Case 2: Cumberland Metal Industries
1070 WordsOct 24th, 20115 Pages
Prof. dr. Muylle Steve
Case 2: Cumberland Metal Industries: Engineered Product Division, 1980
Deadline: Friday 14/10/2011, 18h
Group1: Team 07:
1. What is the worth of the CMI cushion pad relative to the incumbent asbestos cushion pad? Build a customer value model including value elements, word equations, assumptions, and calculations based on the test results of both Colerick and Fazio.
1. Key quantifiable value and Price elements
PRICE: * Price of the pads ( = $0 for both tests) * other resources needed for the job
* less pads needed per set * less time required for changing sets…show more content…
When setting a profit margin of 100%, we become a price of $ 316.08 per pad. This gives us the cost of pads for a total job of $1 890.48 for Colerick and $ 1 575.4 for Fazio, which is still below the competition prices in the case of Fazio. Value in use remains also very high.
When we apply a honest 50 / 50 rule, we should divide the total VIU in half: 50 % for the customer and 50% for CMI. Looking at the following calculations we become a very high price, but since the total VIU is still high, this price is explainable.
$ 106 433.16 / 2 = $ 53 216.58
$ 106 380 - $ 53 216.58 = $ 53 163.42
/ 6 pads = $ 8 860.57 per pads
Total VIU / 2 = $ 146 860.3 /
Cumberland Metal Industries Analysis Essay example
1301 Words6 Pages
Executive Summary Cumberland Metal Industries (CMI), which was historically one of the largest manufacturers of curled metal products in the country, has developed a new product. This product is a metal cushion pad which is to be used with large crane-pile driving activities. The cushion is to prevent the shock of the hammer from damaging the pile. CMI’s cushion pad is a “one-of-a-kind” product as there is nothing similar on the market today making comparisons difficult. Upon successful tests conducted alongside Colerick Foundation Company (Colerick), CMI now seeks to launch this new product to the market. Not unlike many other companies that develop new products, CMI is struggling to set a market price to go along with a…show more content…
He estimated that approximately 13,000 pile hammers were owned by companies directly involved with pile driving, and another 6,500 to 13,000 leased pile hammers. Further, he assumed that the total of 19,500 to 26,000 hammers would operate about 30 hours per week at 25 weeks per year, which equals to 750 hours per hammer per year. Additionally, it was assumed that most jobs would average 20 feet of pile driving per hour. Finally, Simpson concluded that a total of six cushion pads would be required to drive 10,000 feet. With most jobs having an average driving figure of 20 feet per hour, this amounted to between 290 million and 390 million feet of piles driven annually. Based upon these numbers, the potential market for the cushion pads could range from 174,000 to 234,000 per year.
Product Offering, Customers and Industry As CMI’s pads are a new product and that the pile-driving industry has paid little attention to cushion pads prior to CMI’s involvement, there is no other manufacturer that dominates the industry and therefore there is major room for growth. The product seems to be capable of generating a recurring revenue stream. There do not seem to be any barriers. Once CMI becomes the first and therefore, preferred provider of these pads, there is little reason for a customer to switch to a