Standard Machines Pricing

Topics: Milling machine, Price, Procurement Pages: 3 (668 words) Published: October 28, 2008
I. Who should take the blame for getting Standard Machines Corp into the crisis it faces vis-à-vis closing on a major sale with an established account?

The blame for Standard Machine Corp can be directed in one of three ways:

Industry: One could argue that innovation in the machine tool equipment industry has been stagnant and resulting caused customers to view machines as commodities and compete on price. Another thought is that the industry allowed a low cost player to enter and therefore put the premium priced equipment manufactures in a position of having to rationalize their price. Unfortunately, competition on price erodes industry margins and profits.

Standard Machine Corp Management: The fact that a major account has recently resorted to a competitive bidding process to purchase machine equipment communicates that Occidental Aerospace doesn’t fully understand or appreciate the value of Stand Machine Corp’s equipment and services. Standard Machine Corp, a longstanding company that prides itself on innovative, and reliable equipment, and high quality service and training, has failed to create innovative equipment / a competitive advantage in so much in that competitor products can reasonably be compared to their once unmatched superior product. Additionally, the finger can be pointed at the marketing and sales team for failing to effectively communicate the equipment and service benefits.

Scott, account manager: Scott can be blamed for the current predicament with Occidental by agreeing to participate in the bidding process. The fact that Occidental has installed virtually only Standard Machine Equipment in their factories for the past 20 years proves that they realize the benefits of the equipment. Instead of agreeing the participate in the bid process, Scott should have engaged in a conversation with Joanne Baker about the benefits of Standard’s equipment and figured out a way to avoid a process where accounting folks would focus on cost...
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