Longxi Machinery Works - Case Analysis
LongXi Machinery Works
Problem Statement
LongXi is geared to increase its market share for small multi-cylinder diesel engines but the growing quality concern over production of critical parts is jeopardizing LongXi’s growth in the agricultural sector market. Continued quality issues with our DGS, a critical part within LongXi’s Small Multi-Cylinder Diesel Engine has resulted in breakdown, engine failure and loss production at several customers. Customer complaints are increasing and we need to react to and eliminate our quality concerns. We must develop ways to improve quality in house. Our QC group is well established therefore we are recommending that we collect and analyze data relative to why the DGS is failing and from that data collection, make improvement to correct the recurring quality problems.
Situation Analysis
Customer Relationship
Customer relations for LongXi Machinery Works are highlighted in the company’s background. We are one of several medium sized companies that share 55 per cent of the market share not occupied by larger single-cylinder engine manufacturers. Our primary market is the agricultural machinery sector of China. Since our inception, our competitive priority was in manufacturing various single and multi-cylinder diesel engines. These engines served four primary customers. Due to changes in China’s agricultural machinery sector that increased buying power, sales of diesel-powered agricultural machinery is seeing a ten percent continual growth over a five year period. Because of this growth, our sales estimate equate to 85 percent of the overall 10 percent growth over the same five year period.
The attached table shows a comparison to one of our primary competitors – Changchou Diesel Engine Works (Changchai). As you can see from the comparison table, LongXi is a much smaller company to Changchai. Changchai is one of the four large manufacturers that account for 45 percent of the
Problem Statement
LongXi is geared to increase its market share for small multi-cylinder diesel engines but the growing quality concern over production of critical parts is jeopardizing LongXi’s growth in the agricultural sector market. Continued quality issues with our DGS, a critical part within LongXi’s Small Multi-Cylinder Diesel Engine has resulted in breakdown, engine failure and loss production at several customers. Customer complaints are increasing and we need to react to and eliminate our quality concerns. We must develop ways to improve quality in house. Our QC group is well established therefore we are recommending that we collect and analyze data relative to why the DGS is failing and from that data collection, make improvement to correct the recurring quality problems.
Situation Analysis
Customer Relationship
Customer relations for LongXi Machinery Works are highlighted in the company’s background. We are one of several medium sized companies that share 55 per cent of the market share not occupied by larger single-cylinder engine manufacturers. Our primary market is the agricultural machinery sector of China. Since our inception, our competitive priority was in manufacturing various single and multi-cylinder diesel engines. These engines served four primary customers. Due to changes in China’s agricultural machinery sector that increased buying power, sales of diesel-powered agricultural machinery is seeing a ten percent continual growth over a five year period. Because of this growth, our sales estimate equate to 85 percent of the overall 10 percent growth over the same five year period.
The attached table shows a comparison to one of our primary competitors – Changchou Diesel Engine Works (Changchai). As you can see from the comparison table, LongXi is a much smaller company to Changchai. Changchai is one of the four large manufacturers that account for 45 percent of the