilling Inc. has received a request for proposal from Mond Nickel to bid for an upcoming project that will be Northern’s largest contract to date.
The project involves an intermediate job, as well as a deep drilling job, and will require that Northern prioritize this contract over other existing contracts in terms of manpower and equipment. Northern has to assess the technical feasibility of this project before bidding with a competitive price.
Mond Nickel being one of the largest players in the mining industry, winning this project would be a large step towards Northern’s growth strategy. However, overestimating their ability, or alternatively, selling themselves short would be detrimental to their overall success.
The problem in question can therefore be defined as:
1. Should Northern bid for this project?
2. If it bids for the project, should it go for both jobs?
3. At what price should Northern bid?
4. What are the possible outcomes of Northern winning this contract, in terms of existing contracts, future contracts, and competition?
Possible Courses of Action:
The alternative courses of action that Northern can take are summarized below:
Bid for both projects (intermediate and deep)
Don’t bid for either project
Bid for one of the projects (intermediate or deep)
The main criteria for evaluating the alternatives will be the technical feasibility, costs and return on investment involved, and implications in terms of Northern’s Growth strategy.
ANALYSIS
Based on the proposed criteria and available alternatives, I would recommend that Northern bid for the deep drilling job. The reasons for my choice are as below:
1. Required Investment and Returns
Northern has 12 drills, which are currently being utilized for other projects. In view of this, it would be necessary to invest in new drills and equipment. The total cost of these investments would be:
•