Appliance Alliance

Situation

Complication

Key question

Appliance Alliance is the 2nd largest

manufacturer of appliances in North America

On a recent analyst call, AAs new CEO faced

some intense questioning from an analyst who
suggested AA has sub-optimal margins in the
dishwasher segment.

The CEO wants to determine if theres an

opportunity hiding within the analysts
questions.
1

Industry landscape of North American

dishwasher manufacturers
Operating profit margin
30%
Superclean
AppGroup
20

Jears
Washalot

Appliance
Alliance

10

$1.5B
Annual
sales

Sparklemotion
0
0.1

0.2

0.5

Relative market share

10

Competitive intelligence estimates on

dishwasher costs
Cost per dishwasher
$300

222
200

198

208

213

218

230

100

Washers
manufactured

SGA
Logistics
Marketing
Manufacturing
Jears

Appliance
Alliance

AppGroup

Superclean

8.8M

7.2M

4.8M

4.0M

Washalot Sparklemotion

3.2M

2.0M
3

Manufacturing cost contribution to total

Cost per dishwasher

$300

200

100

48

222

Labor

Total cost

74

26
75
SGA
Logistics

Marketing
Non-mfg
costs

Plant overhead Raw materials

Overview of five dishwasher

manufacturing plants
Proportion of manufacturing cost
100%

290

248

124

301

95

Total =
$1,058M

80

60

40
Labor
Raw
materials
Plant
overhead

20

Cleveland

Pittsburgh

San
Leandro

Nashville

Tallahasse

1.8M

0.7M

Plant
Units
manufactured

2.2M

1.4M

1.1M