Should carl pursue a price break

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Should carl pursue a price break

Seven years ago he decided to enter the competitive nightmare that the personal computer business had become. Although on the surface that appeared to be a rather no genius-like move, the genius came in the unique designs and features that he developed for his computer.

He also figured a way to promise delivery in only two days for the local and regional market. Other computer makers also had rapid production and delivery, but they were national competitors, and the delivery time from distant locations generally made Carl able to outcompete them on delivery.

Carl soon had a loyal following, especially among the many small businesses in the area. Not only could Carl deliver quickly, but he also had very rapid service to deal with any technical problems. That service feature became critical for the local businesses whose very livelihood depended on the computers, and soon that rapid service capability became more important than the initial product delivery.

Since most of these businesses were fairly small, they could not afford to have their own in house computer experts, so they depended heavily on Carl. In the first week Rosa got a good idea of the challenges facing her after she interviewed several of the people at Carl's.

I'm not sure what you need to do, but whatever it is needs to be done fast!

Should carl pursue a price break

At this point our main competitive edge other than product delivery is service response, and I'm always hearing that we can't get a unit in the field serviced because some critical part is missing.

Both the customers and the field service people are complaining about it. They make a service call, find out they need a certain part, but in many cases we're out of the part. That's not the only problem, though. Since our service is declining, the customers are looking more closely at our prices.

I'd like to cut them a break, but our financial people tell us our margins are already too thin, and get this-one major reason is that our inventory and associated inventory costs are too high! It looks to me as if we have a very large amount of the wrong stuff here.

I don't know that for sure, but I sure hope you can find a solution, and fast! The inventory problems are killing us in engineering. Carl's has always been known for unique designs, and we've been trying hard to keep ahead of the competitive curve on that issue.

The problem is that most of the time when we push hard to get a new design out, the inventory and financial people tell us we have to wait. It seems like they always have too much of the old design inventory around, and the financial hit to make it immediately obsolete would be too severe. We're told that as soon as we announce a new design many of our customers would want it, so that tends to make most existing old design material-even for service-obsolete.

We tryto tell the service inventory people when we have a new design coming so they can use up the old material, but somehow it never seems to work out. Well, Rosa, I wish you luck-you'll need it. I'm getting pressure from so many directions, sometimes I don't know how to respond.

First, the financial people are always telling me to cut or control costs. The engineers then are always coming out with new designs, most of which represent purchased parts.

A lot of our time is spent working with suppliers on the new designs, while trying to get them to have very rapid delivery with low prices. Although most can live with that, where we really jerk them around is with the changes in orders.

One minute our field service people tell us they've run out of something and they need delivery immediately. In many cases they don't even have an order for that part on the books.

The next thing you know they want us to cancel an order for something that only a day before they said was critical.If you have any questions or want to schedule a complimentary meeting to discuss your specific questions, you can e-mail me at [email protected] or call () Serving the Retirement Income needs of families for over 30 years.

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Recently the supplier for the circuit board hinted that it might be able to give Carl’s a price break of $2 per board if Carl’s would order or more at a time. Case Analysis 1.

Should carl pursue a price break

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