The founder and CEO of EBI recently received a proposal from the vice president of Great Deal, Inc. (GDI), a large discount retailer. The vice president proposed a joint venture between his company and EBI, citing the growing demand for organic products and the superior distribution channels of his organization. Under this venture EBI would make some minor changes to the manufacturing process of some of its best-selling baby foods, which would then be packaged and sold by GDI. Under the agreement, EBI would receive $3.10 per jar of baby food and would provide GDI a limited right to advertise the product as manufactured for Great Deal by EBI. Initial calculations determined that the direct materials, direct labor, and other variable costs needed for the GDI order would be about $2 per unit as compared to the full cost of $3 (materials, labor, and overhead) for the equivalent EBI product. The CEO must decide whether or not to accept the proposed venture from…
In the Hamilton Marketing Services case, we have a full-service pet-grooming company that has hired a company called Hamilton Marketing Services (a major marketing consulting firm that helps provide a wide range of marketing and advertising services) to help them with their pet-grooming business. The pet-grooming company called in with an idea to either offer a flat $40.00 per visit price or a $30.00 per visit price if the pet owner signs up for a series of four groomings. The pet-grooming company has hired Hamilton Marketing Service to see which pricing option would be better. The pet-grooming company suggested to send out a two sets of fliers: one with the $40.00 listing price to a sample of 80 customers and another set of fliers with the $30.00 price and requirement for signing up for four visits to a different sample of 80 customers. The pet-grooming company will track the responses, log the data, and the Hamilton Marketing Services will analyze which is a better pricing model.…
It wouldn’t be a recommended action of this company to engage in a series of pricing differences. If they are to remain competitive in a…
Q3) Based on the post-1995 commission formula and information in the case on pricing and commission rates,…
This case explains the strategy Valderas and his team approached to attain the bid with Ideal. The year prior to the bid, O&M was struggling to contain its costs while trying to understand the profitability of their customers and services. By the end of 1995 the company had encountered an $11 million loss due to a decrease in gross margin and an increase in expenses. Valderes knew that he needed to reevaluate the company’s costing and pricing methods if they wanted to even be considered in winning the Ideal contract. Valderes and the team were concerned with their current cost-plus pricing method. Cost-plus signified that the customer paid a base manufacturer price plus a mark-up added on by the distributor. This allowed for drawbacks like customers engaging in “cherry-picking” and only enabling the distributors to manage low-margin, inexpensive products. This method also tied O&M’s fee to the value of the product rather than the value of the service. The complexity of the pricing structure made it difficult for purchasing manager to track actual product costs or compare quotes from competing manufacturers and distributors.…
Firms today are in their perspective industries to maximize consumer satisfaction, increase revenue, and shareholders profits. These tasks require attention to detail when pricing their products. There are always competitors lurking and waiting by the wayside to gain market share and a competitive advantage.…
Their dedication to low costs paired with an essentially unmatched scale advantage through supply chain management has proven to distinctly separate them from their competitors. The supply chain brought tremendous value to the organization in terms of cost reduction; it’s broad reach and unique manner of management clearly made it a rare resource that provided costly to imitate scale advantages. No other firms in the industry operate a supply chain with the depth that Teva does; they have sustained competitive advantage for supply chain…
general rule of thumb, an extra 10% of competitor’s average price per client will be…
Costs of goods sold for the period totaled $17,250,000; $14,250,000 of the total includes ingredients, packaging, and storage while the remaining $3,000,000 consists of pick/pack and shipping. Costs for ingredients, packing and storage stay the same throughout the process since the end product is the same, however, pick/pack and shipping costs vary due to whether or not the buyer wants to order a…
Michael Stefanic, director of cost management at Owens & Minor (O&M), a medical and surgical supplies distributor and Daniel Borunda, material systems manager at Virginia Mason (VM) Medical Center came together to try to battle healthcare costs and improve the healthcare supply chain. Virginia Mason, a private non-profit healthcare organization based out of Seattle, offered both primary and specialized care and developed the Virginia Mason Production System (VMPS). The VMPS was a modified version of the Toyota Production System that helped VM work towards its goal of being a quality leader, emphasized line-level employee teamwork, and fought for a zero defect rate. The components of VMPS included value-stream mapping (flowcharting), improvement workshops that sought to eliminate waste and improve efficiency, and the “everyday lean idea” used by VM employees in an attempt to reduce waste and add value. They sought to implement their “alpha vendor” idea where a few key vendors acted as partners in the supply chain and provided both goods and services at the lowest cost.…
There are many economic and strategic factors that must be evaluated to determine the benefits and costs of a vertical supply chain. For example, when determining the pros and cons, one must consider production costs, which include…
Kevin O 'Brian (2005) Value-Chain Report -- Supply-Chain Success In The Aftermarket Retrieved April 19, 2005 From: http://www.industryweek.com/ReadArticle.aspx?ArticleID=2226…
market at a lower average total cost than could a number of competing firms. (McConnell, Brue,…
Lee, Hau L. "The Triple-A Supply Chain." Harvard Business Review 82, no. 10 (2004): 102-112.…
$0. Customers that elected to pay for their surgeries would select from a tiered pricing package…