 Could lead to torque war – technical inflation

 Deviation from DMC’s policy to support industry’s standards by not publicizing or

claiming operating characteristics

Alternative 3:
Horsepowe Manufacturin Total Price to Sales Transportati
r g Cost Cost users commission on cost Profit
New 5 hp
motor 665 711.55 1045 83.6 20.9 228.95

Revenue = $1045*(126582*60%) = $80 million

Profit = $17.3 million
Revenue and Profit growth calculated considering market share growth to 60%
Pros
 Product leadership
 Unquestioned competitive superiority
 Providing oil companies with high starting torque without overmotoring
 Minor expenditures for plant and equipment necessary to produce new motors
 Long term strategic investment $75,000; the breakeven quantity (327 units) is very
small
 Perfect Product-Market fit.
 First mover advantage in definite purpose motor oil well pump market
 Market share increase of 10%
 Production complete before sales cycle
 Huge potential for growth as market is growing
Cons:
 Sales lost in peak season of first year as it requires 3 months to begin production
Alternative 4:
Pros:
 Persuading the Hamilton executives without any change in product
Cons:
 No grounds and statistics to challenge the Bridge’s report
 Very less chance of convincing Bridge that his research is false
 Threat of loosing Hamilton by challenging their report
 Further tests may reinforce Bridges test as industry standard, which will lead to
erosion of goodwill for DMC
Recommendation: