Computron Inc Essay Example

quality and brand image maintenance, market security, competitor defense, retaining large consumers, and long-term profitability.
As for the options available, the company can consider the following modes of expansion in regard to the opportunity presented by Konie & Cie., AG and the long-term growth prospects in the European market:
1. Establishing a special low-cost production solely for the deal with Konie & Cie., AG. As the plant setup is already ongoing, major changes are not of concern.

2.

The manufacturing policy for the European unit has been revised. Now, only low-cost and lower-quality products will be produced under a new name, "Computron 999X". However, branded goods can still be imported from the USA plant. When considering any of the options mentioned, the level of changes in price and compromise on the 331/2% mark up are important evaluation criteria.

- Compromising on the quality, including precision, dependability, flexibility, and ease of operation of the product.
- Assessing the break-even period for the investment in establishing a new plant in Germany.
- Analyzing the impact of any price reduction on the brand image of the product.
- Increasing the current market share in Germany, currently at 30%.
- Evaluating the effect on the broader European market, excluding Germany.

England, Sweden, and other countries are assessing options for production. The assessment is focused on a special low-cost production for the agreement with Konie & Cie., AG. As the plant setup is currently underway, no significant changes are expected. According to Table 1 in the Exhibit, the price for this agreement has the potential to be reduced by up to $498,080. However, we can only lower it to $523,200, which is still sufficient to secure the

deal. The remaining amount will be considered as the company's economic profit. In line with the client's requirements, we can offer reliable and affordable process control computers that hold no long-term value.

Reducing production cost can lead to faster break even, but it may come at the expense of flexibility. Acquiring immediate orders from Konie & Cie., AG for high end products allows the company to charge the original price and increase their marginal returns. However, launching a product that does not meet the "Computron" standard could harm the brand image. Therefore, effective market segmentation is crucial in order to minimize this risk.

By leveraging this deal, new opportunities to acquire deals with other companies will arise, leading to a gradual increase in market share. The transportation cost for European markets will decrease, while import costs will remain unchanged. The brand will also be able to explore additional opportunities due to its proximity to other markets. There will be a change in policy regarding the European manufacturing unit, which will now focus solely on manufacturing low-cost and lower-quality products.